Finance Ministry Updates FEMA Compounding Rules: Higher Limits, Online Payments

The Finance Ministry has revised the compounding rules under FEMA, increasing monetary limits for RBI officials and enabling online payments. These changes aim to streamline processes and facilitate ease of doing business. The revised rules reflect the Union Budget 2024-25's emphasis on simplifying foreign investment regulations.

The Finance Ministry has announced significant changes to the compounding rules for offences under the Foreign Exchange Management Act (FEMA). This includes raising monetary limits for RBI officials and introducing online payment options.

The new Foreign Exchange (Compounding Proceedings) Rules, 2024, now require a filing fee of Rs 10,000 plus GST—double the previous amount. RBI Assistant General Managers can now handle cases up to Rs 60 lakh, significantly higher than the previous Rs 10 lakh.

An extensive review in consultation with the Reserve Bank of India led to these changes as part of efforts to simplify and clarify the process for investors and businesses. This updated structure aims to enhance ease of doing business and reflects the evolved regulatory environment.

(With inputs from agencies.)