Govt. Notifies New Rules for Compounding Under FEMA | Specifies List of Non-Compoundable Offences, Expands Pecuniary Limits

  • Blog|News|FEMA & Banking|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 16 September, 2024

Recent Posts

Blog, News, Insolvency and Bankruptcy Code

IBBI Proposes Changes in Liquidation Regulations to Ensure Transparency in Compromise or Arrangement Schemes

Blog, News, Insolvency and Bankruptcy Code

IBBI Proposes to Strengthen the Regulatory Framework Governing Monitoring Committees Under IBC

Latest from Taxmann

Compounding Under FEMA

Notification G.S.R. 566 (E), Dated: 12-09-2024

The Ministry of Finance has notified the Foreign Exchange (Compounding Proceedings) Rules, 2024. The new norms supersede the existing Foreign Exchange (Compounding Proceedings) Rules, 2000, and provide more clarity on non-compoundable contraventions. The major changes are as follows.

1. Newly notified norms specify the list of non-compoundable contraventions

The extant norms did not provide a specific list of the contraventions that are non-compoundable. Rule 9 of the newly notified rules provides the list of contraventions that cannot be compounded.

The following are the non-compoundable contraventions as per Rule 9

  • where the amount involved is not quantifiable
  • where the provisions of section 37A of the Act are applicable
  • where the Directorate of Enforcement is of the view that the proceeding relates to a serious contravention suspected of money laundering, terror financing or affecting the sovereignty and integrity of the nation, the compounding authority shall not proceed with the matter and shall remit the case to the appropriate Adjudicating Authority for adjudicating contravention under section 13
  • where the Adjudicating Authority has already passed an order imposing penalty under section 13 of the Act
  • where the compounding authority is of the view that the contravention involved requires further investigation by the Directorate of Enforcement to ascertain the amount of contravention under section 13 of the Act

2. Increase in the pecuniary limit of various Compounding Authorities

The newly notified norms increase the pecuniary limit of the various compounding authorities. The increased pecuniary limits are as follows –

  • The Assistant General Manager of RBI can compound the contravention upto Rs. 60 Lakh
  • The Deputy General Manager of RBI can compound the contravention exceeding Rs. 60 Lakh and upto Rs. 2.5 Crores
  • The General Manager of RBI can compound the contravention exceeding Rs. 2.5 Crores and upto Rs. 5 Crores
  • The Chief General Manager of RBI can compound the contravention exceeding Rs. 5 Crores

3. Simplification of the payment process, allows payment via NEFT and other e-modes

As per the newly notified rules, the payment for the application for compounding can be made by demand draft, National Electronic Fund Transfer (NEFT), or other permissible electronic or online modes of payment in favour of the compounding authority. Earlier, only payment by demand draft was allowed.

4. Pending Proceedings to be continued as per Old Compounding Proceeding Rules

Any compounding application pending before the compounding authority at the time these rules come into effect will continue to be governed by the provisions of the Foreign Exchange (Compounding Proceedings) Rules, 2000. These prior rules will apply to such cases, despite being superseded by the 2024 rules.

Click Here To Read The Full Notification

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied