Last updated: 5 February 2020


Protests against India’s controversial Citizenship Amendment Act (CAA) erupted in December 2019, following the Bill’s passage by Parliament. The protests began in Assam and northeast India, and rapidly spread to major cities, with high turnout among young people and on university campuses, and crowds of more than 100,000 people in some places. In many states, Indian authorities have responded with disproportionate force, assembly bans (using colonial-era laws), Internet shutdowns, and violent crackdowns on particular universities. To date, there have been over 27 deaths (most in Uttar Pradesh, where the government is demanding damages and threatening to confiscate property from protesters).

The Personal Data Protection Bill, 2019, was introduced in Lok Sabha (lower house of parliament) on December 11, 2019, and is currently being analyzed in committee. There are concerns that the Bill gives the government blanket powers to access citizens’ data and constitutes a serious threat to Indian citizens’ privacy.

On January 6, 2020, reports emerged that the new 2020 budget may include a provision making trustees personally liable in the case of violations of charitable trust norms linked to tax exemptions or registration of entities. This could enable authorities to seize trustees’ personal assets and have far reaching consequences for foundations and philanthropic organizations.

After five months of Internet shutdown in Kashmir, the Supreme Court of India ruled on January 10, 2020 that the right to access the Internet is a fundamental right protected under Article 19 of the Constitution. The Court noted that indefinite Internet shutdowns are unlawful, and even temporary Internet shutdowns cannot be arbitrary and must be subject to judicial review; it stopped short, however, of declaring the shutdown in Jammu and Kashmir, the longest Internet shutdown in India (and ever, in a democracy), as illegal. On the restriction of movement imposed by Section 144 of the Code of Criminal Procedure, the Court said that such restrictive orders could not be “a tool to repress legitimate expressions of citizens.”

Lastly, the new Finance Bill 2020 and the Taxation Law Amendment Act 2019 have the potential to significantly reduce charitable contributions to NGOs, as they allows individuals & companies to receive a reduced income tax rate, provided they forego exemptions and deductions such as those traditionally received as a result of donating to non-profits.


‘Civil Society’ is not a term commonly used in India, though in recent years the media has begun to adopt it. Civil society in India is largely equated with voluntary organizations or the more colloquially used term “NGO,” or non-governmental organization. The Central Statistical Institute of India announced in that as of 2009 there were 3.3 million NGOs registered in India, or one NGO for every 400 Indian citizens. GuideStar India (GSI) says it has the contact information of about 70,000 NGOs across India, and nearly 8,400 have been registered on their portal after verifying the organization’s registration as an NGO, its unique identity based on its tax number, and its operational existence based on proof of an address, as well as its voluntary consent to join the portal. There are also about 29,415 NGOs registered under the Foreign Contribution Regulation Act (FCRA).

The voluntary sector of India is noted for its vibrancy, innovation, and research-based advocacy.  It has played an important role in supporting government as a partner in nation building. Historically, Indian voluntary development organizations have played three significant roles: first, in filling gaps in the government’s welfare systems, such as delivering basic services like health care, education, water, and sanitation to the most remote locations in the country; second, in research-based advocacy, such as analyzing the efficacy and reach of various government projects to provide guidance to the government for policy change; and, third in working on a rights-based approach and entitlements.

Civil society in India has been fairly organized and active pre- and post-Independence in 1947. India has a common law system, a British pre-Independence legacy. The legal framework is generally supportive of civil society. However, in practice, the government sometimes oversteps its regulatory role and instead tries to control the civic sector.

Amnesty International’s work in India, like elsewhere across the globe, is to uphold universal human rights and build a global movement of people who take injustice personally. These are the same values that are enshrined in the Indian Constitution and flow from a long and rich Indian tradition of pluralism, tolerance, and dissent.

Organizational FormsTrusts, Societies and Companies
Registration BodyState-level authorities.
Approximate Number70,000 NGOs (according to Guide-Star India’s portal)
Barriers to EntryIt can take up to a year to complete all the registration procedures.
Barriers to OperationsThe “advancement of any other object of general public utility” is not considered a charitable purpose under certain conditions. In addition, an institution or trust whose dominant object is political in character is said to not have been established for charitable purpose.
Barriers to Speech and/or AdvocacyNGOs cannot engage in political or legislative activities such as endorsing candidates for public office.
Barriers to International ContactNone.
Barriers to ResourcesSignificant restrictions under Foreign Contribution Regulation Act 2010 (FCRA).
Barriers to AssemblyPermission often required with conditions enforced, particularly at certain places; deportations and criminal sanctions against foreigners being ‘associated’ with protests; excessive force used often with wooden batons.
Population1,351,133,673 (2018 est.)
Type of GovernmentFederal parliamentary constitutional republic
Life Expectancy at BirthMale 67.6 years
Female 70.1 years (2017 est.)
Literacy RateMale: 81.3%
Female: 60.6% (2015 est.)
Religious GroupsHindu 79.8%, Muslim 14.2%, Christian 2.3%, Sikh 1.7%, other and unspecified 2% (2011 est.)
Ethnic GroupsIndia has more than 2,000 ethnic groups
GDP per capita$6,700 (2016 est.)

Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2015.

Ranking BodyRankRanking Scale
(best – worst possible)
UN Human Development Index130 ( 2018)1 – 187
World Bank Rule of Law Index3 (2018)100 – 0
World Bank Voice & Accountability Index60 (2018)100 – 0
Transparency International81 (2018)1 – 168
Freedom House: Freedom in the WorldStatus: Free
Political Rights: 2
Civil Liberties: 3 (2018)
Free/Partly Free/Not Free
1 – 7
1 – 7
Foreign Policy: Fragile States Index72 (2018)178 – 1

International and Regional Human Rights Agreements

Key International AgreementsRatification*Year
International Covenant on Civil and Political Rights (ICCPR)Yes1979
Optional Protocol to ICCPR (ICCPR-OP1)No
International Covenant on Economic, Social, and Cultural Rights (ICESCR)Yes1979
International Convention on the Elimination of All Forms of Racial Discrimination (ICERD)Yes1968
Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW)Yes1993
Optional Protocol to the Convention on the Elimination of Discrimination Against WomenNo —
Convention on the Rights of the Child (CRC)Yes1992
International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families (ICRMW)No
Convention on the Rights of Persons with Disabilities (CRPD)Yes2007
Regional Treaties
South Asian Association for Regional Cooperation (SAARC)Yes1979
Shanghai Cooperation Organisation (SCO)Yes2014

* Category includes ratification, accession, or succession to the treaty

Constitutional Framework

The right of all citizens to form associations or unions is guaranteed by the Constitution of India, Article 19(1)(c).
Article 19 guarantees the following six freedoms:

  1. Freedom of speech and expression, which allows an individual to take part in public activities. Though the words “freedom of press” are not mentioned in Article 19, “freedom of expression” also encompasses “freedom of press.” However, reasonable limitations can be imposed to maintain public order and to protect decorum and the dignity of the State.
  2. Freedom to assemble peacefully without arms, though the State can enforce reasonable limitations to maintain public order and the autonomy and integrity of India.
  3. Freedom to form associations or unions, with certain restrictions enforced by the State in the interest of public order, morality, and the sovereignty and integrity of India.
  4. Freedom to move freely throughout the territory of India, subject to certain restrictions to maintain the interest of the general public. For instance, the state can restrict travelling or commuting during epidemics to prevent it from spreading.
  5. Freedom to live and settle in any part of the territory of India, subject to certain limitations by the State to maintain the interest of the general public or to safeguard the rights of the native scheduled tribes and protect them from exploitation and oppression.
  6. Freedom to practice any profession or to carry on any occupation, trade or business. Here the state may impose justified limitations to protect the general public. Thus, nobody has the right to run a hazardous or corrupt business. Professional or technical qualifications may be required to practice any profession or carry out any particular business.

Non-profit organisations in India must not engage in political campaign activities or legislative activities. Indian not-for-profit entities may “lobby” for non-political causes, however, provided that such activity promotes “general public utility” and is incidental to the attainment of the charity’s objects. Under Section 20 of the Societies Registration Act of 1860, societies may have the diffusion of political education as their primary objective. In addition, under the Foreign Contributions Regulation Act, not-for-profit organizations involved in political activities cannot receive foreign contributions.

National Laws and Regulations Affecting Sector

1. Indian Trusts Act 1882
2. Societies Registration Act 1860
3. Maharashtra Public Trusts Act 1950 (state-level)
4. Foreign Contribution Regulation Act 2010
5. Indian Companies Act 2013
6. Direct Tax Code (replacing the Income Tax Act 1961)
7. Foreign Contribution Regulation Amendment Rules (2015)
8. Goods & Service Tax Act 2017

Pending NGO Legislative / Regulatory Initiatives

1. Additional Registration and Compliance for NGOs Implementing CSR Projects

“CSR Implementing Agencies,” which are NGOs that partner with or enter into CSR grant agreements with companies that are mandated under law to carry out CSR activities, may soon be required to register with the Ministry of Corporate Affairs (MCA). etails of the CSR work which they implement on behalf of each company and the progress of each project will also have to be uploaded online regularly so that the regulators and the general public can observe what is being carried out in the name of corporate social responsibility.

Companies required to comply with the provisions of section 135 (the CSR clause) of the Indian Companies Act 2013 have the choice to carry out CSR Activities either directly (with the help of its own employees), through the company’s own corporate or CSR Foundation or an “implementing agency,” which should be registered either as a public charitable trust, society, or section 8 company and have an established track record of at least three years in undertaking similar programs and projects.

If this proposal is implemented (and there is a strong likelihood that it may be implemented from the new fiscal year 2020-21), then it will be one more compliance burden on NGOs, which are already over-regulated by statutory bodies, donors and grant-makers.

Ironically, while CSR is a corporate obligation, and it is the company which is regulated by MCA, this proposal will indirectly make NGOs accountable to the MCA as well. Furthermore, just as company directors are required to obtain Director Identification Number (DIN) before and while serving as a director on the board of any company, agencies implementing CSR programs for companies will have to register with the MCA and will be assigned identification numbers. Ostensibly, this will enable all stake-holders to monitor the progress of the CSR projects and evaluate the program in a transparent and accountable manner.

Reportedly, such increased scrutiny comes as a result of companies claiming large sums spent on often questionable CSR projects and programs and availing tax benefits against activities carried out by NGOs which offer tax benefits.

2. Personal Data Protection Bill, 2019

The Personal Data Protection Bill, 2019, was introduced in Lok Sabha (lower house of parliament) on December 11, 2019, and is currently being analyzed in committee. There are concerns that the Bill gives the government blanket powers to access citizens’ data, and constitutes a serious threat to Indian citizens’ privacy.

3. Amendment to the Income Tax Law/proposed 2020 budget

On January 6, 2020, reports emerged that the new 2020 budget may include a provision making trustees personally liable in the case of violations of charitable trust norms linked to tax exemptions or registration of entities. This could enable authorities to seize trustees’ personal assets in case of an alleged breach, and have far reaching consequences for foundations and philanthropic organizations.

4. National Investigation Agency (NIA) Bill

The National Investigation Agency (NIA) Bill, 2019 passed in the Lok Sabha on July 15, 2019 and will now have to pass in the Rajya Sabha. The bill expands the NIA’s ability to investigate and prosecute offences, and allows for the creation of Special Courts for the trial of scheduled offences. The three major amendments are as follows:

– The Bill would enable the investigation of additional offences related to human trafficking, counterfeit currency, manufacturing or selling prohibited arms, cyber-terrorism, and offences under the Explosive Substances Act, 1908. This expands the scope of the cases that can be investigated under the NIA Act, 2008.

– Officers of the NIA would have the power to investigate scheduled offences committed outside India, thereby expanding the NIA’s jurisdiction. The recent terror attack in Sri Lanka has been used to justify this provision.

– Sessions courts could be designated as special courts for the trial of scheduled offences. Under the original NIA Act, 2008 special courts are allowed for only NIA trials.

Critics of the amendments argued that “providing sweeping powers to police officers is not advisable at a time when the central agencies were being ‘misused’ for political vendetta,” with the Opposition deeming it an attempt to make India a police state.

5. Restrictive Right to Information Amendments

The Right to Information (Amendment) Bill, 2019 passed in both the lower (Lok Sabha) and upper house (Rajya Sabha) in July, and will become law once it receives presidential assent. The Bill amends India’s Right to Information Act, 2005 by allowing the central government to decide the tenure and conditions for information commissioners at both central and state levels. Experts say that these measures will dilute the law, reduce transparency, and take away the autonomy of the Central Information Commission (CIC), which is the highest appellate body on information applications. Seven former Information Commissioners have come together and outlined their opposition to the amendments, which were introduced in a secretive manner and handed to lawmakers only two days before they were tabled, with the government completely skipping the mandatory public disclosure and consultation process.

6. Proposed New Grounds for Cancelling Tax-Exempt Status of Nonprofits in India

The Indian government’s proposed 2019 budget would amend the Income Tax Act of 1961 by adding grounds on which the tax-exempt status of a nonprofit could be cancelled. In particular, under the proposed bill a nonprofit could lose its tax-exempt status at the discretion of the Tax Principal Commissioner or Commissioner if the nonprofit has violated any law material to achieving its objectives. This proposal threatens the independence of the nonprofit sector as it gives the government wide discretion to cancel the tax-exempt status of a nonprofit for even minor violations of the law. The budget passed the Lok Sabha on July 18, 2019 and the Rajya Sabha on July 23 and should be expected to become law imminently. Please see Account Aid and the Centre for Advancement for Philanthropy for detailed write ups on this proposed change.

7. Committee for “Light Regulation” of CSOs

A committee appointed by the central government on the orders of the Supreme Court has recommended several steps to ensure the “light regulation” of CSOs to reduce harassment of them. A shortened version of the recommendations is now before the Supreme Court, though the government has yet to accept the full set.

The committee, headed by S. Vijay Kumar, a former Secretary in the Ministry of Rural Development, was formed as part of the response to the ongoing writ petition filed by Manohar Lal Sharma. On the Supreme Court’s suggestion, the committee has also drawn up a framework of guidelines for the accreditation of CSOs through Niti Ayog, auditing their accounts, and procedures to initiate action to recover grants in cases of misappropriation.

The committee has recommended the following:

  • The registration procedures should be modernized to facilitate the seamless operation of the applicable provisions of the Income Tax Act and the FCRA with respect to CSOs, without the need for cumbersome and intrusive processes.
  • Steps must be taken to reduce the need for in-person interactions between CSOs and public officials acting under the Income Tax Act and FCRA.
  • A separate law is needed for voluntary agencies engaged in activities of a charitable or “public good” nature to enable more effective and efficient regulation of the sector.
  • Regulation should be “light” and consistent with fundamental rights, in order to give effect to the objects for which voluntarism is being promoted.
  • Various state-level and existing central laws should be replaced by overarching legislation based on best practices.
  • Details of CSOs should be available as searchable database information.
  • The new framework should enable “national uniformity” of approach following the principle of “cooperative federalism.”

8. Voluntary Action Cell (VAC)

Niti Aayog (formerly called the Planning Commission) has formed a Voluntary Action Cell (VAC) and constituted a working/standing committee on “Institutionalization of Engagement of Service Delivery Civil Society Organizations (CSOs).” The standing committee met on March 16, 2018 decided to create five sub-groups. One of the sub-groups will deal with self-regulation and the national regulatory framework for the voluntary sector.

We are currently unaware of any other pending initiatives. Please help keep us informed; if you are aware of pending initiatives, write to ICNL at

Organizational Forms

An NGO can register itself first at the state level either as a public charitable trust or as a society under the Societies Registration Act of 1860 or as a company under Section 8  of the Indian Companies Act of 2013 (formerly Section 25 of the Indian Companies Act of 1956).
While the Indian Companies Act of 2013 is central/federal legislation, the Trusts Acts and Societies Acts vary from state to state. In Maharashtra State, for example, there is the Maharashtra Public Trusts Act of 1950. The same Act is applicable in neighboring Gujarat State, but with some variations. In states that do not have a Trusts Act, the principles of the Indian Trusts Act of 1882 apply. The Societies Registration Act of 1860 also varies from state to state. For example, a society registered in Maharashtra or Gujarat does not have to renew its registration. However, societies registered in the northeastern states must renew their registrations annually.

To enjoy tax exemption and provide tax deductions to donors, NGOs must register “u/s 12AA” and “u/s 80G” respectively under the Income Tax Act 1961.

Every NGO receiving funds from “foreign sources” must either obtain prior permission or register under the Foreign Contributions Regulation Act (FCRA) of 2010.
Apart from these key pieces of legislation, labour laws or goods & services tax (GST) laws that also apply, depending on the size or nature of activities an NGO undertakes. For example, any NGO employing more than 20 employees must comply with the the Employees’ Provident Fund (compliance is voluntary if an NGO has less than 20 employees). GST laws would apply if turnover of goods or commercial services exceeds a sum of two million Indian rupees in any fiscal year.

Public charitable trusts may be established for many purposes, including poverty relief, education, medical relief, providing facilities for recreation, and any other objective of general public utility. Indian public trusts are generally irrevocable. No national law governs public charitable trusts in India, although many states, particularly Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh, have Public Trusts Acts. In these states, a trust can be registered with the State Charity Commissioner. In states where there is no Charity Commissioner or Trusts Act in force, the Deed of Trust may simply be registered with the office of the Registrar of Deeds/Assurances.

Societies are membership organizations that may be registered for charitable purposes. They are usually managed by a governing council or a managing committee and are regulated by the Societies Registration Act of 1860, which has been adopted by various states. Unlike trusts, societies may be dissolved. Virtually every state in India has a Registrar of Societies where a society can be registered.

The Indian Companies Act of 1956 has been replaced by the new Indian Companies Act of 2013. The new Act came into force on April 1, 2014, and the old Section 25 has now become Section 8 with further additions.

According to Section 8, The Central Government may issue a license to a limited or private limited company that “(a) has as its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; (b) intends to apply its profits, if any, or other income in promoting its objects; and (c) intends to prohibit the payment of any dividend to its members.”

Thus, a not-for-profit company may be registered with the Registrar of Companies.

Public Benefit Status

To be eligible for tax exemption under the Income Tax Act of 1961, a not-for-profit entity must be established for religious or charitable purposes. Charitable purposes include “relief of the poor, education, medical relief, and the advancement of any other object of general public utility.” The Finance (No.2) Act of 2009 added “preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest” to the list of charitable purposes.

Previously, institutions established for a “charitable purpose” falling under the category of “advancement of any other object of general public utility” were under threat of losing their tax exemption if income from their “business activity” exceeded Rs. 2.5 million during the financial year. This provision was amended with a requirement that for the institution to retain its tax exemption, any activity related to trade, commerce, or business or any activity rendering any service in relation to any trade, commerce, or business for a cess [tax] or fee or any other consideration, irrespective of the nature of use or application or retention of the income from such activity, must meet the following criteria:

  1. Such activity must be undertaken in the course of actual carrying out of such advancement of any other object of general public utility and
  2. The aggregate receipts from such activity or activities during the previous year do not exceed twenty per cent of the total receipts of the trust or institution under such activity or activities of that previous year.

Public charitable trusts, by definition, must be created for the benefit of the public. Societies may be registered for charitable purposes, among other purposes. Section 25/8 companies are formed for the purposes of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other object.

Section 135 of the Indian Companies Act of 2013 requires every company having net worth of Rs. 500/- crore (Rs. 5 Billion) or more, or turnover of Rs. 1,000/- crore (Rs. 10 Billion) or more, or net profit of Rs. 5 crore (Rs. 50 Million) or more, to establish a corporate social responsibility (CSR) committee of its board and disclose the composition of the CSR committee in the board’s report; formulate a CSR policy and spend at least 2% of its aggregate net profit over the block of the previous three years on CSR activities as outlined under Schedule VII of the Indian Companies Act, 2013; and disclose the CSR activities and amounts spent in the company’s annual report.

Several not-for-profit Section 8 Companies have been served with a Show Cause Notice under Section 134(8) for violation of Section 134(3)(O) read with Section 135 of the Indian Companies Act, 2013. One such organization, for example, runs centers in major cities of India where children afflicted with cancer and their families receive shelter, healthcare, and nutritional support. Section 8 companies that are registered as tax exempt organizations under Section 12AA of the Income Tax Act of 1961 are required to spend at least 85% of their total income each financial year. It is therefore odd that the Ministry of Corporate Affairs is insisting that such organizations should spend a mere 2% on CSR activities.

Barriers to Entry

The law does not specifically or explicitly prohibit the formation and operation of “unregistered” groups. In fact, the Income Tax Act of 1961 recognizes both registered and unregistered associations of persons. However, the Ministry of Home Affairs also makes it clear that FCRA registration or prior permission is mandatory for an association (registered or unregistered) to receive contributions from any foreign source.

There are no sanctions or penalties for carrying out activities through an unregistered organization, although there are tax implications.

A trust, society, or Section 8 company can be established by either a company or individuals. A trust or company can be established by two individuals, whereas a society requires seven founding members. A trust may be settled with a token sum of money (Rs. 500/-), which would then be considered ‘Trust Property’. A society requires no initial capital, and a Section 8 company can be established with or without share capital.

Under the Indian Trusts Act of 1882, “a trust may be created by every person competent to contract.” Under Indian Contract Act of 1872, “Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject.”

There is no specific bar on foreigners as founders or trustees under the Bombay Public Trusts Act of 1950, the Indian Companies Act of 2013, the Societies Registration Act of 1860, or the Income Tax Act of 1961.

There is a specific bar only under the FCRA, which applies only if the NGO is seeking a foreign contribution.

Registration fees are nominal. However, the registration process moves slowly: often it takes several months and sometimes up to a year to get all the registrations. FCRA applications are required by law to be processed within a period of 3 months, but it generally takes much longer. The government has the right to deny registration or even suspend or cancel an existing registration (income tax exemption or an FCRA registration) for violation of any provision of the statute or the rules thereunder, but they must allow due process and give the NGO an opportunity to be heard. If an NGO’s registration is refused or canceled, the NGO has the right of redress before a higher competent authority.

Generally, as long as the objects of the NGO as stated in its charter document are for a charitable purpose, it may take some time to receive the registration, but it will not be denied. An existing registration may be cancelled for reasons such as not functioning in line with the stated objects, failure to file returns, or violation of any provision of the law.

Barriers to Operational Activity

As long as the activities of the NGO are within the framework of a charitable purpose, the law does not impose burdens or constraints on the NGO’s operations.

According to Section 2(15) of the Income Tax Act of 1961, “charitable purpose” includes:

  • Relief of the poor
  • Education
  • Medical relief
  • Preservation of the environment (including watersheds, forests, and wildlife)
  • Preservation of monuments or places or objects of artistic or historic interest
  • The advancement of any other object of general public utility.

Amendments made under the Finance Acts of 2008, 2010, 2011, and 2015 have affected all organizations falling under the sixth category, “The advancement of any other object of general public utility.”

According the 2015 amendment of the Finance Act 2015: “the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless––
(i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and
(ii) The aggregate receipts from such activity or activities during the previous year do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that fiscal year.”

One could argue that “improvement of democracy and governance in India through political and electoral reforms” could be deemed as a charitable purpose under the category “Advancement of any other object of general public utility,” as long as the organization is not involved in “carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for any fee, tax or other consideration,” even if the aggregate value of receipts from such activity does not exceed twenty percent of the total receipts of the trust or institution in that fiscal year.

However, courts in India have held that an institution or trust whose dominant object is political in character cannot be said to have been established for charitable purpose [Lokamanya Tilak Jubilee National Trust Fund, [1942] 10 ITR 26 (Bom.); CIT v. All India Hindu Mahasabha [1983] 140 ITR 748 (Delhi)]. In the Lokamanya Tilak case, a trust was created to give effect to the wishes of Lokmanya Tilak as expressed in his will. The trust was created for spreading political education through the Kesari and Maratha newspapers to raise public awareness of political rights and demanding changes in the structure of the country’s administration. However, the Supreme Court held that the trust was not a public charitable trust as defined under the Bombay Public Trusts Act. The court’s position is summarized in Halsbury’s Laws of England: “A trust for the attainment of political objects is invalid, not because it is illegal — for everyone is at liberty to advocate or promote by any lawful means a change in the law, but because the court has no means of judging whether a proposed change in the law will or will not be for the public welfare or benefit, and therefore cannot say that a gift to secure the change is a charitable gift.” This argument was also advanced by Lord Parkar in Bowman v. Secular Society Limited.

Political purposes include, but also extend beyond, the support of political parties or of those seeking political office. Supporting or opposing a change to the law or government policy is a political purpose and not a charitable purpose. In addition, attempts to sway public opinion on controversial social issues are legitimate and lawful but not charitable.

A purpose pursued by an NGO would be considered political if:

  • It is concerned with party politics;
  • It involves the dissemination of ‘propaganda’ for some cause; or
  • It involves seeking changes to the law, to the administration of the law, or to government policy.

It is the third of these notions of “political” that creates difficulties for activist welfare organizations. English courts and other Commonwealth country courts, including India, deem activities such as advocating changes to the law as “political,” reasoning that a purpose cannot be held to be charitable unless it is beneficial to the public. Accordingly, when a court has to decide whether a trust or other organization which aims to change the law, the administration of the law, or some government policy is charitable, it must determine whether the change sought would be beneficial. But a court, whose task is to resolve disputes according to existing law, cannot rule on whether a particular change to the law would or would not be beneficial.

NGOs are independent concerning internal governance. The government has the right to regulate but not control the internal affairs of an NGO. Fines and penalties may be imposed for compounding certain irregularities such as not filing returns in time. NGOs may also be subject to random financial or tax assessments by the regulatory authorities.

The Finance Bill of 2017

The Finance Bill of 2017 was approved after modifications by both Houses of Parliament and received the assent of the President of India on March 31, 2017. It brought about several changes to the voluntary sector in India:

1) Restrictions on inter-charity corpus donations
One charitable organization may contribute funds to another charitable organization but not as a corpus donation or grant.

2) Restrictions on cash donations

Sub-section 5D of section 80G has been amended to lower the limit on cash donations under section 80G to 2000 rupees. The move is in line with the government’s overall efforts to promote a cashless economy and increase transparency.

3) Expansion of power of survey inspection

Amended section 133A now expressly empowers the Income Tax Authority to enter any places of “activity of charitable purpose” to inspect the account books, verify cash, stock, or valuable articles, or furnish any relevant information.

Finally, in 2018 the Maharashtra State Charity Commissioner issued an order directing around 400 NGOs and trusts registered in the state to remove the words “corruption” and “human rights” from their names or risk a suspension under the Maharashtra Public Trusts Act of 1950. The charity commissioner’s office in Pune had previously taken similar action against 16 NGOs with the word “corruption” in their names, including Anna Hazare’s Bhrashtachar Virodhi Jan Andolan, which was suspended. The NGO’s case to regain its registration is pending in court. According to press reports, the State Charity Commissioner believes that only the government has the machinery to prevent corruption and protect human rights.

Barriers to Speech / Advocacy

There are no specific restrictions on the ability of NGOs to criticize the government or to advocate for politically unpopular causes, including issues of human rights and democracy. However, NGOs cannot engage in political or legislative activities such as endorsing candidates for public office. NGOs have nonetheless often been successful in advocacy work, especially on issues such as children’s rights and marginalized communities, and they have thus indirectly influenced the drafting of more enabling laws and policies.

On March 24, 2015, India’s Supreme Court declared Section 66A of the Information Technology Act (“IT Act”) as unconstitutional. Prior to this, section 66A of the IT Act was often misused by politicians, political parties, and their followers to silence critics through the power to arrest and jail those who spoke out, especially on social media. As a result of the decision, Internet content cannot be removed without a court order, and the threat of arrest for posting content on the Internet is gone. The court, however, upheld the validity of section 69B and the 2011 guidelines for the implementation of the IT Act, which allow the government to block websites if their content has the potential to create communal disturbance, social disorder, or affect India’s relationship with other countries.

Most recently, on October 25, 2018, the Enforcement Directorate (ED) of the Department of Revenue took action against Amnesty international in Bengaluru 20 days after the ED conducted searches of Greenpeace’s office in the same city. On charges of an FCRA violation, the ED confiscated various documents and even individual laptops. Before this raid, Amnesty International had issued a statement that raids on media houses were an attempt to hinder the free press. According to reports, Aakar Patel, the Executive Director of Amnesty India, had said that the Income Tax Department’s search on Quintillion Media Private Ltd, which runs a news website The Quint, and the homes of its owners, Raghav Bahl and Ritu Kapoor, indicated a clampdown on the free press.

According to a statement issued by the ED, after Amnesty International India Foundation Trust (AIIFT) was denied permission/registration under FCRA by the Ministry of Home Affairs (MHA), AIIFT bypassed FCRA by floating a commercial entity in the name of Amnesty International India Pvt. Ltd (AIIPL). This entity, according to the ED, had received Rs 36 crore of foreign funds through a commercial route, of which 10 crore was received as long term loans. This amount was immediately placed in fixed deposits (FDs) and another Indian entity, Indians for Amnesty International Trust (IAIT), established an overdraft facility for Rs. 14.25 crore with the Rs.10 crore FD as collateral. The remaining Rs.26 crore was received in two other bank accounts of AIIPL as “consultancy services.”

Explanation 3 to Section 2(1)(h) of FCRA states that “Any amount received, by any person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause” (italics added for emphasis).

The ED appears to believe that Amnesty International took advantage of this loophole and received contributions from a foreign source for a definite charitable, religious, economic, education, or social purpose under the cover of “commercial transactions” and thus violated FCRA.

Earlier, in 2016, the Bengaluru police had filed a sedition case against Amnesty International based on a complaint filed by the Akhil Bharatiya Vidyarthi Parishad for organizing a program that sought to portray the human suffering from the Kashmir conflict. The police charged Amnesty India with sedition under section 124A of the Indian Penal Code. Sedition is defined as “whoever, by words, either spoken or written, or by signs, or by visible representation, or otherwise, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection towards the government established by law.” The government also filed cases against Amnesty’s representatives under sections 142, 143, 147, and 149 for unlawful assembly and rioting and Section 153a for promoting enmity between groups.

The separate ED crackdown on Greenpeace occurred on October 5, 2018, when its offices were raided in Bengaluru and its bank accounts frozen for alleged FCRA violations and “raising funds through fraudulent means.” The ED also claimed to have found “important evidence” of corrupt practices by Greenpeace India. Greenpeace India is the Indian branch of the global environmental group Greenpeace and claims it receives 60% of its funding from individual donors in India and does not, as a policy, receive any funding from the government or companies. In 2015, the central government had cancelled the FCRA registration of Greenpeace and accused it of being involved in “anti-national activities,” a charge denied by Greenpeace.

Restrictions on Amnesty surfaced again on November 15, 2019, when India’s federal investigative agency, the Central Bureau of Investigation (CBI), conducted searches at the offices of Amnesty International India Private Limited (a for-profit entity) and Indians for Amnesty International Trust (a not-for-profit entity) in Bangalore. The raids occurred because of alleged Foreign Contribution (Regulation) Act (FCRA), 2010 violations based on complaints received from the Ministry of Home Affairs (MHA).

According to CBI, Amnesty International (India) has received foreign contributions to the tune of INR 46 Crore (1 Crore = 10 million) from Amnesty International (UK) through the for-profit company named Amnesty International India Private Limited (AIIPL). The complaint by the MHA was that Amnesty India used commercial methods in order to illegally circumvent the provisions of the FCRA, which Amnesty was obliged to observe. Under law, commercial receipts from any ‘foreign source’, including fees in lieu of goods or services, do not fall under the ambit of ‘foreign contribution’ as defined under the FCRA. To evade the FCRA, Amnesty (UK) reportedly remitted Rs 10 Crore to the for-profit entity in India and classified it as Foreign Direct Investment (FDI) under Foreign Exchange Management Act (FEMA) instead of FCRA.

Purportedly upon inspecting the Books of Accounts of Amnesty International India Pvt. Ltd, Bangalore, the MHA found that the for-profit company indulged in activities “that were not commensurate to the activities of a for-profit company but constituted activities that are either prohibited or regulated under FCRA.”

Under FCRA, any person, which includes associations, having a definite cultural, economic, educational, religious, or social programme can receive foreign contributions only after obtaining the prior permission of the Central Government, or becoming registered with the Central Government under FCRA. In other words, the MHA believes that Amnesty International India Pvt. Ltd. as an association has received funds from a ‘foreign source’ “for a definite cultural, economic, educational, religious or social programme” without prior permission or registration under FCRA 2010.

Following the raids, Amnesty International stated that “over the past year, a pattern of harassment has emerged every time Amnesty International India stands up and speaks out against human rights violations in India. Amnesty International India stands in full compliance with Indian and international law.”

Barriers to International Contact

Section 6(6) of the Foreign Exchange Management Act (FEMA) of 1999 regulates the establishment of branch offices, liaison offices, or project offices or any other place of business in India by foreign entities (for-profit or non-profit). Previously provisions of the FCRA were not applicable to International NGOs (INGOS) or International Donor Agencies (IDAs) having their offices in India, as long as these offices received funds or grants in India directly and only from their head office situated overseas. These offices had to be registered with the Reserve Bank of India (RBI) and were regulated by FEMA and not FCRA.

However, the RBI’s Notification No. FEMA 22(R) /RB-2016 of March 31, 2016 was amended on August 31, 2018 to state that “where approval of the Reserve Bank is required in certain cases for establishment of branch office, liaison office or project office or any other place of business in India and if the applicant is a Non-Government Organization, Non-Profit Organization, Body/Agency/Department of a foreign government, if such entity is engaged, partly or wholly, in any of the activities covered under Foreign Contribution (Regulation) Act, 2010 (FCRA), they shall obtain a certificate of registration under FCRA and shall not seek permission under FEMA” (italics added for emphasis).

INGOs or IDAs seeking registration under FEMA will now be required to apply to the MHA under FCRA and not RBI. If they choose to register with RBI and not with MHA under FCRA they will then be required to declare in the amended Form FNC (Annex C): “We will not undertake either partly or fully, any activity that is covered under Foreign Contribution Regulation Act, 2010 (FCRA) and we understand that any misrepresentation made or false information furnished by us in this behalf would render the approval granted under the Foreign Exchange Management (Establishment in India of a branch office or liaison office or a project office or any other place of business) Regulations, 2016, automatically as void ab initio (Latin for ‘from the beginning’) and such approval by the Reserve Bank shall stand withdrawn without any further notice” (italics added for emphasis).

There are several items for which the August 31, 2018 amendment creates some uncertainty:
1) whether every INGO having a definite cultural, religious, economic, educational or social (CREES) program in its Memorandum of Association or running CREES programs or activities in its home country or other countries must apply for registration under FCRA to establish its liaison office in India, even if the liaison office would not be carrying out or funding any definite CREES program or activity in India; and
2) whether existing liaison offices now have to apply for registration under FCRA, or whether this amendment applies prospectively only to INGOs seeking to register an office in India after the August 31, 2018 amendment.

The amendment also comes in the context of the MHA viewing liaison offices with suspicion for several years. In August 2016 the Economic Times, for example, reported, “The Home Ministry wants Finance Ministry to stop registering NGOs under Foreign Exchange Management Act (FEMA) so that there’s only one custodian to monitor flow of foreign funds to these organisations. To make its case, the Home Ministry has drawn up a list of 67 NGOs which were found violating FCRA but tried to escape penalty by invoking their FEMA registration.”

The MHA has long believed that INGOs from Europe and the U.S. avoided coming under the FCRA by registering as a liaison office with RBI under FEMA. With the August 31, 2018 amendment, it would seem the MHA has succeeded in making the Ministry of Finance withdraw its power to regulate INGOs under FEMA, 1999 and make FCRA the “umbrella legislation” for registering all NGOs, international or otherwise, receiving funds from foreign sources.

Barriers to Resources

1. Foreign Contributions Regulation Act 2010 (FCRA)
Under the Foreign Contribution Regulation Act 2010 (FCRA), all NGOs in India, such as public charitable trusts, societies, and Section 8 companies, wishing to accept foreign contributions must: a) register with the central government; b) agree to accept contributions through designated banks; and c) maintain separate books of accounts with regard to all receipts and disbursements of funds.

NGOs are required to report the amount of the foreign contribution, its source, the manner in which it was received, the purpose for which it was intended, and the manner in which it was used. Foreign contributions include currency, securities, and articles. Funds collected by an Indian citizen in a foreign country on behalf of an NGO registered in India are considered foreign contributions. Moreover, funds received in India in Indian currency from a foreign source are considered foreign contributions.

Under FCRA, a foreign contribution does not include commercial receipts. NPOs can receive consultancy or other commercial receipts from foreign sources even without FCRA registration. FCRA-registered NGOs should receive commercial receipts in their domestic account, and NGOs are not required to report commercial receipts to the FCRA department.
FCRA guidelines require that an organization allowed to receive funds from a foreign source may provide funds from its FCRA account to another organization only if the other organization also has clearance from the Ministry of Home Affairs (MHA) to receive funds from a foreign source.

If the foreign donor agency specifies in writing that the whole or part of the grant may be directed to the recipient organization’s capital fund or endowment, the organization may do so. Such an endowment or capital fund may be invested in an approved security.

Any interest or dividends should be accounted for as an amount received by way of interest on a deposit drawn out of funds received from a foreign source. In other words, even the interest or dividend received in India, in Indian rupees, must be disclosed in the return. Contributions from an expatriate Indian are not considered foreign contributions if the individual has not become a citizen of a foreign country.

The government has blacklisted dozens of NGOs for failing to adhere to different aspects of the FCRA, including 69 NGOs in March 2015 alone. In addition, on March 3, 2015, the Ministry of Home Affairs cancelled the FCRA registration of 1,142 NGOs that received funding from foreign sources in one state, Andhra Pradesh, for failure to file annual returns for 2009 to 2012.

On June 16, 2016, the MHA cancelled “with immediate effect” the registration of the NGO Sabrang Trust under the FCRA for receiving funds from a foreign source. Sabrang Trust is run by civil rights activist Teesta Setelvad, who is known for promoting the rights of of Gujarat riot victims and has received funds from the US-based Ford Foundation. The Ford Foundation was put on a watch list following a Gujarat government complaint that it was interfering in India’s internal affairs and promoting communal disharmony through engagement with Setelvad’s NGO. The MHA argued that foreign funds received by Sabrang Trust under the FCRA license had not been used for the rightful purposes.

The FCRA has not been without opposition. In November 2016, the MHA permanently cancelled the FCRA registration of the NGO Lawyers Collective because it allegedly misused foreign funds. In a January 30, 2017 interim order, the Bombay High Court ruled that while the MHA has powers under the FCRA to “regulate or even prevent the acceptance of foreign funds by an association,” the Act does not “provide for a government to stifle the very functioning of individuals or associations.” The Court thus ordered the government to un-freeze the Lawyers Collective’s domestic and non-FCRA bank accounts.

Other court rulings, however, have upheld the FCRA. For example, on January 11, 2017, the Supreme Court of India ordered an audit of 3 million NGOs receiving funds from the government or foreign sources under the FCRA. It also ordered penal action against NGOs found not to be submitting their records on time in accordance with General Financial Rules, 2005. The audit was mandated to be completed by March 31, 2017. According to Supreme Court, “mere blacklisting of NGOs who do not file annual statements will not suffice but also action must be initiated like criminal proceedings for misappropriation and civil action for recovery of given funds.” The order came after an amicus curiae cited a finding by the Central Bureau of Investigation (CBI) that only 10% of NGOs filed annual income and expenditure statements.

2. Foreign Contribution Regulation Rules

In December 2015, the MHA issued amended Foreign Contribution Regulation Amendment Rules. The application process for registration under the FCRA is now completely online, and reporting requirements on foreign contributions have increased significantly. The MHA subsequently issued a circular dated December 14, 2015 stating that application for renewal of FCRA registration must now be made online at The last date for filing a renewal application was extended to March 15, 2016, and then extended again to June 30, 2016. The validity of FCRA registration for organizations that were registered before the enactment of FCRA was extended from October 31, 2015 to October 31, 2016. Under the new system there is no need to post hard copies, and fees can be paid online.
Under the amended Foreign Contribution Regulation Rules:

    • Application for new registration, prior permission, or renewal of existing registration must now be made in the new Form FC 3.
    • The application must be digitally signed.
    • Applications sent by post will not be accepted. The process now must be completed online. Payment of processing fees has also been made electronic.
    • Every person receiving foreign contribution, regardless of the amount received, is required to post on one’s own website or on the government’s website the annual audited statement of accounts of receipt and utilization. This report must include income and expenditure statements, receipt and payment accounts, and balance sheets and must be completed within nine months of the end of the financial year when the foreign contribution was received. Previously, only organizations that received foreign contribution in excess of 10 million rupees (about $146,000) were required to report summary information about the receipt and utilization of foreign contributions for the year of receipt and one year thereafter.
    • An organization receiving foreign contributions are now required to post quarterly statements containing details of those contributions on its own website or the government’s website within 15 days of the completion of a quarter of a financial year, including details of donors, amounts, and dates of receipt.
    • Banks are now required to report to the government within 48 hours any foreign contribution received by any person, including those having registration or prior permission under the FCRA.
    • An NGO registered under the FCRA but does not receive foreign contributions may continue to file annual returns in the new Form FC 4 to keep the registration active. However, these organizations are now exempt from filing certificates issued by chartered accountants or income and expenditure statements, along with receipt and payment accounts and balance sheets.
    • NGOs are now required to notify the government of a change of name or address within 15 days. Similarly, NGOs must notify the government within 15 days of changes to an NGO’s nature; objectives; registration with local or relevant authorities; bank, bank branch, or designated bank account number for foreign contributions; or of replacement of 50% or more of “key members” of the organization. The term “key members” has not been defined, though it likely would include key office bearers like President, Secretary, or Chief Functionary.
    • Annual returns must be filed in the new Form FC 4, along with an affirmation that the NGO has “not used the foreign funds for activities that are likely to prejudicially affect the sovereignty and integrity of the country, the security, strategic, scientific and economic interests of the State and the public interest.” Organizations that work on human rights issues, legal rights, policy, governance, electoral reform, and other sensitive issues are likely to be affected by this provision.

The MHA has also issued Notification S.O. 2291(E) dated June 5, 2018, which lists offences that hitherto were not compoundable (e.g. defraying of foreign contribution beyond 50% of the contribution received for administrative expenses). For virtually every offence, the minimum penalty is Rs. 100,000, with the exception of the offence of accepting any foreign hospitality in contravention of FCRA, where the penalty is Rs. 10,000,. The Notification also lists officers competent for compounding such offences. In all cases it is the Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act. To date, however, no specific instances of audits appear to have been initiated by the Comptroller and Auditor General (CAG) of India.

Domestic Funding

An NGO may raise funds in any lawful manner, including by soliciting donations and grants or sponsorships or organizing fundraising events.

Under amendments to Section 11(4A) of the Income Tax Act of 1961, an NGO is not taxed on income from a business that it operates that is incidental to the attainment of the NGO’s objects, provided that the entity maintains separate books and accounts for the business. Furthermore, certain activities resulting in profit, such as renting out auditoriums, are not treated as income from a business.

The Finance Act of 2008 had changed the definition of charitable purpose so that the “advancement of any