Indian NGOs and nonprofits receiving funds from international sources face a distinct regulatory landscape that's significantly different from regular business payment infrastructure. This guide covers the compliance requirements, the two very different categories of foreign fund receipt, and what payment infrastructure applies to each.
The Critical Distinction: FCRA vs Non-FCRA
This is the most important concept for Indian NGOs receiving foreign funds:
FCRA-Regulated (Foreign Donations)
FCRA (Foreign Contribution Regulation Act, 1976) governs receipt of "foreign contribution" — broadly defined as money, articles, or securities from foreign sources for a definite purpose.
What requires FCRA registration:
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Receiving charitable donations from foreign individuals, organizations, or governments
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Receiving grants from international foundations (Gates Foundation, Ford Foundation, etc.)
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Receiving CSR funds from foreign companies
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Any receipt from a foreign source that is a "contribution" (not payment for services) FCRA compliance requirements:
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Must be registered with MHA (Ministry of Home Affairs) under FCRA
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Foreign contributions must be received only in the designated FCRA bank account at SBI's New Delhi Main Branch (or now at other authorized banks post-2020 amendments)
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Cannot receive FCRA funds through commercial payment gateways (Razorpay, Playto Pay, Cashfree, etc.)
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Separate accounting for FCRA and non-FCRA funds
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Quarterly/annual reporting to MHA For FCRA-registered NGOs: Commercial payment gateways cannot be used for foreign donation receipt. The funds must come through the FCRA-designated bank account directly.
Non-FCRA Foreign Fund Receipt (Service Income)
If your NGO receives foreign payments for services rendered (consulting, research, program implementation for a specific foreign client), this is not FCRA-regulated:
- This is a commercial transaction, not a "foreign contribution"
- Standard cross-border payment infrastructure applies
- FIRA documentation required (same as any Indian business)
- GST treatment as export of services (zero-rated with LUT)
- Regular payment gateways (Playto Pay, Razorpay, Skydo) can be used
Payment Infrastructure for Indian NGOs: By Category
FCRA Foreign Donation Receipt
Do NOT use: Playto Pay, Razorpay, Cashfree, Skydo, PayPal, Wise, or any commercial payment gateway
Must use: Designated FCRA bank account at SBI (or other MHA-approved banks) via direct SWIFT wire transfer from the foreign donor
Process:
- Foreign donor sends wire to NGO's FCRA-designated bank account
- Bank generates FIRA for the inward foreign remittance
- NGO maintains separate FCRA accounts and reporting
- Quarterly utilization certificate filed with MHA
Non-FCRA Foreign Service Income
If your NGO is registered as a legal entity (Section 8 Company, Trust, or Society) and receives payment for services from foreign clients, standard cross-border payment infrastructure applies:
Playto Pay: International card acceptance (4% flat) and VBA wire receipts (1% flat) with FIRA auto-generated. Suitable for NGOs receiving service income from international organizations for consulting, research, training, or program implementation.
Skydo: For large wire receipts ($5K+) from international clients. Flat-fee, auto-FIRA.
Razorpay International / Cashfree International: Alternative for NGOs already in those ecosystems.
Do Indian NGOs Need GST Registration?
Section 8 Companies (nonprofit companies): GST registration required if aggregate annual turnover (including service income from foreign sources) exceeds ₹20 lakh threshold. Foreign service income qualifies as export of services (zero-rated).
Trusts and Societies: GST treatment depends on whether activities are for profit or charitable. Consult your CA for specific structure.
FCRA donations: Foreign contributions received under FCRA are typically not subject to GST (they are contributions, not consideration for service). However, GST registration requirements are based on total turnover including all activities.
Summary: Which Payment Gateway for Which NGO Scenario
| NGO Activity | Fund Type | Payment Gateway |
|---|---|---|
| Foreign charitable donation receipt | FCRA regulated | Only FCRA bank account (not commercial PGs) |
| International grant from foundation | FCRA regulated | Only FCRA bank account |
| Fee for consulting/training for foreign org | Service income | Playto Pay, Skydo, Razorpay International |
| Program implementation paid by foreign agency | Service income | Playto Pay, Skydo |
| Domestic Indian donations | N/A | Razorpay, Cashfree (UPI/cards for Indian donors) |
FAQ
Can Indian NGOs use Razorpay or Playto Pay to receive foreign donations? No, for FCRA-regulated foreign contributions. Foreign charitable donations must be received through the NGO's designated FCRA bank account. Commercial payment gateways cannot be used for FCRA fund receipt.
What is FCRA and does my NGO need it? FCRA (Foreign Contribution Regulation Act) registration is required for Indian NGOs receiving foreign contributions (donations, grants) for charitable purposes. Managed by MHA. Without FCRA, NGOs cannot legally receive foreign donations.
Can Indian NGOs receive service income from foreign organizations through Playto Pay? Yes. Payment for services (consulting, research, training) from foreign organizations is not FCRA-regulated. Standard cross-border payment infrastructure (Playto Pay, Skydo) applies, with FIRA documentation and GST export of services treatment.
What bank do FCRA funds go to? FCRA-designated bank account. Post-2020 FCRA amendments required SBI New Delhi Main Branch as the primary FCRA account; subsequent amendments allowed other authorized banks. Verify current requirements with MHA guidelines and your CA.
Do Indian NGOs pay GST on foreign service income? If GST-registered and annual turnover above threshold: foreign service income qualifies as zero-rated export of services with LUT filing. Domestic donation income may be exempt. Consult CA for NGO-specific structure.