Section 13 of FEMA : Section 13: Penalties

Explanation using Example

Imagine a businessman, Mr. Sharma, who travels abroad and purchases foreign securities worth $100,000 without proper authorization from the Reserve Bank of India (RBI), which is a requirement under the Foreign Exchange Management Act (FEMA), 1999. This act of Mr. Sharma is a contravention of FEMA.

Upon investigation, it is determined that Mr. Sharma has violated the provisions of FEMA. As per Section 13(1) of FEMA, Mr. Sharma is liable to face adjudication and may be penalized up to three times the amount involved, which in this case would be up to $300,000. If Mr. Sharma continues with the contravention, he could also face an additional daily penalty.

Furthermore, if Mr. Sharma's acquisition of foreign securities is considered a serious contravention, under Section 13(1A), he could face a penalty of up to three times the sum involved and confiscation of equivalent value property situated in India.

If the Adjudicating Authority finds it appropriate, as per Section 13(1B), they could recommend prosecution, leading to Mr. Sharma facing criminal charges and, if convicted under Section 13(1C), imprisonment for up to five years along with fines.

Additionally, under Section 13(2), the Adjudicating Authority could order the confiscation of Mr. Sharma's foreign securities to the Central Government and may require him to repatriate the funds back to India.