Ministry of Finance

Department of Economic Affairs notifies Foreign Exchange (Compounding Proceedings) Rules, 2024 in pursuance of Union Budget 2024-25 announcement

These Rules supersede the Foreign Exchange (Compounding Proceedings) Rules, 2000

New amendments will simplify and update the provisions towards ‘ease of investment’ and ‘ease of doing business’

In pursuance of the Union Budget 2024-25 announcement by Union Minister for Finance and Corporate Affairs Smt. 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 under powers given under section 46 read with section 15 of the Foreign Exchange Management Act (FEMA), 1999. The amended Rules will supersede the existing Foreign Exchange (Compounding Proceedings) Rules, which were issued in 2000.

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.

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.

These amendments indicate commitment of the Government towards promoting ‘ease of investment’ for investors and ‘ease of doing business’ for businesses.

CLICK HERE TO ACCESS NOTIFICATION

****

NB/KMN

Compounding rules modernisation streamlines application processing and introduces digital payments to ease investment. The Foreign Exchange (Compounding Proceedings) Rules, 2024, notified under FEMA, supersede the 2000 Rules and create a streamlined framework to simplify and clarify compounding procedures for foreign exchange contraventions. They prioritise expedited processing of compounding applications, introduce digital payment options for fees and compounding amounts, and rationalise provisions to promote ease of investment and ease of doing business, following consultation with financial sector authorities.