If you are stuck in such a situation, here is what to do.

Mr. Rohan Gupta, a resident of Jayanagar, found himself in a deeply distressing situation. His close friend, Mr. Alok Sharma, was diagnosed with a critical illness in its advanced stage. Doctors at the City Care Hospital informed the family that the only viable treatment involved a series of intensive therapies, with an estimated cost of nearly ₹25 lakhs. The prognosis was grim, with a very limited timeframe to begin treatment. Mr. Sharma’s family had exhausted their savings, and while friends like Rohan had pooled their resources, they were still far from the required amount.

Feeling helpless, Rohan decided to explore online crowdfunding. However, he was overwhelmed by the number of platforms available, such as ‘SahayataConnect’ and ‘CureFund’. He was concerned about the platform commissions, the verification process, potential tax implications, and the overall legality of raising such a large sum online. He worried about choosing the wrong platform, which could delay the funds and jeopardise his friend’s chances of survival.

Advice in such cases

Facing a medical emergency is emotionally and financially draining. When turning to crowdfunding, it’s essential to proceed with caution and awareness of the legal landscape. Here are some crucial steps to consider:

• Platform Due Diligence: Thoroughly research crowdfunding platforms. Compare their commission rates, payment processing fees, verification procedures, and payout timelines. Opt for well-established platforms with a proven track record in medical fundraising.
• Transparency is Key: Be completely transparent in your campaign. Clearly state the medical condition, the hospital where treatment is being sought, and provide a detailed breakdown of the estimated costs. Uploading authentic medical documents builds trust with potential donors.
• Understand Tax Implications: Funds received through crowdfunding can have tax implications. While there are exemptions for funds received for medical treatment, the rules can be complex. It is crucial to understand your liabilities.
• Bank Account Management: It is advisable to use a separate bank account solely for receiving and disbursing the donated funds. This creates a clear financial trail and simplifies accounting for both personal and legal purposes.
• Consult with Lawyer: Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

While India does not have a specific “Crowdfunding Act,” several existing laws govern such activities:

• Income Tax Act, 1961: Section 56(2)(x) of the Act deals with the taxation of money received without consideration (gifts). However, there are exemptions for sums received for medical treatment under specific conditions. Further, Section 80DDB allows for deductions on expenses incurred for the treatment of specified diseases. The applicability can be complex and depends on the specific facts of the case.
• Bharatiya Nyaya Sanhita, 2023 (BNS): If funds are raised using false pretences or are misappropriated, provisions related to cheating and fraud, such as Section 318 of the BNS, can be invoked. Both the fundraiser and the platform must ensure the campaign’s authenticity to avoid legal trouble.
• Information Technology Act, 2000: This Act governs all online activities, including the operations of crowdfunding platforms. It has provisions related to data protection, privacy, and penalties for online fraud and misrepresentation.
• Foreign Contribution (Regulation) Act, 2010 (FCRA): If you expect to receive donations from foreign sources, this Act becomes extremely important. Individuals are generally prohibited from directly receiving foreign contributions. Reputable crowdfunding platforms usually have FCRA-compliant mechanisms to legally process donations from abroad.

If you are the complainant

If you are the one organizing the fundraiser for a loved one, you are the complainant in this context. Your primary responsibility is to act with utmost integrity.

• Maintain Meticulous Records: Keep a file of all medical reports, hospital bills, payment receipts, and correspondence. This documentation is vital for verification by the platform and for transparency with donors.
• Provide Regular Updates: Post regular updates on the patient’s health and the utilization of funds on the campaign page. This maintains donor confidence and engagement.
• Secure Personal Data: Ensure that while providing proof, you are careful about the patient’s sensitive personal and medical data, sharing only what is necessary for verification.
• Consult with Lawyer: Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

In this context, a victim could be a donor who has been defrauded or a patient whose campaign has been hijacked or misrepresented by someone else.

• Report to the Platform: Immediately report the fraudulent activity to the crowdfunding platform’s grievance or support team. Provide them with all the evidence you have.
• File a Police Complaint: Visit the nearest police station or file a complaint online with the National Cyber Crime Reporting Portal. This is a critical step to initiate a formal investigation.
• Preserve All Evidence: Take screenshots of the campaign, save all emails and messages, and keep records of any financial transactions related to the fraud.
• Consult with Lawyer: Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

When a complaint of crowdfunding fraud is filed, the police, particularly the cybercrime cell, will typically take it seriously due to the financial and emotional elements involved. They will likely register a First Information Report (FIR) under relevant sections of the Bharatiya Nyaya Sanhita, 2023 (for cheating/fraud) and the Information Technology Act, 2000. The investigation involves tracing the digital trail, coordinating with the crowdfunding platform for user data, and analyzing bank account transactions to follow the money trail. However, investigations can be complex if the perpetrator has used sophisticated methods to hide their identity or if jurisdictional issues arise.

FAQs people normally have

• Are funds raised via crowdfunding for medical needs taxable?
  

  Generally, funds received from non-relatives for medical emergencies are not treated as income. However, the law has nuances. If the amount is very large or if it’s not fully utilized for the stated purpose, tax authorities might scrutinize it. It is always best to consult a chartered accountant or a lawyer.

  
  
• What happens to the excess money if we raise more than needed?
  

  This is an ethical and legal grey area. The best practice is to be transparent. Many platforms have policies for this, often suggesting that excess funds be donated to another verified campaign or a registered NGO. Using the funds for purposes other than what was stated can be considered a breach of trust and may have legal consequences.

  
  
• Can we accept donations from people living outside India?
  

  Yes, but only through FCRA-compliant channels. Most major crowdfunding platforms in India are equipped to handle foreign donations legally. Attempting to receive foreign funds directly into a personal account without FCRA registration is illegal and can lead to severe penalties.

  
  

What evidence is required?

To launch a legitimate campaign, you will need:

• Official medical records confirming the diagnosis.
• A letter from the treating doctor or hospital explaining the condition and recommended treatment.
• A detailed cost estimate from the hospital, including breakdowns for surgery, medication, room rent, etc.
• Identity proof of the patient and the person managing the campaign (e.g., Aadhar Card, PAN Card).
• Bank account details of the patient or a close relative for fund transfer.

How long will the investigation take?

The timeline varies significantly. The verification process by the crowdfunding platform itself usually takes between 24 hours to a week. If a fraud complaint is filed with the police, the investigation can be lengthy. A simple case might be resolved in a few months, but complex cases involving multiple jurisdictions or sophisticated digital masking techniques can take a year or even longer to conclude.

Advocate Sudhir Rao, Supreme Court of India