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CA Intermediate · Corporate and Other Laws · The Foreign Exchange Management Act, 1999

Sundaram Pharma Ltd. is alleged to have contravened a FEMA provision relating to foreign exchange, and the amount involved in the contravention is quantifiable at Rs 40 lakh. Which statement correctly describes the penalty under FEMA for such a contravention?

Under FEMA, where the amount involved in a contravention is quantifiable, the penalty can extend to three times that sum. A fixed fee, mandatory imprisonment or a Rs 1 crore threshold is not the rule for such contraventions.

  1. AThe penalty can be up to three times the sum involved, where the amount is quantifiableCorrect
  2. BThe penalty is a fixed Rs 2,000 irrespective of the amount
  3. CThe contravention is punishable only by imprisonment
  4. DNo penalty applies unless the amount exceeds Rs 1 crore

Explanation

Where the amount involved in the contravention is quantifiable, the penalty is up to thrice the sum involved. Where it is not quantifiable, a monetary cap applies, with a daily penalty for continuing contraventions. Imprisonment is not the primary civil remedy, and the fixed amount and Rs 1 crore threshold do not exist.

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