Section 13 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sub-sections (1A) to (1D) of section 13 are a separate, heavier track within the penalty section. They apply where a person is found to have acquired foreign exchange, foreign security or immovable property situated outside India above a prescribed threshold. They provide for a penalty of up to three times the sum involved, confiscation of equivalent value in India, a route to prosecution, and imprisonment of up to five years with fine. This article covers these four sub-sections only. For sub-sections (1) and (2), see our existing post on contravention and penalties under section 13.
If a person is found to have acquired foreign exchange, foreign security or immovable property outside India whose aggregate value exceeds the prescribed threshold, he is liable to a penalty up to three times the sum involved and confiscation of equivalent value situated in India (sub-section (1A)). The Adjudicating Authority may recommend prosecution and the Director of Enforcement may direct it (1B). On top of the penalty, imprisonment up to five years and fine can follow (1C). A court takes cognizance only on a written complaint by an officer not below Assistant Director (1D).
About this article
This article is based on the consolidated text of the Act consulted (amendments shown up to Act 50 of 2019). Later amendments should be checked. The sub-sections are bracketed in the copy and footnote 1 says they were inserted by Act 20 of 2015, s. 140, with effect from 9-9-2015. The threshold is not printed in the Act and no amount is given here. If you have received a notice, a summons or any communication from an enforcement authority, our legal consultation team can help you decide the next step.
Where the threshold comes from
Sub-sections (1A) and (1C) both refer to "the threshold prescribed under the proviso to sub-section (1) of section 37A". The proviso to section 37A(1) says that no seizure shall be made where the aggregate value of the foreign exchange, foreign security or immovable property situated outside India is less than "the value as may be prescribed". "Prescribed" means prescribed by rules under section 2(x), and the hook is section 46(2)(gg): "the aggregate value of foreign exchange referred to in sub-section (1) of section 37A". The Act prints no figure, and this article does not give one. The rules as in force must be read for it. Section 4, which makes the holding of such assets a restriction in the first place, is covered in our article on section 4.
Sub-section (1A): penalty and confiscation
Sub-section (1A): "If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed under the proviso to sub-section (1) of section 37A, he shall be liable to a penalty up to three times the sum involved in such contravention and confiscation of the value equivalent, situated in India, the Foreign exchange, foreign security or immovable property."
| Element | What the Act says |
|---|---|
| Trigger | A person is found to have acquired foreign exchange, foreign security or immovable property situated outside India |
| Value test | Aggregate value exceeding the threshold prescribed under the proviso to section 37A(1) |
| Penalty | Up to three times the sum involved in such contravention |
| Confiscation | Of the value equivalent, situated in India, of the foreign exchange, foreign security or immovable property |
Two points about the penalty. First, the multiple is "up to" three times, a ceiling and not a fixed amount. Second, the sub-section does not say who imposes it. The surrounding scheme is adjudication: sub-section (1B) refers to "the Adjudicating Authority, in a proceeding under sub-section (1A)", so the penalty is imposed in a proceeding before that authority. The Adjudicating Authority is an officer authorised under section 16(1); see our post on adjudication under section 16.
Drafting point. The end of sub-section (1A) is printed as "confiscation of the value equivalent, situated in India, the Foreign exchange, foreign security or immovable property". Words appear to be missing between "situated in India" and "the Foreign exchange". The sense, as the heading of section 37A also indicates, is confiscation of an equivalent value situated in India of the assets held abroad. The text is quoted as printed.
Sub-section (1B): recommending and directing prosecution
Sub-section (1B): "If the Adjudicating Authority, in a proceeding under sub-section (1A) deems fits, he may, after recording the reasons in writing, recommend for the initiation of prosecution and if the Director of Enforcement is satisfied, he may, after recording the reasons in writing, may direct prosecution by filing a Criminal Complaint against the guilty person by an officer not below the rank of Assistant Director."
The steps, in order:
- The Adjudicating Authority, in a proceeding under sub-section (1A), thinks fit.
- It records reasons in writing and recommends initiation of prosecution.
- The Director of Enforcement, if satisfied, records reasons in writing and directs prosecution.
- A criminal complaint is filed by an officer not below the rank of Assistant Director.
Drafting points. The copy prints "deems fits" (not "deems fit") and "he may, after recording the reasons in writing, may direct", repeating "may". These are printing slips, quoted as printed. The meaning is clear despite them. Section 2(k) defines "Director of Enforcement" as the Director appointed under section 36(1), and our article on sections 36 and 38 covers the Directorate.
Sub-section (1C): imprisonment and fine
Sub-section (1C): "If any person is found to have acquired any foreign exchange, foreign security or immovable property, situated outside India, of the aggregate value exceeding the threshold prescribed under the proviso to sub-section (1) of section 37A, he shall be, in addition to the penalty imposed under sub-section (1A), punishable with imprisonment for a term which may extend to five years and with fine."
Key features: it applies to the same factual trigger as (1A); it is in addition to the penalty under (1A); the imprisonment is "for a term which may extend to five years", again a ceiling; and the sub-section adds "with fine", without stating an amount. The Act does not state the amount of the fine in this sub-section.
Sub-section (1D): cognizance only on complaint
Sub-section (1D): "No court shall take cognizance of an offence under sub-section (1C) of section 13 except as on complaint in writing by an officer not below the rank of Assistant Director referred to in sub-section (1B)."
This is a safeguard: a court cannot start on its own or on a private complaint. It acts only on a written complaint by an officer not below the rank of Assistant Director, the same officer referred to in (1B). Drafting point: the sub-section says "under sub-section (1C) of section 13" although it is itself inside section 13; it is quoted as printed.
How the track fits together
| Stage | Sub-section | Who acts | Outcome |
|---|---|---|---|
| Finding of acquisition above threshold | (1A) | Adjudicating Authority | Penalty up to three times; confiscation of equivalent value in India |
| Recommendation | (1B) | Adjudicating Authority, with reasons in writing | Recommend initiation of prosecution |
| Direction | (1B) | Director of Enforcement, with reasons in writing | Direct prosecution by criminal complaint |
| Prosecution | (1C) | Court | Imprisonment up to five years and fine, in addition to (1A) penalty |
| Safeguard | (1D) | Court | No cognizance except on written complaint |
Related provisions
- Seizure. Section 37A lets an Authorised Officer seize an equivalent value in India in certain cases, using the same threshold. Our article on section 37A explains it, and sub-section (6) of that section says section 15 does not apply to it.
- Compounding. Section 15 allows compounding of contraventions under section 13. Whether and how it applies here is a question to take up with an adviser; this article does not describe any compounding sum or procedure.
- Other laws. The sub-sections speak of prosecution and cognizance by a court but name no other Act; check the current law for the procedure that applies.
What the Act does not say
- It does not print the threshold.
- It does not state an amount of fine.
- It does not describe how the Adjudicating Authority computes "the sum involved".
- It does not say whether and how a person who discloses and brings back the assets can avoid these consequences under section 13; section 37A(4) has a proviso on disclosure and bringing back for the seizure proceedings.
Need help with a notice about overseas assets?
Sub-sections (1A) to (1D) deal with serious consequences, including prosecution, and the first reply or response often shapes what follows. Our legal consultation team can review the notice, the facts about the assets and the position under the rules, and help you plan a response.
Key takeaways
- Sub-sections (1A) to (1D) were inserted by Act 20 of 2015, s. 140, w.e.f. 9-9-2015, per footnote 1.
- They apply where foreign exchange, foreign security or immovable property outside India is acquired above the prescribed threshold; the threshold is in the rules (hook section 46(2)(gg)) and is not printed in the Act.
- Penalty up to three times the sum involved and confiscation of equivalent value situated in India (1A).
- The Adjudicating Authority may recommend and the Director of Enforcement may direct prosecution, by an officer not below Assistant Director (1B).
- Imprisonment up to five years and fine, in addition to the penalty (1C); cognizance only on written complaint (1D).
- The printed text has slips in (1A), (1B) and (1D); they are flagged, not corrected.
Read next
- Section 14 and 14A: enforcement of penalty orders, civil imprisonment and recovery
- Section 37A: seizure of equivalent assets for foreign holdings
- Contravention and Penalties Under FEMA: Section 13
- Penalties for Hawala and Illegal Forex Transactions
Disclaimer: Based on a consolidated text of the Foreign Exchange Management Act, 1999 showing amendments up to Act 50 of 2019, as consulted on 2 October 2026. Limits, forms, timelines and procedures are set by rules, regulations and Reserve Bank directions made under the Act; they change from time to time and are not covered here. Later amendments should be checked. This article is general information, not legal advice; check the official text before acting.