Introduction
Foreign Liabilities and Assets (FLA) reporting is a mandatory annual compliance for Indian entities that have received Foreign Direct Investment (FDI) or made Overseas Direct Investment (ODI). This requirement is governed by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA).
Who Should File the FLA Return?
The obligation to file the FLA return applies to the following entities:
Indian Companies
Entities incorporated under the Companies Act that have received FDI or made ODI.
Limited Liability Partnerships (LLPs)
LLPs that have received FDI or made ODI.
Alternative Investment Funds (AIFs)
AIFs with foreign investments or overseas investments.
Partnership Firms
Firms that have engaged in FDI or ODI transactions.
Public-Private Partnerships (PPPs)
PPP entities with foreign investment involvement.
Purpose of FLA Reporting
FLA reporting serves several critical purposes:
Indian Companies
Entities incorporated under the Companies Act that have received FDI or made ODI.
Limited Liability Partnerships (LLPs)
LLPs that have received FDI or made ODI.
Limited Liability Partnerships (LLPs)
LLPs that have received FDI or made ODI.
Penalties for Non-Filing of FC-GPR and FC-TRS
The FC-GPR form must be filed within 30 days of allotting securities to the foreign investor.
Regulatory Compliance
Ensures adherence to FEMA regulations concerning foreign investments.
Data Collection
Assists the RBI in compiling data on foreign liabilities and assets for economic analysis.
Transparency
Promotes transparency in cross-border financial transactions.
Due Date for Filing
The FLA return must be filed annually by 15th July of each year.
- If financial statements are unaudited by this date, entities should submit the return based on unaudited figures to avoid penalties.
- A revised return can be filed by the end of September after finalizing the audited statements.
Consequences of Non-Compliance
Failure to file the FLA return within the stipulated time frame is considered a violation of FEMA regulations and can result in significant penalties:
Monetary Penalties
Up to three times the amount involved in the contravention or ₹2 lakhs if the amount is not quantifiable.
Additional Fines
For continuing offenses, an additional penalty of ₹5,000 per day may be imposed.
Steps to File the FLA Return
1. Access the FLAIR Portal
- Visit the RBI’s Foreign Liabilities and Assets Information Reporting (FLAIR) system.
2. Create a User Account
- Register by providing the necessary entity details to obtain login credentials.
3. Prepare the Return
- Gather required information, including:
- Financial statements
- Details of foreign investments
- Shareholding patterns
4. Submit the Return
- Log in to the FLAIR portal, complete the return form, and submit it electronically.
5. Acknowledgment
- After submission, retain the acknowledgment for your records.
Documents Required
- Corporate Identification Number (CIN)
- Permanent Account Number (PAN) of the Company
- PAN of the Authorized Person
- Authority Letter on Company Letterhead
- Verification Letter
- Financial Statements (Audited or Unaudited)
- List of Employees on Company Payroll
- Details of FDI/ODI Transactions
- Shareholding Pattern
- Proof of Registered Office Address
- Official Mobile Number and Email ID
- Mobile Number and Email ID of the Authorized Person
- Business Activity Classified as per NIC Code
- Business User Account on the FLAIR Portal
Why Choose Our Services?
Expertise
Our team specializes in FEMA compliance and FLA reporting.
Timely Filing
We ensure your FLA return is filed accurately and on time.
Comprehensive Support
From document preparation to submission, we provide end-to-end assistance.
Avoid Penalties
Our services help you stay compliant, mitigating the risk of penalties.