Govt. Notifies New Rules for Compounding Under FEMA | Specifies List of Non-Compoundable Offences, Expands Pecuniary Limits
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- Last Updated on 16 September, 2024
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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
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