The Premier League club now sit in the relegation zone, dropping below Luton and into the bottom three with 21 points.
In an official statement on their website, the Premier League said Forest have breached their Profit and Sustainability Rules.
"Nottingham Forest was referred to an independent Commission on 15 January, following an admission by the club that it had breached the relevant PSR threshold of £61 million by £34.5 million.
"The threshold was lower than £105 million as the club spent two seasons of the assessment period in the EFL Championship. The case was heard in accordance with new Premier League Rules, which provide an expedited timetable for PSR cases to be resolved in the same season the complaint is issued.
"The independent Commission determined the sanction following a two-day hearing this month, at which the club had the opportunity to detail a range of mitigating factors. The Commission found that the club had demonstrated “exceptional cooperation” in its dealings with the Premier League throughout the process."
Greek businessman Evangelos Marinakis, chairman of shipping group Capital Maritime, took over Forest in 2017 and also owns Greek club Olympiakos.
Forest broke the record for most transfers (21) by a Premier League club in the summer window after their promotion in May 2022, and a staggering 42 players across four transfer windows.
They now face an uphill battle to stay in the league, with nine games remaining until the end of the campaign - starting with a clash against fellow strugglers Crystal Palace on March 30th.
Forest are the second Premier League club to be deducted points this season for finance breaches, with Everton having 10 taken away in November before the sanction was reduced to six on appeal this month.
Everton are still waiting on a potential second punishment relating to 2022-23.
Last year, Manchester City were referred to an independent commission over more than 100 alleged breaches of finance rules since the club were acquired by the Abu Dhabi-based City Football Group in 2008.
No verdict has been reached in that case. Premier League CEO Richard Masters said in January that a date had been set for a hearing. City have denied any wrongdoing.