TaxTMI 
TaxTMI 
Foreign Exchange Management Act, 1999 (FEMA) Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) - Compounding of Contraventions under FEMA, 1999
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry 1, 2016. 2. In terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, effective from June 1, 2000, Reserve Bank is empowered to compound contraventions relating to rule 7, 8 and 9 of and the third schedule to the Foreign Exchange Management (Current Account Transactions) (FEMCAT) Rules, 2000. With a view to providing comfort to individuals and corporate community by minimizing transaction costs and the same time taking a serious view of wilful, malafide and fraudulent transactions, the Reserve Bank was, vide GSR 609 (E) dated September 13, 2004 empowered to compound all the contraventions of Foreign Exchange Management Act, 1999 (FEMA) except section 3(a) of FEMA. 3. To ensure more transparency and greater disclosure,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and the subsequent sub-paragraph renumbered accordingly. 4. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned. 5. The directions contained in this circular have been issued under section 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Yours faithfully, (Shekhar Bhatnagar) Chief General Manager-in-Charge Annex Guidance Note on computation of the amount imposed under the Foreign Exchange (Compounding Proceedings) Rules 2000 Ref : A.P. (DIR Series) Circular No. dated May 26, 2016 I. Computation Matrix Type of contravention Existing Formula 1] Reporting Contraventions A) FEMA 20 Para 9....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n percentage: 1st year : 0.30% 1-2 years : 0.35% 2-3 years : 0.40% 3-4 years : 0.45% 4-5 years : 0.50% >5 years : 0.75% (For project offices the amount of contravention shall be deemed to be 10% of the cost of project). 4] All other contraventions except Corporate Guarantees Rs.50000/- + given percentage: 1st year : 0.50% 1-2 years : 0.55% 2-3 years : 0.60% 3-4 years : 0.65% 4-5 years : 0.70% > 5 years : 0.75% 5] Issue of Corporate Guarantees without UIN/ without permission wherever required /open ended guarantees or any other contravention related to issue of Corporate Guarantees. Rs.500000/- + given percentage: 1st year : 0.050% 1-2 years....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (iv) In cases where it is established that the contravenor has made undue gains, the amount thereof may be neutralized to a reasonable extent by adding the same to the compounding amount calculated as per chart. (v) If a party who has been compounded earlier applies for compounding again for similar contravention, the amount calculated as above may be enhanced by 50%. III. For calculating amount in respect of reporting contraventions under para I.1 above, the period of contravention may be considered proportionately {(approx. rounded off to next higher month / 12) X amount for 1 year}. The total no. of days does not exclude Sundays/holidays. IV. Illustrations in respect of few sample cases are appended. ============= Documen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rting to RBI DelayNumber of days Period of contravention (years) Variable Amount applicable as per para I.1 of Guidance Note Amount imposed (Rs.) 1 03.12.2005 547950 04.05.2006 4 months 2 days 0.42 Rs.1000/year 420 2 15.12.2005 232430 26.02.2012 6 years 1 month 11 days 6.17 Rs.1000/year 6170 3 17.04.2006 303070 26.02.2012 5 years 9 months 9 days 5.83 Rs.1000/year 5830 4 18.07.2006 497000 19.08.2006 2 days 0.08 Rs.1000/year 80 5 14.09.2006 605320 23.10.2006 10 days 0.08 Rs.1000/year 80 6 25.12.2006 688380 03.02.2007 9 days 0.08 Rs.1000/year 80 7 26.03.2007 501130 04.04.2007 - 0 0 8 14.07.2007 477860 31.08.2007 19 days 0.08 Rs.1000/year 80 9 25.09.2009 788870 21.02.2012 2 years 3 months 27 days 4.33 Rs.1000/year 43....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... permitted end use / ineligible borrower Date of availing Amount Date of repayment Interest rate Average PLR rate of 3 leading banks@ % gain in interest Period of gain 01.02.2009 320000000 02.01.2016 5.52% p.a. 8% p.a. +2.48% p.a. 7 y Fixed amount as per Para I.5 of guidance note (Rs.) 50000 Variable amount as per para I.5 of guidance note (Rs.) 2400000 (0.75% of 32000000) Notional gain (Rs.) 55552000 Total imposed (Rs.) 58002000 @ The average PLR rate as on the date of drawal of first (and in this case only) tranche of loan Illustration V- Acqusition of immoveable property in India Date of acquisition 21.06.2006 Date on which permission for unwinding given by RBI 27.12.2014 Date of u....