THE FOREIGN EXCHANGE (COMPOUNDING PROCEEDINGS) RULES, 2024 – OVERVIEW

The Department of Economic Affairs (DEA), Ministry of Finance, on 12^th September has notified the Foreign Exchange (Compounding Proceedings) Rules, 2024 under powers given under section 46 read with section 15 of the Foreign Exchange Management Act (FEMA), 1999. The amended Rules will supersede the existing Foreign Exchange (Compounding Proceedings) Rules, which were issued in 2000. They provide a framework for individuals or entities to voluntarily settle contraventions of the Foreign Exchange Management Act, 1999 (FEMA), by paying a compounding fee.

Key Highlights

The 2024 Rules introduce significant reforms aimed at reducing administrative delays and supporting the Government of India’s Ease of Doing Business initiative.

1. Revision in Monetary Limits for RBI Officials

The monetary jurisdiction for officers of the Reserve Bank of India (RBI) handling compounding proceedings (for all contraventions other than Section 3(a) of FEMA) has been substantially enhanced to allow faster disposal at regional levels:

RBI Officer Rank	Former Limits (2000 Rules)	Revised Limits (2024 Rules)
Assistant General Manager (AGM)	Up to ₹10 Lakh	Up to ₹60 Lakh
Deputy General Manager (DGM)	> ₹10 Lakh to ₹40 Lakh	> ₹60 Lakh up to ₹2.5 Crore
General Manager (GM)	> ₹40 Lakh to ₹100 Lakh	> ₹2.5 Crore up to ₹5 Crore
Chief General Manager (CGM)	Exceeding ₹100 Lakh	Exceeding ₹5 Crore

2. Monetary Limits for Directorate of Enforcement (ED) Officials

For contraventions specifically involving Section 3(a) of FEMA (dealing in or transferring foreign exchange/foreign security to unauthorized persons), the authorities in the Directorate of Enforcement (ED) hold compounding jurisdiction as detailed below:

ED Officer Rank	Sum Involved in Contravention
Deputy Director	Up to ₹5 Lakh
Additional Director	> ₹5 Lakh up to ₹10 Lakh
Special Director	> ₹10 Lakh up to ₹50 Lakh
Special Director in conjunction with Deputy Legal Adviser	> ₹50 Lakh up to ₹1 Crore
Director of Enforcement along with Special Director	Exceeding ₹1 Crore

3. Key Operational Changes

Provision	Erstwhile Framework (2000 Rules)	Updated Framework (2024 Rules)
Application Fee	₹5,000	₹10,000 (+ applicable GST)
Payment Mode	Demand Draft (DD) only	Digital Modes (NEFT/RTGS), Online Payment, or DD
Order Timeline	Within 180 days from application	Within 180 days from application receipt
Payment Timeline	Within 15 days of the order	Within 15 days of the compounding order
Rule on Pending Matters	N/A	Applications pending before Sept 12, 2024, continue under the 2000 Rules

Non-Compoundable Contraventions (Rule 9)

Rule 9 of the 2024 Rules explicitly categorizes contraventions that cannot be compounded by the Compounding Authority:

• Unquantifiable Sums: Matters where the amount involved in the contravention is not quantifiable.
• Serious Violations: Cases involving money laundering, terror financing, or threats to national security/integrity (referred to Adjudicating Authority under Section 13).
• Section 37A Violations: Holding foreign assets outside India in violation of Section 4 of FEMA.
• Already Adjudicated: Cases where the Adjudicating Authority has already passed an order imposing a penalty under Section 13.
• Further ED Investigation Needed: Cases where the authority believes further investigation by the ED is necessary to ascertain the contravention amount.

3-Year Limitation Rule for Repeat Offences

Under Rule 4(2) and Rule 5(2):

• Three-Year Lookback: If a similar contravention committed by a person was previously compounded under these rules, any second or subsequent contravention within 3 years of that date cannot be compounded.
• Reset Period: Any contravention committed after the expiry of 3 years from the date of the previous compounding order will be treated as a first-time contravention.

Summary Impact

The Foreign Exchange (Compounding Proceedings) Rules, 2024 bring much-needed modernization to FEMA compliance in India. By increasing officer authorization limits up to fivefold, incorporating digital payment gateways, and laying down clear rules for non-compoundable offences, the Ministry of Finance has created a more transparent, efficient, and business-friendly regulatory system.

·         Source: Click Here

Disclaimer:  Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

EPFO 3.0: PF WITHDRAWAL REFORMS 2026

The Employees’ Provident Fund Organisation (EPFO) has officially transitioned into its EPFO 3.0 phase, marking one of the most significant regulatory and digital shifts in the history of social security in India. Aimed at reducing bureaucratic hurdles and empowering subscribers, the 2026 reforms balance instant financial liquidity with long-term retirement security.

Key Changes at a Glance

Feature	Old System (Pre-2026)	New System (EPFO 3.0)
Withdrawal Grounds	13 specific reasons	3 Simplified Categories: Essential, Housing, and Special Circumstances.
Auto-Settlement Limit	Up to ₹1 Lakh	Up to ₹5 Lakh for eligible claims.
Withdrawal Methods	Online Portal / Physical Form	UPI Transfers and a dedicated EPFO ATM Card.
Processing Time	7 to 20 days	Within 3 Days for advances (Illness, Marriage, Education).
Employer Approval	Often required for claims	No Attestation Needed for KYC-compliant accounts.
Minimum Retention	No fixed percentage	25% Lock-in Rule to protect retirement corpus.
EPS Withdrawal	Available after 2 months	Available after 36 months (encouraging pension retention).

 

Detailed Breakdown of Withdrawal Categories

The consolidation of withdrawal grounds ensures that members no longer face claim rejections due to selecting the "wrong" sub-category.

Category	Permissible Uses	Max Frequency / Limit
Essential Needs	Medical emergencies, Higher education, Marriage.	Education: 10 times; Marriage: 5 times.
Housing Needs	Purchase of plot/house, construction, or home loan repayment.	Subject to service years and balance.
Special Circumstances	Natural calamities, sudden financial distress, or job loss.	Immediate access to 75% of funds.

 

New Digital Payout Channels

For the first time, your retirement fund is accessible via modern banking interfaces, reducing the reliance on the unified portal for small, urgent needs.

1. UPI Integration: Members can withdraw up to 75% of their balance directly through apps like Google Pay or PhonePe.
2. EPFO ATM Card: Allows for direct withdrawal of up to 50% of the balance at any standard ATM, bypasses the need for manual online claim filing for urgent liquidity.

The 25% Security Buffer

To balance liquidity with long-term security, the EPFO now mandates that 25% of the total corpus (employee + employer share + interest) must remain in the account. This ensures that even if a member utilizes multiple advances throughout their career, they still retain a foundational amount for their retirement years.

Compliance Checklist for Members

To benefit from these instant settlement features, members must ensure the following are completed on the Member e-Sewa portal:

• Aadhaar-UAN Linking: Mandatory for all digital claims.
• KYC Verification: Bank account (with IFSC) and PAN must be verified.
• Mobile Seeding: The mobile number linked to Aadhaar must be active to receive OTPs for UPI and ATM transactions.

Prerequisites for these benefits:

To utilize these new features, ensure your UAN is activated, your Aadhaar is linked, and your KYC details (PAN and Bank Account) are verified on the EPFO portal.

·         Source: Media / News

Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

Tax Compliance Tracker – August, 2026

 As we enter August 2026, tax professionals, corporate finance teams, and individual taxpayers face a dense compliance calendar under both the Income Tax Act and Goods and Services Tax (GST) framework. Timely adherence to these statutory deadlines is essential to avoid interest, penalties, and procedural complications.

1.      Compliance requirement under Income Tax act, 1961

 

Sl.	Compliance Particulars	Due Dates
1	Due date for deposit of Tax deducted/collected for the month of July, 2026. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan	07.08.2026
2.	Uploading of declarations received in Form No. 127 (Income-tax Rules, 2026) from the buyer in the month of July, 2026	07.08.2026
3	Issue of certificate in Form No. 132 (Income-tax Rules, 2026) under section 395(4) of the Income-tax Act 2025 for tax deducted at source under section 393(1) [Table Sl. No. 2(i), 3(i), 6(ii) & 8(vi)] of the Income-tax Act 2025 in the month of June, 2026	14.08.2026
4	Issuance of TCS certificate in Form No. 133 (Income-tax Rules, 2026) under section 395(4) of the Income-tax Act, 2025 for tax collected at source for the quarter ending June 30, 2026	15.08.2026
5	Issuance of TDS certificate in Form No. 131 (Income-tax Rules, 2026) for TDS other than on salary, pension or interest income of specified senior citizen under section 393(1) of the Income-tax Act, 2025 for the quarter ending June 30, 2026	15.08.2026
6	Due date for furnishing Form No. 137 (Income-tax Rules, 2026) by an office of the Government where TDS/TCS for the month of July, 2026 has been paid without the production of a challan	15.08.2026
7	Statement in Form 1 (Income-tax Rules, 2026) by the stock exchange for the month of July, 2026, in respect of transactions in which client codes have been modified after registering in the system.	15.08.2026
8	Furnishing of challan-cum-statement in Form No. 141 (Income-tax Rules, 2026) in respect of deduction of tax under section 393(1) [Table Sl. No. 2(i), 3(i), 6(ii) & 8(vi)] of the Income-tax Act, 2025 for the month of July, 2026	30.08.2026
9	Furnishing of statement in Form No. 10-EE (Income-tax Rules, 1962) for exercising the option to claim relief under section 89A (Income-tax Act, 1961) for income arising from retirement benefit account maintained in a notified country at the time of withdrawal or redemption (if the assessee is required to submit the return of income on or before August 31, 2026)	31.08.2026
10	Furnishing of Form No. 10BBD (Income-tax Rules, 1962) reporting details of funds received from eligible persons, directly or through an Alternative Investment Fund, during the Previous Year 2025-26 (if the assessee is required to submit return of income on or before August 31, 2026)	31.08.2026
11	Furnishing of declaration in Form No. 10BA (Income-tax Rules, 1962) by an assessee claiming deduction under Section 80GG (Income-tax Act, 1961) in respect of the rent paid for residential accommodation (if the assessee is required to submit the return of income on or before August 31, 2026)	31.08.2026
12	Due date for furnishing the return of income for the Assessment Year 2026–27 by the following assessees: •         An assessee having income from business or profession whose accounts are not required to be audited, and to whom the provisions of Section 92E of the Income-tax Act, 1961 do not apply; and ·         A partner of a firm whose accounts are not required to be audited, or the spouse of such partner (where Section 5A of the Income-tax Act, 1961 applies), to whom the provisions of Section 92E of the Income-tax Act, 1961 do not apply.	31.08.2026
13	Furnishing of Form No. 10E (Income-tax Rules, 1962) by an employee claiming relief under section 89 (Income-tax Act, 1961) when salary is paid in arrears or in advance, etc. (if the assessee is required to submit the return of income on or before August 31, 2026)	31.08.2026
14	Furnishing of certificate in Form No. 10CCD (Income-tax Rules, 1962) by a resident individual being an author (including a joint author) claiming deduction under section 80QQB (Income-tax Act, 1961) in respect of royalty income (if the assessee is required to submit return of income on or before August 31, 2026)	31.08.2026
15	Furnishing of certificate in Form No. 10CCE (Income-tax Rules, 1962) by a resident individual being a patentee claiming deduction under section 80RRB (Income-tax Act, 1961) in respect of royalty income on patents (if the assessee is required to submit return of income on or before August 31, 2026)	31.08.2026
16	Furnishing of certificate of foreign inward remittance in Form No. 10H (Income-tax Rules, 1962) by a resident individual being an author/patentee claiming deduction under Section 80QQB/80RRB (Income-tax Act, 1961) in respect of income earned from any source outside India (if the assessee is required to submit the return of income on or before August 31, 2026)	31.08.2026
17	Furnishing of the certificate in Form No. 10-IA (Income-tax Rules, 1962) from the medical authority certifying ‘person with disability’, ‘severe disability’, ‘autism’, ‘cerebral palsy’ or ‘multiple disability’ for the purposes of sections 80DD and 80U (Income-tax Act, 1961). (If the assessee is required to furnish the return of income on or before August 31, 2026)	31.08.2026
18	Furnishing of Form No. 3CT (Income-tax Rules, 1962) by the transferor of shares or interests in, a company or an entity that derives its value substantially from assets located in India, duly certified by an accountant for apportionment of income attributable to assets located in India (if the assessee is required to submit the return of income on or before August 31, 2026)	31.08.2026
19	Application in Form No. 9A (Income-tax Rules, 1962) for exercising the option available under Explanation to Section 11(1) (Income-tax Act, 1961) to apply income of previous year in the next year or in future (if the assessee is required to submit return of income on October 31, 2026).   Note: The benefit of a deemed application will not be denied to a trust, even if Form No. 9A is not filed at least two months before the due date for filing the income tax return. However, Form 9A must be submitted on or before the due date for filing the return to avail of this benefit [Circular No. 6/2023, dated 24-5-2023]	31.08.2026
20	Statement in Form No. 10 (Income-tax Rules, 1962) to be furnished to accumulate income for future application under Section 10(21) or Section 11(1) (Income-tax Act, 1961) (if the assessee is required to submit return of income on October 31, 2026)   Note: The benefit of accumulation will not be denied to a trust, even if Form 10 is not filed at least two months before the due date for filing the income tax return. However, Form 10 must be submitted on or before the due date for filing the return to avail of this benefit [Circular No. 6/2023, dated 24-5-2023	31.08.2026
21	Furnishing of statement in Form No. 3CFA (Income-tax Rules, 1962) for exercising the option to pay tax at a concessional rate under section 115BBF (Income-tax Act, 1961) for income in the nature of royalty arising from patent developed and registered in India (if the assessee is required to submit return of income by August 31, 2026)	31.08.2026
22	Furnishing of Form No. 3CT (Income-tax Rules, 1962) by the transferor of shares or interests in, a company or an entity that derives its value substantially from assets located in India, duly certified by an accountant for apportionment of income attributable to assets located in India (if the assessee is required to submit the return of income on or before August 31, 2026)	31.08.2026

 

2. Compliance Requirement under GST, 2017

 

A. Filing of GSTR –3B / GSTR 3B QRMP

 

Taxpayers having aggregate turnover > Rs. 5 Cr. in preceding FY

 

Tax period	Due Date	Particulars
July, 2026	20th August, 2026	Due Date for filling GSTR - 3B return for the month of July, 2026 for the taxpayer with Aggregate turnover exceeding INR 5 crores during previous year.

 

B. Filing Form GSTR-1:

 

Tax period	Due Date	Remarks
Monthly return (July, 2026)	11.08.2026	1. GST Filing of returns by registered person with aggregate turnover exceeding INR 5 Crores during preceding year.   2. Registered person, with aggregate turnover of less then INR 5 Crores during preceding year, opted for monthly filing of return under QRMP.

 

C. Non Resident Tax Payers, ISD, TDS & TCS Taxpayers

 

Form No.	Compliance Particulars	Timeline	Due Date
GSTR-5 & 5A	Non-resident ODIAR services provider file Monthly GST Return	20th of succeeding month	20.08.2026
GSTR -6	Every Input Service Distributor (ISD)	13th of succeeding month	13.08.2026
GSTR -7	Return for Tax Deducted at source to be filed by Tax Deductor	10th of succeeding month	10.08.2026
GSTR -8	E-Commerce operator registered under GST liable to TCS	10th of succeeding month	10.08.2026

 

D. GSTR - 1 QRMP monthly / Quarterly return (IFF – Optional)

 

Form No.	Compliance Particulars	Timeline	Due Date
Details of outward supply-IFF &   Summary of outward supplies by taxpayers who have opted for the QRMP scheme.	a)      GST QRMP monthly return due date for the month of July, 2026 (IFF). Applicable for taxpayers with Annual aggregate turnover up to Rs. 1.50 Crore.   b)      Summary of outward supplies by taxpayers who have opted for the QRMP scheme.	13th of succeeding month  - Monthly   Quarterly Return	13.08.2026

 

E. GST Refund:

 

Form No.	Compliance Particulars	Due Date
RFD -10	Refund of Tax to Certain Persons	2 years from the last day of the quarter in which supply was received

 

 

F. Monthly Payment of GST – PMT-06:

 

Compliance Particular	Due Date
Due Date of payment of GST for a taxpayer with Aggregate turnover up to INR 5 crores during the previous year and who has opted for Quarterly filing of return under QRMP.	25.08.2026

 

G. GSTR 11: Statement of inward supply of goods or services or both received by UIN holders – due date 28.08.2026

 

GSTR-11 is the return to be filed by the persons who have been issued a Unique Identity Number and claims a refund of the taxes paid on their inward supplies.

Due date: Must be filed by the 28th of the month following the month in which inward supply is received by the UIN holders. 

In case of any query/suggestion, please connect cslalitrajput@gmail.com

Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.