The Central Government vide its notification, has amended the Compounding Proceeding Rules, which shall be referred to as Foreign Exchange (Compounding Proceedings) Rules, 2024. These rules shall be in supersession with erstwhile rules i.e. the Foreign Exchange (Compounding Proceedings) Rules, 2000.
The gist of the proposed amendments is summarized in the table below:
| Sr. No. | Particulars | Proposed Amendment | Comments |
|---|---|---|---|
| 1. | Compounding authorities of the Reserve Bank to compound various contraventions |
may compound the contravention in accordance with the rules. |
The revised rules have increased the limits of the sum involved in contravention for each of the officers of the RBI for handling compounding matters. Hence, this will reduce the burden and dependency on higher officers of RBI for compounding matters. This will also reduce the time required for compounding. |
| 2. | Increase in compounding application fees | The fees for making the compounding application is INR 10,000 + applicable GST. | The amended rules have increased the application fees from INR 5,000 to INR 10,000. |
| 3. | Mode of payment of application fees and compounding amount | The application fees and compounding amount can be paid by demand draft or NEFT, or RTGS, or such other permissible electronic or online modes of payment in favor of the compounding authority. | Earlier, such an amount was accepted only in form of a demand draft. However, the amended rules have widened the mode of payment of application fees and compounding amount. Hence, the payment can be made online as well (e.g. NEFT, RTGS and other permissible online mode) |
| 4. | Contraventions not to be compounded in certain cases |
No contravention shall be compounded:
|
These amendment rules specifically cover cases where compounding is not allowed. Hence, the matter involving money laundering, terror finance and cases falling under Section 37A are not eligible for compounding. |
| 5. | Continuation of pending proceedings | Any compounding application pending before the compounding authority, on the date of commencement of these rules, shall be governed by the provisions of the Foreign Exchange (Compounding Proceedings) Rules, 2000 superseded herein. | The on-going compounding matters as on the date of commencement of these new rules shall continue to be governed by the erstwhile rules i.e. the Foreign Exchange (Compounding Proceedings) Rules, 2000. |
Our Comments
Although there are no major changes in the procedure for compounding, however, these rules certainly bring a few changes that were the need of the day, such as exceeding the limits for officers of RBI for handling the cases, opening online payment for application fees and compounding matter and categorically mentioning cases which are not eligible for compounding. These are welcome moves and will be beneficial in promoting the swift resolution of compounding matter.
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