Compounding of an offence permits settlement before prosecution subject to government supervision and procedural filing conditions.

Compounding under Section 41 allows specified officers to compound offences not punishable with imprisonment only, before prosecution, under Central Government supervision; compounding bars subsequent prosecution in respect of that offence. Applications are to be made to the designated officer or to the Secretary, Ministry of Home Affairs in electronic form with the prescribed fee. The compounding authority may require filing or registration of returns, accounts or documents as a condition of compounding, and the penalty on compounding is capped by reference to the value of the foreign contribution received.

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