DEA Notifies Foreign Exchange (Compounding Proceedings) Rules, 2024

The Department of Economic Affairs (DEA), Ministry of Finance has notified the Foreign Exchange (Compounding Proceedings) Rules, 2024 in pursuance of the Union Budget 2024-25 notification by the Union Minister of Finance and Corporate Affairs Nirmala Sitharaman. The new rules have been aimed at simplifying the rules and regulations for foreign investments.

The DEA has notified the rules under powers given under section 46 read with section 15 of the Foreign Exchange Management Act (FEMA), 1999. As the new rules have been notified, these amended rules will now supersede the existing Foreign Exchange (Compounding Proceedings) Rules, which were issued in 2000.

Aimed at facilitating the ease of doing business, the compounding proceeding rules were comprehensively reviewed as part of the Centre’s broader initiative to streamline and rationalise the existing rules and regulations. The review has been carried out in consultation with the Reserve Bank of India.

The centre has been putting enhanced emphasis on enabling the provisions to expedite and streamline the processing of compounding applications. Introducing digital payment options for the application fees and compounding amounts along with simplifying and rationalising the provisions in order to tackle ambiguity has been on a priority basis.

As per the statement from the Ministry of Finance, the centre has been working towards the promotion of ease of investing for the investors. Apart from this, the motive of the government has been to strive towards betterment in ease of doing business for the businesses that operate within the country.