Penalties under FEMA

Jul 8, 2021 | Blog, FEMA

 

Foreign Exchange management Act, 1999 (FEMA) was passed on 29th December 1999 in Parliament replacing the Foreign Exchange Regulation Act (FERA). The new regime is made consistent with the framework laid down by the World Trade Organisation. FEMA enabled all cross border trades & payments and promotes orderly development of foreign exchange market in India.

Section 13 of FEMA lays down the Penal provisions. As per Section 13(1), if any person contravenes any provision or any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorization is issued by the Reserve Bank, an order shall be passed penalising the contravener up to:

As per Section 13 (1A), if any person is found to have acquired any foreign exchange, foreign security or immovable property situated outside India of the aggregate value exceeding the prescribed threshold under section 37A, he shall be liable to a penalty up to three times the sum involved in such contravention and direct confiscation of value equivalent to foreign exchange, security and money or property situated in India. Also, the offence is punishable with imprisonment for a term which may be extended to 5 years with fine (Section 13 (1C)).

Under Section 13 (1B), the Adjudicating Authority if deems fit, may recommend the initiation of the prosecution after recording the reasons in writing. And if the Director of Enforcement is satisfied, he may after recording the reasons in writing, direct the prosecution of the guilty person by filing a criminal complaint by an officer not below the rank of assistant director.

The Adjudicating Authority under Section 13(2), adjudging the contravention under section 13 (1), may in addition to any penalty, direct that any currency, security or any money or property in respect of which the contravention has taken place shall be confiscated to Central Government and if the contravener holds any foreign exchange, it shall be brought back to India or retained outside as per the direction made in this behalf.

For the purpose of this section, ‘’property’’ includes:

Enforcement of Orders of Adjudicating Authority

If the person contravening the provisions of the Act fails to make full payment of the penalty imposed on him under Section 13 within the period of 90 days from the date on which notice of such penalty is served on him, he shall be liable to civil imprisonment under this section.

But no order of arrest and detention in civil prison of the defaulter shall be made unless the Adjudicating Authority has served a show cause notice asking defaulter to appear before authority on the specified date and showing the relevant cause why he should not be committed to the civil prison and unless the Adjudicating Authority is satisfied:

The Adjudicating Authority may issue a warrant for the arrest of the defaulter if it’s satisfied by affidavit or otherwise that defaulter is likely to abscond or leave the local limits of the jurisdiction of the Adjudicating Authority. Also, warrant can be issued for the arrest if the defaulter pursuant to the show cause notice served does not make the appearance.

Once the defaulter pays the amount mentioned in the warrant of arrest along with the cost of arrest, he shall be released with an immediate effect.

    captcha

    Recent Blogs

    How Can NRI Transfer Money to India? A Complete Guide

    For Non-Resident Indians (NRIs), transferring money to India is a common necessity, whether for family support, investments, or property purchases. With numerous transfer options available today, NRIs can find a suitable method that offers both convenience and...

    Why a Tax Advisor is Essential for Your Business

    Running a business involves a multitude of responsibilities, from managing finances and scaling operations to ensuring compliance with ever-evolving tax laws. While tax season can be a daunting time for business owners, partnering with a tax advisor can transform the...

    Who Needs an Internal Audit in India?

    In India, internal audits are becoming more of a necessity than a choice for organizations of all types and sizes. Whether you’re running a listed company, a private firm, or even a non-profit organization, the role of internal auditing in ensuring financial...

    The Role of Accounting in Business Decision Making

    In today’s fast-paced and ever-evolving business environment, accounting plays a pivotal role in guiding businesses toward sound decisions. Whether you're running a small startup or a large corporation, understanding the financial health of your business is crucial....

    Effective Strategies for Managing Business Debt

    Running a business often involves taking on debt to fuel growth, manage operations, or navigate tough times. But if not managed properly, business debt can become overwhelming and hinder your success. In this article, we'll explore effective strategies for managing...

    Taxation of Expatriate Employees in India

    Understanding the taxation of expatriate employees in India is crucial for both individuals and businesses. Navigating the complex tax laws can be daunting, but it's essential for compliance and financial planning. Who is Considered an Expatriate in India? Definition...

    Choosing Between the New Tax Regime vs. Existing Old Regime

    Introduction Navigating the complexities of income tax in India can be daunting, especially with the introduction of the new tax regime. As a taxpayer, deciding between the new tax regime and the existing old regime can significantly impact your financial planning and...

    Complete Understanding About GSTR-1A

    Introduction to GSTR-1A When it comes to Goods and Services Tax (GST) compliance, there are numerous forms and procedures businesses need to be familiar with. One such form is GSTR-1A. But what exactly is GSTR-1A, and why is it important? GSTR-1A is a GST return form...

    Tax Planning Strategies for NRIs Returning to India

    Introduction Tax planning can be a complex process, especially for Non-Resident Indians (NRIs) who decide to return to India. As you prepare to transition back to your home country, understanding the tax implications is crucial to ensure you don’t end up overpaying or...

    MAKE AN IMPRESSION WITH US