Sections 23 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.
Chapter V gives the Central Government power to look at the books and papers of anyone it suspects of contravening the Act. Section 23 authorises an inspecting officer to inspect accounts or records, with reasons recorded in writing. Section 24 lets that officer seize them in a defined situation and requires them to be returned if no proceeding follows within six months.
This article reads sections 23 and 24 as per the Act as enacted, read with the Foreign Contribution (Regulation) Amendment Act, 2020 (33 of 2020), which did not change these sections. Later amendments should be checked.
If the Central Government has, for reasons recorded in writing, any ground to suspect that a provision of the Act has been or is being contravened by a political party, person, organisation or association, it may by order authorise an inspecting officer to inspect their accounts or records and enter premises at any reasonable hour, before sunset and after sunrise. After inspection, if there is reasonable cause to believe the Act or another foreign exchange law has been contravened, the officer may seize the accounts or records, who must return them if no proceeding is brought within six months.
Section 23: inspection
The trigger
Section 23 applies "if the Central Government has, for any reason, to be recorded in writing, any ground to suspect that any provision of this Act has been or is being, contravened by" any of:
- (a) a political party;
- (b) a person;
- (c) an organisation; or
- (d) an association.
The Government must have a "ground to suspect", and the reason must be recorded in writing. This is a lower threshold than "reasonable cause to believe" used in section 24. The text does not say that the reasons are given to the person inspected.
The inspecting officer
The Government may, "by general or special order, authorise such gazetted officer, holding a Group A post under the Central Government or such other officer or authority or organisation, as it may think fit (hereinafter referred to as the inspecting officer)". So the inspecting officer may be a Group A gazetted officer or "such other officer or authority or organisation". The authority is by order, general or special.
The power
The inspecting officer is authorised "to inspect any account or record maintained by such political party, person, organisation or association", and has "the right to enter in or upon any premises at any reasonable hour, before sunset and after sunrise, for the purpose of inspecting the said account or record". The right of entry is tied to the purpose (inspecting the account or record) and to the time limits in those words.
If you are visited by an officer, ask to see the written order of authorisation and note the name, post and time of entry. For help in handling an inspection and the steps that follow, our legal dispute resolution practice can assist.
Section 24: seizure of accounts or records
Section 24 begins with a second trigger: "If, after inspection of an account or record referred to in section 23, the inspecting officer has any reasonable cause to believe that any provision of this Act or of any other law relating to foreign exchange has been, or is being, contravened, he may seize such account or record and produce the same before the court, authority or tribunal in which any proceeding is brought for such contravention".
| Step | Provision |
|---|---|
| Written reasons for suspicion | Section 23 |
| Authorisation of inspecting officer by general or special order | Section 23 |
| Inspection of account or record; entry at reasonable hour, before sunset and after sunrise | Section 23 |
| Reasonable cause to believe the Act or a foreign exchange law was contravened | Section 24 |
| Seizure and production before the court, authority or tribunal | Section 24 |
| Return if no proceeding within six months | Proviso to section 24 |
Two features of section 24 deserve a note. First, it follows inspection: the inspecting officer must have inspected "an account or record referred to in section 23" before he can seize it. Second, the contravention that justifies seizure is not limited to the FCRA: "any other law relating to foreign exchange" is also within the words. The Foreign Exchange Management Act, 1999 is a separate law; our post on dealing in foreign exchange and payments to non-residents explains one of its provisions, and this article states nothing from it.
The proviso: return after six months
"Provided that the authorised officer shall return such account or record to the person from whom it was seized if no proceeding is brought within six months from the date of such seizure for the contravention disclosed by such account or record."
The proviso says "the authorised officer" where the main part says "the inspecting officer"; the two terms are used for the same officer in the section, and the text is read as printed. The six months run "from the date of such seizure". The duty to return arises if no proceeding is brought "for the contravention disclosed by such account or record", so a proceeding about a different contravention does not by the words of the proviso prevent return. The text does not say how a person is to claim the return; it is silent on the procedure.
Example (invented). Janhit Seva Sansthan is suspected of contravening the Act, and the Central Government records its reasons in writing and authorises a Group A officer. The officer inspects the Sansthan's cash book and bank records at its office after sunrise and, finding reasonable cause to believe a provision was contravened, seizes the cash book. If no proceeding for the contravention disclosed by the cash book is brought within six months of the seizure, the cash book must be returned to the Sansthan.
How these sections differ from related ones
- Audit under section 20 is triggered by a failure or defect in the intimation, or reasonable cause to believe after inspecting it, and is an audit of books of account. See the article on sections 18 to 20.
- Seizure of an article, currency or security under section 25 is a separate power over things received in contravention of the Act, with its own procedure; see the article on sections 25 to 27.
- Investigation under section 43 is by an authority the Central Government specifies and is explained in the article on sections 42 and 43.
Keeping complete records is the practical answer to an inspection, and section 19 requires the accounts and records to be kept in any case; see the article on sections 18 to 20.
Need help in an inspection?
An inspection or seizure should be met with calm, complete records and a clear record of what the officer took. Speak to our legal dispute resolution team for help with your response, including a list of seized items and follow-up.
Key takeaways
- Section 23 needs a ground to suspect contravention, with reasons recorded in writing, and an order authorising an inspecting officer.
- Entry is at a reasonable hour, before sunset and after sunrise, to inspect an account or record.
- Section 24 allows seizure after inspection where there is reasonable cause to believe the Act or a foreign exchange law was contravened.
- Seized records are produced before the court, authority or tribunal in which a proceeding is brought.
- They must be returned if no proceeding is brought within six months from seizure.
Read next
- Sections 18 to 20: intimation, accounts and audit
- Sections 25 to 27: seizure and disposal
- Sections 28 to 30: confiscation and who adjudges it
Disclaimer: Based on the Foreign Contribution (Regulation) Act, 2010 as enacted, read with the Amendment Act, 2020 and the other amendments named in this article, and on the Foreign Contribution (Regulation) Rules, 2011 as amended by the notifications named (latest consulted: S.O. 3272(E) dated 22 June 2026), as consulted on 2 October 2026. No consolidated official text was available; some provisions rest on a third-party copy and are identified as such. Later amendments, notifications and Ministry of Home Affairs orders should be checked. This article is general information, not legal advice; check the official text before acting.