Union Finance Minister Nirmala Sitharaman.
Credit: PTI Photo
New Delhi: The Finance Ministry on Thursday modified the compounding rules for offences under the Foreign Exchange Management Act (FEMA) by raising the monetary limits for adjudications by RBI officials and allowing online payments.
As per the Foreign Exchange (Compounding Proceedings) Rules, 2024, the fees for filing compounding application has been doubled to Rs 10,000 plus GST, from Rs 5,000 earlier.
The notification further said that Assistant General Manager rank officials of the RBI can decide on compounding application of up to Rs 60 lakh, up from Rs 10 lakh earlier.
Similarly, the monetary limits for Deputy GM and General Manager rank officers have been raised to Rs 2.5 crore and Rs 5 crore respectively.
Chief General Manager in the RBI will be authorised to decide on compounding cases of above Rs 5 crore.
In a statement, the Finance Ministry said the Foreign Exchange (Compounding Proceedings) Rules, 2024, will replace the Rules issued in 2000.
In pursuance of the Union Budget 2024-25 announcement by Finance Minister Nirmala Sitharaman to simplify rules and regulations for Foreign Investments, the Department of Economic Affairs (DEA), Ministry of Finance, has today notified the Foreign Exchange (Compounding Proceedings) Rules, 2024.
As part of a broader initiative to streamline and rationalize existing rules and regulations to further facilitate ease of doing business, the compounding proceeding rules were comprehensively reviewed in consultation with the Reserve Bank of India, it said.
"The emphasis has been on enabling provisions to expedite and streamline the processing of compounding applications, introduction of digital payment options for application fees and compounding amounts, and a focus on simplification and rationalization of the provisions to eliminate ambiguity and clarify the process," the Ministry said.
These amendments indicate commitment of the Government towards promoting ‘ease of investment’ for investors and ‘ease of doing business’ for businesses, it added.
Nangia Andersen India, Partner -Regulatory, Angali Malhotra said one of the key updates in the Rules include a notable upward revision of monetary limits for contraventions subject to compounding, with the revised limits delegating greater responsibility across various levels of authority. This restructuring imposes that cases are handled more efficiently, reflecting the increased sums involved in such contraventions.
"This revamped structure reflects the evolution of both the regulatory environment and payment systems, providing more streamlined and efficient processes for stakeholders involved," Malhotra said.