Section 46 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.
Whenever the Act says something is "prescribed", the detail sits in rules made by the Central Government under section 46. The section gives a general power in sub-section (1) and a list of subjects in sub-section (2), without prejudice to that generality. This article maps each clause of section 46(2) to the section of the Act it serves.
Section 46(1) lets the Central Government make rules by notification to carry out the provisions of the Act. Section 46(2) lists subjects in clauses (a) to (i), including (aa), (ab) and (gg), such as restrictions on current account transactions, the manner of compounding, the form and fee of appeals and the authentication of documents. "Prescribed" means prescribed by rules made under the Act (section 2(x)). Rules go before Parliament under section 48. The limits, forms and fees are in the rules, not in the Act.
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 footnotes show that clauses (aa), (ab) and (gg) were inserted by Act 20 of 2015, s. 143 (w.e.f. 15-10-2019), and that the words in clauses (e) and (f) were substituted by Act 7 of 2017, s. 165 (w.e.f. 26-5-2017). This article does not set out the content of any rule. Practical reporting steps, such as those for share transfers between residents and non-residents, are covered by our share transfer reporting service and guides, which should be read with the current rules.
Section 46(1): the general power
The Central Government may, by notification, make rules to carry out the provisions of the Act. "Notification" is a notification in the Official Gazette (section 2(t)), and "prescribed" means prescribed by rules made under the Act (section 2(x)). Section 46(2) then begins "Without prejudice to the generality of the foregoing power", so the list that follows is illustrative, not exhaustive, and clause (i) closes it with "any other matter which is required to be, or may be, prescribed".
Section 46(2): the clauses, one by one
| Clause | Subject of the rules | Section served |
|---|---|---|
| (a) | The imposition of reasonable restrictions on current account transactions | Section 5 |
| (aa) | The instruments determined to be debt instruments | Section 6(7) |
| (ab) | The permissible classes of capital account transactions (in accordance with section 6(2A)), the limits of admissibility of foreign exchange, and the prohibition, restriction or regulation of such transactions | Section 6(2A) |
| (b) | The manner in which the contravention may be compounded | Section 15(1) |
| (c) | The manner of holding an inquiry by the Adjudicating Authority | Section 16(1) |
| (d) | The form of appeal and fee for filing such appeal | Sections 17 and 19 |
| (e) | The salary and allowances and other terms and conditions of service of the Special Director (Appeals) | Section 23 |
| (f) | The salaries and allowances and other conditions of service of officers and employees of the office of the Special Director (Appeals) | Section 27(3) |
| (g) | Additional matters in which the Appellate Tribunal and the Special Director (Appeals) may exercise civil court powers | Section 28(2)(i) |
| (gg) | The aggregate value of foreign exchange referred to in section 37A(1) | Section 37A(1) |
| (h) | The authority or person and the manner in which any document may be authenticated | Section 39(ii) |
| (i) | Any other matter which is required to be, or may be, prescribed | Throughout |
Printing point: clause (gg) speaks of "the aggregate value of foreign exchange" referred to in section 37A(1), while the proviso to section 37A(1) speaks of the aggregate value of foreign exchange, foreign security or immovable property. It is quoted as printed.
Reading the clauses in groups
Money and transactions: clauses (a), (aa) and (ab). Clause (a) is the hook for the restrictions on current account transactions; the rules made under section 5 and section 46(2)(a) are the Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time. Clauses (aa) and (ab) were inserted by Act 20 of 2015 with effect from 15-10-2019 and divide capital account rule-making: the Central Government prescribes which instruments are debt instruments and the classes of capital account transactions that do not involve debt instruments, while the Reserve Bank's regulations cover debt instruments (section 47(2)(a)). This division is explained in our article on section 6, and the current account side in our article on section 5.
Contravention and its resolution: clauses (b) and (c). Clause (b) is the hook for the manner of compounding under section 15(1). The Foreign Exchange (Compounding Proceedings) Rules, 2024, as amended from time to time, are made under section 46(2)(b) read with section 15(1). Our article on section 15 explains the section itself. Clause (c) covers the manner of holding an inquiry under section 16(1).
Appeals and their staff: clauses (d) to (g). The form of appeal and fee for sections 17 and 19, service terms for the Special Director (Appeals) and his office, and extra civil court powers for the two appellate bodies. These are explained in our articles on sections 17, 19 and 28.
Foreign holdings and evidence: clauses (gg) and (h). The value below which no seizure is made under section 37A, and the authentication of documents received from abroad under section 39. The Act prints no amount or form for either; see our articles on sections 37A and 39.
Other places where the Act says "prescribed"
Section 46(2) is not the only route. Sections that use "prescribed" and need rules include the "Authorised Officer prescribed by the Central Government" in section 37A(1), and the catch-all in clause (i). The Act does not collect them in one place. The text of each section must be read for the word, and the matching rule found from the current rules.
What section 46 does not do
- It does not state any limit, form, fee or period; the Act prints none of these for the subjects in section 46(2).
- It does not give the Reserve Bank's power. Regulations are made under section 47, covered in our article on sections 47 and 48.
- It does not exempt rules from Parliament: section 48 requires every rule and regulation to be laid.
- It does not say which rules are in force today; that has to be checked against the current rules.
Rules against regulations
| Feature | Rules (section 46) | Regulations (section 47) |
|---|---|---|
| Made by | The Central Government | The Reserve Bank |
| Word used in the Act | "Prescribed" (section 2(x)) | "Specified" (section 2(zd)) |
| Method | By notification | By notification |
| Laid before Parliament | Yes, section 48 | Yes, section 48 |
Example. A hypothetical company, Northstar Pharma Pvt Ltd, files an appeal under section 19 and is asked for a form and a fee. The Act does not print either. It points to section 46(2)(d), so the company looks in the rules made by the Central Government under section 46 and finds the form and the fee there. If instead the company wants to know the limit for a capital account transaction that does not involve debt instruments, it looks to the rules made under section 46(2)(ab). For a transaction that involves debt instruments, the hook is in section 47(2)(a) and the regulations of the Reserve Bank.
Need help finding the rule behind a section?
The Act sends many questions to the rules, and the rules change from time to time. Our share transfer reporting team can help you trace the rule that governs a given transaction and the reporting that follows it.
Key takeaways
- Section 46(1): the Central Government may make rules by notification to carry out the Act.
- Section 46(2) lists subjects in clauses (a) to (i), with (aa), (ab) and (gg) inserted by Act 20 of 2015 (w.e.f. 15-10-2019).
- "Prescribed" means prescribed by rules under the Act (section 2(x)).
- Current account restrictions, compounding, inquiry, appeal form and fee, service terms, civil court powers, the section 37A value and document authentication are all left to rules.
- The Act prints none of those details; they sit in the rules, as amended from time to time.
Read next
- Section 5: current account transactions
- Section 6: capital account transactions, debt and non-debt instruments
- Section 15: power to compound contravention
- Sections 47 and 48: Reserve Bank regulations and laying before Parliament
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.