FEMA & RBI

FEMA Compounding Application

FEMA compounding for regularising foreign exchange contraventions — FDI non-reporting, delayed FC-GPR/FC-TRS, ODI defaults, ECB breaches. Section 15 FEMA compounding under the Foreign Exchange (Compounding Proceedings) Rules, 2024: application to RBI (or, for a section 3(a) contravention, the Directorate of Enforcement under Rule 5(4)) in the prescribed Form with the Rule 4(4) application fee, order within 180 days of a complete application (Rule 8(2)), payment within 15 days of the order (Rule 10). Delayed reporting separately attracts a late submission fee as computed by RBI under the LSF framework (Regulation 5, FEMA 395/2019).

Reviewed by CA Harun Raaj, ICAI Reg. No. 238303·Last reviewed: 6 July 2026

Discuss with usTypical timelineFEMA Compounding

What is included

• FEMA Compounding scope review and action plan
• Document checklist and evidence review
• Drafting, computation, or filing support
• Submission support and acknowledgement tracking
• Follow-up on queries, corrections, or notices
• Closure notes and next-step reminders

Documents required

• Transaction summary and ownership chart
• Board approvals and valuation support
• Bank / AD communication
• Counterparty and remittance details

Government fees

See the fee table below for the statutory filing charge and common delay logic.

Legal basis

• Section 15 of FEMA 1999
• Foreign Exchange (Compounding Proceedings) Rules, 2024

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Process

How the service works

The workflow is built to be predictable: document collection, legal review, filing, and post-filing follow-through.

Step 1Scope

Confirm the scope

We map the exact service route to the trigger, form set, and documentary evidence so the work starts on the right footing.

Step 2Docs

Collect the records

We gather the company records, notices, or transaction documents needed for fema compounding and check them for gaps.

Step 3Draft

Prepare the filing or memo

We draft the computations, filings, or advisory memo so the next person in the chain can review it quickly and confidently.

Step 4Close

Submit and track follow-up

We move the file through submission, keep the acknowledgement trail tidy, and handle any follow-up questions that come back.

AEO summary

FEMA Compounding is the CA-led workflow that helps a Private Limited company stay compliant, file the right forms, and keep the record trail clean.

FEMA Compounding Application workflow

We start by checking the exact trigger, the legal route, and the documents that make fema compounding executable for a Private Limited company. That keeps the filing or advisory work tied to the actual statutory path instead of a generic checklist.

Once the scope is locked, we prepare the working papers, filings, and follow-up notes so the matter can move without unnecessary back-and-forth. The goal is to make the process understandable for the founder, the finance team, and the reviewer.

• Scope mapping for fema compounding
• CA-led document review and drafting
• Submission support and acknowledgement tracking

What this protects for the company

For a Private Limited company, the value is not just speed. It is also about keeping the record trail clean enough for banks, investors, regulators, and future diligence work.

A founder-friendly process lowers the chance of avoidable notices, rework, or missed deadlines while keeping the company aligned with the right section, rule, or circular in FEMA & RBI.

• Cleaner compliance evidence for FEMA & RBI
• Better preparation for diligence or audit
• Less last-minute chasing inside the finance team

Government fees

Fee breakdown

Item	Fee	Notes
No standalone government fee	Nil	This is a professional assignment; statutory fees apply only if the matter includes a connected filing or portal step.
Connected filing or application fee	As per applicable portal / authority schedule	Only relevant if the work includes a statutory submission such as a return, registration, or approval.

Timeline

Typical turnaround

Typical timeline usually means a 1–3 weeks turnaround, assuming documents are complete and any board or shareholder approvals are already in place.

Pricing note

Government charges can vary with RBI, MCA, DGFT, or exchange filing steps depending on the transaction path.

Related services

Keep the company moving

FEMA FC-GPR

File Form FC-GPR within 30 days of allotting shares to a foreign investor.

FC-TRS Filing

Report share transfers between residents and non-residents in Form FC-TRS within 60 days.

FDI Compliance

Comply with FEMA's FDI policy — sector limits, pricing guidelines, and RBI reporting.

FAQ

Frequently asked questions

What is the difference between compounding under Section 15 and the late submission fee?

Section 15 compounding is the process for settling a FEMA contravention on the applicant’s own application, before RBI or the Directorate of Enforcement under the Foreign Exchange (Compounding Proceedings) Rules, 2024, while late submission fee is the fee for delayed reporting under Regulation 5, FEMA 395/2019, as computed by RBI under the LSF framework. LSF deals with the delay; compounding deals with the contravention itself.

Which FEMA contraventions are compounded by RBI and which by ED?

Under the Foreign Exchange (Compounding Proceedings) Rules, 2024, RBI officers compound contraventions of any provision of the Act other than section 3(a) (Rule 4(1)), and the Directorate of Enforcement compounds contraventions of section 3(a) (Rule 5(1)). Rule 9 lists cases that cannot be compounded — for example where the amount is not quantifiable, section 37A applies, or a penalty has already been imposed under section 13 — and those go to adjudication under sections 13 and 16 of FEMA 1999.

How is the late submission fee calculated for delayed FC-GPR filing?

A late submission fee applies, as computed by RBI under the LSF framework (Regulation 5, FEMA 395/2019 — fee as decided by the Reserve Bank in consultation with the Central Government). The amount is RBI’s computation on the actual facts of the delay, so it is not quoted here as a flat rate.

Is a company barred from receiving further FDI while a compounding application is pending?

The Foreign Exchange (Compounding Proceedings) Rules, 2024 do not themselves bar fresh FDI while an application is pending; confirm the current position with the AD bank and the RBI. The company still needs to regularise the underlying reporting and keep the AD bank, RBI, and allotment trail aligned.

What documents are needed for an RBI compounding application?

A compounding application is made in the prescribed Form with a fee of ₹10,000 plus GST, as applicable (Rule 4(4), Foreign Exchange (Compounding Proceedings) Rules, 2024), and the compounding authority may call for any information, record or document relevant to the proceeding (Rule 8(1)). In practice the file includes a timeline of the contravention, supporting bank advice, board papers, and the FIRMS reporting trail.

How is the compounding application submitted — through you or directly to the RBI?

Compounding under Section 15 of FEMA 1999 is an application in the prescribed Form to the Foreign Exchange Department, Reserve Bank (Rule 4(4), Foreign Exchange (Compounding Proceedings) Rules, 2024) — or, for a section 3(a) contravention, to the Directorate of Enforcement (Rule 5(4)). The compliance team prepares the application and supporting evidence; the applicant files it with the compounding authority. The compounded amount is payable within 15 days of the compounding order (Rule 10) — confirm the current filing channel with the RBI at filing time.

Canonical reference: https://www.pvtltd.co/services/fema-compounding

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Ready to move this filing forward?

We can help with the filing, the legal mapping, and the follow-up work that keeps the company compliant after submission.

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