Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
FLA return is the annual return required to be submitted by the following entities which have received FDI and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e., who holds foreign assets or/and liabilities in their balance sheets by 15th of July every year.
Applicability:-
- Companies defined under section 1(4) of Companies Act i.e. it not only includes companies which are defined under 2(20) of Companies Act 2013 but shall also include the following:
- companies incorporated under Companies Act 2013 or any other previous law;
- insurance companies, except in so far as the said provisions are inconsistent with the provisions of the Insurance Act, 1938 or the Insurance Regulatory and Development Authority Act, 1999.
- banking companies, except in so far as the said provisions are inconsistent with the provisions of the Banking Regulation Act, 1949
- companies engaged in the generation or supply of electricity, except in so far as the said provisions are inconsistent with the provisions of the Electricity Act, 2003.
- any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act; and
- such body corporate, incorporated by any Act for the time being in force, as the Central Government may, by notification, specify in this behalf, subject to such exceptions, modifications or adaptation, as may be specified in the notification.
- Limited liability partnership
- Others [include SEBI registered Alternative Investment Funds (AIFs), Registered Partnership Firms, Public Private Partnerships (PPP) etc.]
Exemption from filing FLA return: –
- Companies which:-
- have only issued shares on a non-repatriable basis to the non-residents of India.
- do not have any outstanding balance of FDI or ODI by the end of the financial year
- have only received share application money and have not received any FDI or not made any ODI
Now the question is balance sheet of many companies has not been audited by 15th July, so in that case, entity must file their FLA return on unaudited basis but shall mandatorily file the revised FLA return on audited basis by 30th September.
Further, many foreign subsidiaries are allowed to choose different financial year for their accounts closing, in that case the entities cannot file FLA return according to their FY but information shall be reported for the reference period only, i.e., previous March and latest March, based on the entity’s internal assessment.
If an entity has not received any fresh FDI and/or ODI (overseas direct investment)’ in the latest FY but has outstanding FDI and/or ODI as at end-March of that financial year, then it is required to submit their outstanding position as on March 31 in the FLA return every year by July 15.
HOW AND WHERE FLA RETURN IS REQUIRED TO BE FILED?
- RBI portal to file FLA return is FLAIR https://flair.rbi.org.in/fla/faces/pages/login.xhtml
- Entity has to register itself on the portal
- On successful registration, login ID and password will be generated.
- After login into FLAIR portal, the FLA return will be filed in 5 sections consisting of Company identifications details, Capital structure, Foreign liabilities, Foreign Assets , Variation report etc.
- After submission, Return and Acknowledgment will be downloaded.
PENALTY :-
In case the company does not file the FLA return within the given time, the company will be liable to pay a penalty of thrice the sum involved in the contravention. In case it is not quantifiable, then a penalty of Rs 2,00,000 will have to be paid by the company. If the contravention is continuing, a penalty of Rs 5,000 per day will have to be paid by the company.
Author Bio
What is the benefit to provide unaudited data to RBI and every company needs to file FLA return twice as usually Audit gets completed by August’ end.
RBI should need to extend this date and put some effort to enable ease of compliance at his end.