charity firm

Manager Medical Affairs



I am from Bangalore and wanted to start a Trust to provide financial aid to the needy for healthcare purposes. The source of funds, I am looking it is from NRIs. So now, he mentioned that to get foreign funds, we need to take approval from Home Ministry and it is a tedious process. Need to spend a good amount of time before getting that approval and hence it shall take time. It is explained in this post as well:


But now, as an alternative I thought if I can start a proprietary firm for the same. In that case, will I be able to receive funds because RBI lays down guidelines that FDI is not possible in sectors like Agriculture, Real estate, Gambling, Tobacco Industry, Print media and few more. But this firm shall not come under this.

Some things which I am concerned is that, here no shares shall be given. I understand it is taxable, but if I am spending the funds for charity, then tax is not an issue. Is this allowed? Kindly guide me on this.


Mr Bharat,

Pease be sure about your constitution first.

First you wanted to start a trust.

Lateron you wanted to start proprietory firm.

Proprietor is different from a firm.

Whatever may be your constitution, your funds flow from foreign countries being charity purpose. You have to obtain permission of RBI since RBI is monitoring money transactions flowing from foreign countries to arrest anti-money-laundering activities in our country.

Once you obtain permission from RBI it would be easy for you to recieve funds through any bank identified by you without any trouble. The bank which recieves your funds is supposed to report to RBI regularly in cases where funds are Rs.50,000/- and above. It is better you may write to Banking Operations Department (BOD) in RBI furnishing full particulars and apply for their permission.







Manager Medical Affairs

Dear Ramachary,

Many thanks for your response. Yes, clarity is not there as you mentioned but that was because of restrictions. My idea is to get foreign funds for healthcare charity in hospitals in Bangalore. For this I had planned to start a trust, but now I learnt that FCRA registration is required for that and it takes 3 years audit for getting that. Hence, I thought if I start a proprietorship concern (hope word is correct), can I get such foreign funds again for charity purpose. With this, I need not wait for 3 years to start operating. Hence asked this.

Now as per your response, can I take it like, for a proprietorship, permission from RBI is sufficient. Hope this is legal and allowed. Can I trouble you to detail regarding the procedure or provide a link for further information and action? And is FCRA required for getting funds from NRIs?


Mr. Bharat,

I think you are right that you have to apply to Ministry of Home Affairs under Rule 9 of Foreign Contribution (Regulation) Rules, 2011 read with Sec.11 of Foreign Contribution (Regulation) Act, 2010. for obtaining permission for accepting the contribution of funds from foreign countries to your venture.

As you wish to start the venture now the question of filing any 'audited statements does not arise. You may apply to the Ministry of Home Affairs for permission or registration. RBI's permission is not required.

You have to seek for permission by making an application covering various points such as:-

(i) that your concern is not fictitious or benami;

(ii) it has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another;

(iii) it has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country;

(iv) it has not been found guilty or diversion or mis-utilisation of its funds; 

(v)it is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends;

(vi) it is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes;

(vii) it has not contravened any of the provisions of this Act;

(viii) it has not been prohibited from accepting foreign contribution; 

Later you can apply for registration in Form No. FC3.

Necesary fee is to be deposited for ths purpose.

On line request for permission or registration is available in google.

While addressing any one in this club please note to pre-fix 'Mr.' before his name




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