Section 4 FCRA 2010: Persons to Whom Section 3 Does Not Apply
Section 4 of the Foreign Contribution (Regulation) Act, 2010 provides limited exceptions to the prohibition contained in Section 3. It identifies situations in which a person covered by Section 3 may accept a foreign contribution, subject to Section 10 of the Act.
Statutory Text of Section 4
4. Persons to whom section 3 shall not apply. Nothing contained in section 3 shall apply to the acceptance, by any person specified in that section, of any foreign contribution where such contribution is accepted by him, subject to the provisions of section 10,-
(a) by way of salary, wages or other remuneration due to him or to any group of persons working under him, from any foreign source or by way of payment in the ordinary course of business transacted in India by such foreign source; or
(b) by way of payment, in the course of international trade or commerce, or in the ordinary course of business transacted by him outside India; or
(c) as an agent of a foreign source in relation to any transaction made by such foreign source with the Central Government or State Government; or
(d) by way of a gift or presentation made to him as a member of any Indian delegation, provided that such gift or present was accepted in accordance with the rules made by the Central Government with regard to the acceptance or retention of such gift or presentation; or
(e) from his relative; or
(f) by way of remittance received, in the ordinary course of business through any official channel, post office, or any authorised person in foreign exchange under the Foreign Exchange Management Act, 1999 (42 of 1999); or
(g) by way of any scholarship, stipend or any payment of like nature:
Proviso: If a person specified in Section 3 receives foreign contribution for a purpose other than the purposes listed in Section 4, the contribution is deemed to have been accepted in contravention of Section 3.
How Section 4 Works with Sections 3 and 10
Section 3 identifies persons and categories to whom the statutory prohibition on accepting foreign contribution applies. Section 4 then carves out the listed transactions from that prohibition. The opening words of Section 4 are important because every exception remains subject to Section 10.
Section 10 empowers the Central Government, in the circumstances specified by the Act, to prohibit payment or delivery of currency or articles received in contravention of the FCRA. Accordingly, Section 4 should be read together with Sections 3 and 10 rather than as a stand-alone permission.
Explanation of the Seven Exceptions
1. Salary, wages and ordinary business payments - clause (a)
A payment genuinely due as salary, wages or other remuneration from a foreign source, or an ordinary-course business payment made in India by that foreign source, falls within clause (a). The character and purpose of the payment matter: the clause concerns remuneration or a genuine commercial payment, not an unrelated contribution merely described as one.
2. International trade or business outside India - clause (b)
Clause (b) covers payments received in international trade or commerce and payments arising in the ordinary course of business carried on outside India. It recognises normal commercial transactions rather than treating every cross-border receipt as prohibited foreign contribution.
3. Acting as agent in a government transaction - clause (c)
A person acting as an agent of a foreign source in a transaction between that foreign source and the Central Government or a State Government may receive the relevant payment under clause (c), subject to the Act.
4. Gifts to members of an Indian delegation - clause (d)
A gift or presentation made to a member of an Indian delegation is covered only when its acceptance or retention complies with the rules made by the Central Government. The exception is therefore conditional, not automatic.
5. Contribution from a relative - clause (e)
Clause (e) covers foreign contribution received from a relative. For FCRA purposes, the expression should be read with the definition of relative in Section 2 and the applicable rules and reporting requirements. A receipt from a relative may therefore be treated differently from a receipt from an unrelated foreign source.
6. Ordinary remittance through an official channel - clause (f)
Clause (f) covers an ordinary-course remittance received through an official channel, a post office or an authorised person in foreign exchange under the Foreign Exchange Management Act, 1999. The provision addresses legitimate remittance channels and should be applied according to the true nature of the transaction.
7. Scholarship or stipend - clause (g)
A scholarship, stipend or payment of a similar nature is included in the statutory exceptions. This allows genuine educational or comparable support of the kind described in the clause without applying the Section 3 prohibition merely because the source is foreign.
Why the Proviso Matters
The proviso prevents Section 4 from being used as a general exemption. If a person covered by Section 3 accepts foreign contribution for a purpose outside clauses (a) to (g), the Act treats the contribution as accepted in contravention of Section 3. The purpose and factual nature of the receipt should therefore be identified before relying on Section 4.
Last reviewed: 27 September 2026. This page is an explanatory legal-information article. The statutory text and applicable rules should be checked for the facts of a particular matter.