The short answer
Currency counts as "goods" under the Customs Act (section 2(22)), so carrying it in breach of the FEMA currency regulations makes it liable to confiscation: under section 111 when arriving and section 113 when leaving. A penalty can follow. Undeclared does not automatically mean unlawful in origin, and in many cases the currency is released on a redemption fine once its source is shown.
Most currency cases turn on two questions: was a declaration required, and can the money be traced to a legitimate source? The first is a matter of the limits below. The second is a matter of documents.
The limits: what needs declaring, and what cannot be carried
The rules are in the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015, issued by the RBI. The Baggage Rules, 2026 (rule 8) adopt them for passengers.
| Situation | Rule |
|---|---|
| Arriving with foreign currency | No limit on the amount, but declare on the Currency Declaration Form (CDF) if foreign currency notes exceed US$5,000, or if notes, bank notes and travellers' cheques together exceed US$10,000 (or the equivalent) |
| Resident leaving India with foreign currency | Only foreign exchange obtained from an authorised dealer or money changer within the permitted purposes. Keep the purchase or encashment document. |
| Non-resident leaving India with foreign currency | Up to the amount brought in and declared on arrival, so keep the CDF |
| Indian currency, in or out | Up to ₹25,000 per person. Separate rules apply to travel to and from Nepal and Bhutan. |
The CDF was updated by the RBI's amendment of 23 February 2026, without changing these thresholds.
What happens when currency is seized
- Detention or seizure. The currency is counted, the notes are listed by denomination, and a detention receipt or seizure memo is issued. Check the count before signing.
- Statement and source questions. A section 108 statement records where the money came from, who it belongs to and why it was carried. Inconsistent explanations at this stage are hard to repair later.
- Information sharing. Larger or unexplained amounts may be reported to other authorities, such as the Enforcement Directorate for FEMA adjudication or the Income Tax Department.
- Show cause notice and adjudication. The same procedure as for goods applies: a written notice within six months of seizure (section 110(2)), a reply, a personal hearing and a reasoned order (section 124). The order may release the currency, allow redemption on a fine (section 125) with a penalty, or confiscate it absolutely.
- Prosecution. This is uncommon for modest amounts. Where the value of undeclared goods exceeds ₹1 crore, a Customs offence is non-bailable (section 104(6)). Patterns suggesting hawala or carrying for others can also lead to COFEPOSA, the preventive detention law that exists precisely for foreign exchange and smuggling.
Getting the currency back: what persuades
- Bank withdrawal slips, money-changer receipts and encashment certificates that match the denominations and amounts.
- A CDF from the earlier inward journey, for non-residents taking money out.
- Salary, business or sale records abroad that explain the cash, with dates close to travel.
- A coherent explanation of purpose (medical treatment, education fees, a family event) supported by documents.
- If the money was pooled within a family, statements and documents from each contributor.
Where the source is shown and the only failure was a missed declaration, adjudicating authorities and revisionary authorities have often allowed release on a redemption fine rather than absolute confiscation. The exercise of discretion under section 125 must be reasoned.
Leaving India: the outbound traps
- Carrying Indian rupees above ₹25,000 to a country other than Nepal or Bhutan.
- Carrying foreign currency without a purchase document, or more than the amount declared on arrival (for non-residents).
- Carrying cash handed over by someone else to "deliver" abroad. This is the classic carrier pattern, and it carries the highest risk.
- Splitting one family's money between several travellers to stay under a threshold. This looks like structuring even when it is innocent.
Appeal and revision
An order confiscating currency carried by a passenger follows the baggage route: appeal to the Commissioner (Appeals) within 60 days (section 128), then a revision application to the Central Government under section 129DD, not an appeal to CESTAT. Procedural failures, such as no notice, no hearing or retention beyond the statutory period, can be taken to the High Court.
How we assist
- Building the source-of-funds file quickly, while bank and money-changer records are easy to obtain.
- Replies to show cause notices, personal hearings and arguments for redemption.
- Appeals and revision applications; parallel FEMA or tax notices where they arise.
- Bail and COFEPOSA representation where the case escalates.