FEMA Penalty & Compounding
Estimate maximum FEMA penalty and Late Submission Fee; compounding overview.
The FEMA Penalty and Compounding estimator shows the maximum penalty exposure under Section 13 of FEMA, 1999 for various contraventions and helps assess whether compounding is viable. Actual penalties depend on the facts, voluntary disclosure and the compounding authority's discretion. It is for companies and individuals reviewing a FEMA contravention.
Use the FEMA Penalty & Compounding
Penalty Estimate (Maximum)
Base penalty₹ 0
Continuing default (up to ₹5,000/day)₹ 0
Maximum penalty₹ 0
Per Section 13 of FEMA, 1999. If the contravention is compounded under Section 15, the compounding amount is worked out under RBI's computation matrix, not as a percentage of this maximum.
Estimate maximum penalty exposure under Section 13 of FEMA, 1999 for various contraventions and assess compounding viability. Actual penalty depends on facts, voluntary disclosure and compounding authority's discretion.
FEMA Penalty Framework
| Contravention | Maximum Penalty | Note |
|---|---|---|
| Quantifiable contravention (where amount is determinable) | Up to 3 times the sum involved | Per Section 13(1) FEMA. Compounding available under Section 15. |
| Non-quantifiable contravention | Up to Rs 2,00,000 | Per Section 13 FEMA. Plus up to Rs 5,000 per day for continuing default. |
| Continuing contravention (per day, after first day) | Up to Rs 5,000 per day | For every day after the first day during which the contravention continues (Sec 13(1)). |
| Authorised person: breach of RBI direction or failure to file a return (Sec 11(3)) | Up to Rs 10,000 + up to Rs 2,000/day | Applies to authorised persons (e.g. AD banks, money changers); per-day amount for continuing contravention. |
| Delay in filing FC-GPR / FC-TRS / Form FC / ECB 2 (transaction returns) | LSF: Rs 7,500 + (0.025% x A x n) | A = amount involved, n = years of delay (rounded up to the nearest month, 2 decimals); capped at 100% of A, rounded up to the nearest hundred. Available up to 3 years from the due date; beyond that, compounding. |
| Delay in filing APR / FLA / Form OPI / ECB 1 (non-flow returns) | LSF: Rs 7,500 per return | Flat LSF, available up to 3 years from the due date; beyond that, compounding. |
| Delay in filing Form ECB 2 | LSF (formula above) | Each delayed ECB 2 under an LRN is a separate instance for LSF (A.P. (DIR Series) Circular No. 25 dated 30 March 2026). |
| Non-realisation / non-repatriation of export proceeds | Up to 3x export value | Contravention of Section 8 FEMA; penalty under Section 13. |
Compounding under Section 15:
- Law: Foreign Exchange (Compounding Proceedings) Rules, 2024 (notified 12 September 2024, replacing the 2000 Rules) and RBI's Master Direction – Compounding of Contraventions under FEMA, 1999 (issued 1 October 2024; amended 22 and 24 April 2025).
- Authority: Reserve Bank of India for most contraventions (the officer level depends on the sum involved); the Directorate of Enforcement for contraventions of Section 3(a) of FEMA.
- Limits: A contravention is generally not compounded by RBI if a similar contravention was compounded within the preceding three years. Serious contraventions (for example, suspected money laundering or terror financing) may be referred to the Directorate of Enforcement instead.
- Procedure: Application with a fee of ₹10,000 plus GST; the Rules provide for the contravention to be compounded within 180 days of receiving a complete application, and the compounding amount is payable within 15 days of the order.
- Quantum: Worked out under RBI's computation matrix — a fixed amount plus a variable amount that is a percentage of the sum involved and rises with the period of contravention. For miscellaneous non-reporting contraventions, the compounding authority may cap the amount at ₹2,00,000 per regulation / rule contravened (A.P. (DIR Series) Circular No. 04/2025-26 dated 24 April 2025), depending on the facts.
- Effect: Once the compounding amount is paid, no further proceedings are taken against the applicant for that contravention.
- Late Submission Fee (LSF): Reporting delays of up to three years from the due date can be regularised by paying LSF instead of compounding: ₹7,500 + (0.025% × amount × years of delay) for transaction returns (capped at the amount involved), or a flat ₹7,500 for other returns such as APR and FLA (A.P. (DIR Series) Circular No. 16 dated 30 September 2022).
When to act:
The LSF route is available only within three years of the due date, and the compounding matrix increases the variable amount with the period of contravention. If a non-compliance is identified, it is advisable to review it promptly with your AD bank or adviser.
Important note: This tool provides an indicative output only. It does not factor in every special provision, surcharge, exception, or recent notification. Verify with the firm before acting on any computation.
Frequently Asked Questions
What is the penalty for contravention of FEMA?
Under Section 13 of FEMA, 1999, the penalty can be up to three times the sum involved where the amount is quantifiable, or up to Rs 2 lakh where it is not. A further penalty of up to Rs 5,000 per day can apply for each day the contravention continues after the first day. Actual penalties depend on the facts of each case.
What is compounding under FEMA?
Compounding under Section 15 of FEMA allows a person to admit a contravention and settle it by paying a compounding amount, which closes the matter without further proceedings. Applications are generally made to RBI, or to the Enforcement Directorate in certain cases. The amount is worked out under RBI's computation matrix: a fixed amount plus a percentage of the sum involved that rises with the period of contravention. For miscellaneous non-reporting contraventions, RBI may cap it at Rs 2 lakh per regulation or rule contravened.
How does the FEMA penalty estimator work?
Choose the contravention type and enter the sum involved and any days of continuing default (or, for a late-filed return, the months of delay). For quantifiable cases the tool takes three times the amount; for non-quantifiable cases it uses Rs 2 lakh; and it adds Rs 5,000 for each day the contravention continues after the first day. For late-filed FEMA returns, it instead computes the Late Submission Fee: Rs 7,500 plus 0.025% of the amount involved per year of delay for transaction returns, capped at that amount, or a flat Rs 7,500 for other returns, for delays of up to three years.
Due in the next 30 days
FEMAFull compliance calendar → Statutory dates, which can be extended by notification. General information only.