Lee tested positive for the banned anti-inflammatory dexamethasone at the 2014 World Championship in Copenhagen.
Dexamethasone is not a performance enhancing as such, but remains on the banned list regardless.
To Lee's credit, he voluntarily stood down from playing pending an investigation when he was first told of the positive test which could have seen the 32-year-old banned for as long as two years.
In a statement released to the media on Monday, the BWF said the two-time Olympic silver medalist deserved a ban since he had been negligent, but added that the back-dated sanction was "correct and fair".
"The panel is convinced this is not a case of doping with intent to cheat," the BWF said in a statement.
The world governing body said that the banned substance was found in the casings of some of the capsules of food supplements the Malaysian was taking.
"I am of course relieved," Lee said during a press conference in Kuala Lumpur.
"I accept the result. I will review back, and maybe…will be stronger mentally for the competitions to come."
A winner of 55 professional titles, Lee appeared before a three-person tribunal in Amsterdam on April 11 and faced the prospect of a lengthy ban that would have spelled the end of his career.
Due to the length of his absence from the professional circuit, his world ranking had dropped to 30th and is expected to plummet even further since his World Championship final defeat to China's Chen Long has been disqualified by the BWF.
He is, however, allowed to keep the two Asian Games bronze medals he won in September last year since he had not been notified of his failed test at that time.
Monday's announcement means Lee is free to participate in the May 10-17 Sudirman Cup, which is one of the first events with qualifying points for the Rio de Janeiro Olympic Games next year.
He is also likely to participate in the Southeast Asian Games in June before August's World Championships in Jakarta.
Malaysia will be allowed to enter two men's singles players in the field for the Olympics, should they both be ranked within the top 16 at the cut-off date after the year-long Olympic qualification events.