Section 41 FCRA 2010: Composition of Certain Offences
Section 41 of the Foreign Contribution (Regulation) Act, 2010 provides a statutory mechanism for compounding eligible FCRA offences before prosecution is instituted. Compounding allows a specified offence to be resolved on payment of the prescribed sum, subject to the Act, the Rules and the applicable Central Government notification.
Updated for the compounding framework notified up to 22 June 2026Meaning of composition or compounding under Section 41
Compounding is a statutory settlement of an eligible offence. Instead of prosecution for the compounded offence, the person or association pays the amount prescribed by the Central Government and complies with the applicable procedure. It is not an automatic waiver of every FCRA default: the particular contravention must fall within the offences notified for compounding and the competent authority must deal with the application under the governing framework.
Text of Section 41 of the Foreign Contribution Regulation Act 2010
41. Composition of certain offences.
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by an individual or association or any officer or employee thereof), not being an offence punishable with imprisonment only, may, before the institution of any prosecution, be compounded by such officers or authorities and for such sums as the Central Government may, by notification in the Official Gazette, specify in this behalf.
(2) Nothing in sub-section (1) shall apply to an offence committed by an individual or association or its officer or other employee within a period of three years from the date on which a similar offence committed by it or him was compounded under this section.
Explanation. For the purposes of this section, any second or subsequent offence committed after the expiry of a period of three years from the date on which the offence was previously compounded shall be deemed to be a first offence.
(3) Every officer or authority referred to in sub-section (1) shall exercise the powers to compound an offence, subject to the direction, control and supervision of the Central Government.
(4) Every application for the compounding of an offence shall be made to the officer or authority referred to in sub-section (1) in such form and manner along with such fee as may be prescribed.
(5) Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, against the offender in relation to whom the offence is so compounded.
(6) Every officer or authority referred to in sub-section (1), while dealing with a proposal for the compounding of an offence for a default in compliance with any provision of this Act which requires an individual or association or its officer or other employee to obtain permission or file or register with, or deliver or send to, the Central Government or any prescribed authority any return, account or other document, may direct, by order, if he or it thinks fit to do so, the individual or association or its officer or other employee to file or register such return, account or other document within the time specified in the order.
Conditions for compounding an FCRA offence
1. The offence must be eligible for compounding
Section 41 excludes an offence that is punishable with imprisonment only. In practice, the applicable Central Government notification must also cover the particular contravention and specify the competent officer or authority and the compounding amount.
2. Compounding is linked to the stage before prosecution
Section 41(1) permits compounding before institution of prosecution. Once an eligible offence is compounded at that stage, Section 41(5) bars institution of prosecution for that compounded offence against the offender concerned.
3. Similar offence within three years is excluded
Under Section 41(2), the benefit does not apply where a similar offence is committed within three years from the date on which the earlier similar offence was compounded. The Explanation treats a second or subsequent offence committed after expiry of that three-year period as a first offence for this purpose.
4. Compliance may still have to be completed
Compounding does not necessarily end the underlying filing or regulatory requirement. Section 41(6) permits the competent authority, in appropriate cases, to direct filing, registration or delivery of a required return, account or other document within a specified time.
Rule 21: how to apply for compounding
Rule 21 of the Foreign Contribution (Regulation) Rules, 2011 provides the procedural route for an application under Section 41. The rule provides for an application to the Secretary, Ministry of Home Affairs, New Delhi on plain paper, accompanied by the prescribed fee of Rs. 1,000 in the manner stated in the rule. Applicants should check the current FCRA portal instructions before filing because administrative filing and payment processes may be updated.
Current compounding notifications
The Central Government exercises the power under Section 41(1) through Gazette notifications specifying compoundable contraventions, the sums payable and the competent officers. The principal current framework is Notification S.O. 3025(E), dated 1 July 2022, as amended, including S.O. 778(E), dated 20 February 2023 and S.O. 3287(E), dated 22 June 2026.
The 22 June 2026 notification further revised specified entries in the 2022 table, including contraventions concerning administrative expenditure beyond the permissible limit, speculative activity, utilisation for a purpose other than that for which foreign contribution was received, and specified contraventions connected with Section 11 and the scope of registration. The precise notified amount depends on the contravention, so the current Gazette table should be checked before calculating a compounding sum.
Official FCRA resources
Practical points before making an application
Identify the exact provision breached, confirm that the offence is included in the current compounding notification, check whether a similar offence was compounded during the preceding three years, calculate the amount strictly under the applicable notified entry, and complete any pending return, account, permission or document requirement that may be relevant to the default. Supporting records should clearly explain the nature, period and amount of the contravention.
This page explains Section 41 for general legal information. For a particular FCRA default, the Act, Rules, latest Gazette notifications and current Ministry of Home Affairs filing instructions should be read together.