FEMA Penalty & Compounding
Estimate compounding fee for contraventions under FEMA.
Estimate maximum penalty exposure under Section 13 of FEMA, 1999 for various contraventions and assess compounding viability. Actual penalty depends on facts, voluntary disclosure and compounding authority's discretion.
Penalty Estimate (Maximum)
Base penalty₹ 0
Continuing default (₹5,000/day)₹ 0
Maximum penalty₹ 0
Per Section 13 of FEMA, 1999. Compounding under Section 15 typically reduces penalty to 5-50% of maximum, depending on circumstances.
FEMA Penalty Framework
| Contravention | Maximum Penalty | Note |
|---|---|---|
| Quantifiable contravention (where amount is determinable) | Up to 3 times the sum involved | Per Section 13 FEMA. Compounding available. |
| Non-quantifiable contravention | Up to Rs 2,00,000 | Per Section 13 FEMA. Plus Rs 5,000 per day for continuing default. |
| Continuing contravention (per day, after first day) | Rs 5,000 per day | Continuing default during which contravention continues. |
| Failure to submit information (Sec 11(3)) | Up to Rs 10,000 + Rs 2,000/day | Plus per-day penalty for continuing default. |
| Delay in filing FC-GPR (FDI inflow reporting) | Late Submission Fee (LSF) | Per RBI LSF matrix (varies by delay duration and amount). |
| Delay in filing APR (Annual Performance Return for ODI) | Late Submission Fee (LSF) | LSF applies for delays up to 3 years; beyond 3 years requires compounding. |
| Delay in filing ECB-2 (ECB monthly return) | Late Submission Fee (LSF) | RBI LSF matrix applies. |
| Non-realisation / non-repatriation of export proceeds | Up to 3x export value | Compounding through RBI / Enforcement Directorate. |
Compounding under Section 15:
- Authority: Reserve Bank of India (most cases) or Enforcement Directorate (cases involving hawala / FERA-type violations).
- Eligibility: Available for most FEMA contraventions; not available for serious violations involving money laundering / terror financing.
- Procedure: File compounding application in prescribed form with admission of contravention. Hearing by Compounding Authority. Order within 180 days.
- Quantum: Compounding fee typically ranges between 5-50% of the maximum penalty, calculated using RBI's prescribed matrix considering sum involved, duration, nature of breach, and conduct (voluntary disclosure vs. detected by RBI).
- Effect: Compounding closes the matter - no further proceedings. Does not require admission for purposes of other laws.
- Late Submission Fee (LSF): For procedural delays (FC-GPR, APR, FLA, ECB-2 etc.), RBI accepts LSF without formal compounding for delays up to specified period (matrix-based).
When to act:
Voluntary disclosure (suo motu compounding application) typically attracts lower compounding fees than violations detected during RBI inspection or by an AD Bank. If a non-compliance is identified, consult immediately - delay reduces options.
Important note: This tool provides an indicative output only. It does not factor in every special provision, surcharge, exception, or recent notification. Verify with the firm before acting on any computation.
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