For NRIs, FEMA governs: the acquisition and transfer of immovable property in India; the maintenance of bank accounts in India (NRE, NRO, FCNR(B)); the repatriation of funds from India to the NRI's overseas account; investments in Indian securities, mutual funds, and deposits; and — following the 2022 amendments to the overseas investment regulations — the NRI's investments outside India. Each category of transaction has its own Master Direction specifying the conditions, reporting requirements, and prohibitions.
The Enforcement Directorate (ED) enforces FEMA — and its powers, including the power to attach property and impose civil penalties of up to three times the amount involved in the contravention, make FEMA compliance a serious business. Where a FEMA contravention has already occurred, the RBI's compounding mechanism provides a route to regularisation — but only if the contravention is voluntarily disclosed, fully explained, and the compounding application is properly prepared. GP's FEMA practice covers both the pre-transaction advisory (ensuring compliance before any money moves) and the post-contravention compounding (regularising past violations with the RBI).
Permissibility analysis for proposed transactions before any money moves — confirming whether the transaction is permitted on the automatic route, requires prior RBI approval, or is prohibited. GP analyses the transaction against the applicable Master Direction, identifies any conditions or reporting requirements, and advises on the optimal structure to achieve the client's objective within the FEMA framework. The analysis covers property transactions, investments, loans, gifts, and all other categories of transaction involving NRI funds and Indian assets.
Advisory on FEMA reporting requirements — the filings that NRIs and their authorised dealer banks must make following specific categories of transaction. These include reporting of overseas direct investments (ODI forms), foreign portfolio investments, inward remittances above specified thresholds, and the annual return on foreign liabilities and assets (FLA return). Many FEMA contraventions arise from reporting failures rather than from the underlying transaction being impermissible. GP identifies the applicable reporting requirements and manages the filings.
Preparation and filing of compounding applications with the RBI's Compounding Authority for past FEMA contraventions — including agricultural land purchases, NRO remittances without documentation, accounts not closed on status change, loans to non-relatives, and unreported overseas investments. GP assesses the compoundability of each contravention (not all FEMA violations are compoundable), prepares the application with full disclosure, and manages the compounding process through to the order. Compounding resolves the contravention and prevents ED action on the compounded violation.
Advisory on the Overseas Investment Rules 2022 — which significantly revised the framework for investments by Indian residents and NRIs outside India. The 2022 Rules introduced new categories of permitted investment, new reporting requirements, and new conditions on the round-tripping of overseas funds. GP advises NRIs on the permissibility of their overseas investments (which are governed by FEMA as well as the law of the overseas jurisdiction), the reporting requirements applicable to each investment category, and the management of the compliance position when the rules change mid-investment.
Advisory on the Liberalised Remittance Scheme (LRS) — under which resident Indians (not NRIs, who use a different framework) can remit up to USD 250,000 per financial year abroad for permitted purposes. For NRIs returning to India or retaining resident family members who wish to remit funds overseas, the LRS framework applies. GP advises on the permitted purposes under LRS, the prohibited transactions (acquisition of foreign currency in India, overseas property investment above the limit, and others), and the tax collected at source (TCS) on LRS remittances above ₹7 lakh.
Representation in Enforcement Directorate proceedings — Show Cause Notices under FEMA, adjudication proceedings before the Adjudicating Authority, and appeals before the Appellate Tribunal for Foreign Exchange (ATFE). GP defends against ED allegations of FEMA contravention — challenging the jurisdiction, the characterisation of the transaction, and the quantum of the penalty — and advises on whether a compounding application during proceedings can reduce the penalty exposure. For serious FEMA matters, GP's anti-money laundering team provides integrated FEMA and PMLA defence.
Based on GP's compounding practice, the five most frequently encountered inadvertent NRI FEMA contraventions are: (1) purchase of agricultural land; (2) NRO account remittance without Form 15CA/CB; (3) failure to convert resident accounts to NRO on becoming NRI; (4) loans to India-based non-relatives from NRE account; and (5) failure to report overseas investments. All five are compoundable — and all five are preventable with a pre-transaction FEMA advisory.
A FEMA contravention can trigger PMLA scrutiny — because FEMA violations are scheduled offences under PMLA, meaning the proceeds of a FEMA contravention are technically "proceeds of crime" under PMLA. This means the ED can pursue an NRI who committed a FEMA violation both under FEMA (civil penalty) and PMLA (attachment of property, prosecution). For serious FEMA matters, GP's anti-money laundering team provides the integrated FEMA and PMLA defence that the situation requires.
When an NRI returns to India permanently, their FEMA status changes — they become a "person resident in India" and most of their NRI-specific rights and obligations change with them. NRE accounts must be closed or redesignated as resident accounts; FCNR(B) deposits must be allowed to mature or closed; overseas investments made during the NRI period can be retained but are subject to the LRS framework thereafter. GP conducts a FEMA transition audit for returning NRIs — identifying all accounts, investments, and assets that need to be re-characterised or notified, and managing the transition process.
Many lawyers know the headline FEMA rules — NRIs cannot buy agricultural land, NRE accounts are freely repatriable. GP's FEMA advisory goes deeper: the distinction between "close relative" for gifting purposes, the conditions on loans from NRE accounts, the interaction between FEMA and the overseas investment rules after the 2022 amendments, and the compoundability analysis for each category of contravention. The depth of the advisory matters because half-right FEMA advice is as dangerous as no FEMA advice at all.
FEMA compliance and Indian income tax are inseparable for most NRI transactions — the Form 15CA/CB required for NRO remittances, the TDS certificate required for property sales, and the tax treaty position for income repatriated to a treaty country are all FEMA-tax intersections. GP integrates both analyses — the FEMA permissibility and the tax cost — in a single advisory, ensuring the client understands the complete cost of the transaction before they proceed.
A compounding application that is incomplete, inaccurate, or poorly drafted will be returned by the RBI — adding delay and potentially increasing the penalty. GP prepares compounding applications with the rigour the RBI expects: complete disclosure of every contravention, a detailed chronology, an analysis of the applicable penalty range, and a submission on mitigating factors. GP's compounding practice has a consistent record of applications accepted on the first submission and penalties at the lower end of the applicable range.
A Dubai-based NRI planning to return to India permanently engaged GP for a pre-return FEMA audit. The audit identified six historic contraventions across 14 years as an NRI: resident savings account not converted to NRO on becoming NRI (2009); NRO remittances to Dubai account in 2013, 2015, and 2017 without Form 15CA/CB documentation; a loan of ₹15 lakh from the NRE account to a non-close-relative (2016); and an unreported overseas investment in a Singapore private company (2018). GP prepared six compounding applications, filed sequentially with the RBI's Mumbai regional office, with complete disclosure of each contravention and a detailed submission on the inadvertent nature and clean record otherwise. All six were compounded. The client returned to India with a fully regularised FEMA position.
Advised a Singapore-based NRI on the FEMA compliance position of his overseas investment portfolio following the Overseas Investment Rules 2022 — which introduced significant changes to the framework for Indian persons' overseas investments. The client held interests in three Singapore companies and a Cayman Islands fund — all made during his NRI period but potentially subject to new reporting requirements under the 2022 rules. GP analysed each investment against the new framework, identified the applicable ODI reporting forms, prepared and filed the required reports with the RBI (facilitated through the client's authorised dealer bank), and advised on the steps needed to bring the Cayman fund investment within the new permitted categories — including the restructuring that was required to avoid the new round-tripping restrictions.
Defended a Delhi-based exporter who received a Show Cause Notice from the Enforcement Directorate alleging FEMA contravention arising from export proceeds not being credited to the exporter's account within the prescribed period. The ED alleged a contravention of ₹14 lakh in unrealised export proceeds, demanding a civil penalty of ₹42 lakh (three times the amount). GP filed a detailed response demonstrating that the delay was caused entirely by the foreign buyer's bank hold — supported by SWIFT messages and correspondence — and that the exporter had followed up consistently and in good faith. The Adjudicating Authority accepted GP's response and imposed a token penalty of ₹50,000 in lieu of the ₹42 lakh demand — finding the contravention technical and non-wilful.
Every NRI engagement at GP begins with a FEMA compliance check — confirming the permissibility of the proposed transaction before any money moves. For returning NRIs, GP conducts a pre-return FEMA audit to identify and regularise any historic contraventions before the NRI is back in India and subject to resident Indian obligations. For active FEMA and ED matters, GP's anti-money laundering team provides integrated defence.
GP updates its FEMA advisory practice continuously as the RBI issues new Master Directions and circulars — ensuring the advice clients receive reflects the current position, not a position that changed with the last RBI circular.
What compounding is, the five most commonly compounded NRI violations, the application process, and why voluntary disclosure consistently produces lower penalties.
Read Guide →NRE to resident account conversion, FCNR(B) maturity, overseas investment retention rights, and the LRS framework for your post-return remittances.
Read Guide →Whether you need a pre-transaction FEMA check, have discovered a past violation, are returning to India, or have received an ED notice — speak to GP today.
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