FC-GPR Is Not the Finish Line: What the Janapriya Townships Compounding Order Actually Teaches About FLA Compliance
Most companies that raise foreign direct investment believe their FEMA obligations end the day Form FC-GPR is filed. A compounding order the Reserve Bank of India passed on 6 November 2025, against Janapriya Townships Private Limited, is a fairly clean illustration of why that belief is wrong, and why it keeps costing companies money and time even when the underlying transaction itself was perfectly legitimate.
The order does not break new legal ground. What makes it worth writing about is the pattern it exposes: a company that got its FDI reporting broadly right, eventually, and still ended up carrying seven years of a completely separate default that nobody on its compliance team seems to have been tracking.
What happened
RBI’s order, issued under Section 15 of the Foreign Exchange Management Act, 1999, closed out an Enforcement Directorate investigation into three distinct contraventions by Janapriya Townships. The ED had taken up the matter based on credible information, and the three defaults were:
- Delayed reporting of foreign inward remittances towards issue of shares to a person resident outside India, under Para 9(1)(A) of Schedule 1 to FEMA 20, involving ₹64.66 crore.
- Delayed filing of Form FC-GPR after allotment of those shares, under Para 9(1)(B) of Schedule 1 to FEMA 20, involving ₹13.20 crore.
- Non-filing of the Annual Return on Foreign Liabilities and Assets (FLA Return) for seven consecutive financial years, under Paragraph 9(2) of Schedule 1 to FEMA 20, read with A.P. (DIR Series) Circular No. 45 dated 15 March 2011.
The company applied to compound all three. RBI referred the matter to the ED for a no-objection, received it, and closed the file on payment of a one-time compounding sum of ₹1,68,160 under its order dated 6 November 2025.
The statutory framework
The compounding power itself comes from Section 15 of FEMA, read with the Foreign Exchange (Compounding Proceedings) Rules, 2024. These 2024 Rules replaced the earlier 2000 Rules with effect from 12 September 2024, and the mechanics of how RBI actually arrives at a compounding figure are now set out in the Master Direction on Compounding of Contraventions under FEMA, 1999 (Ref. No. RBI/FED/2025-26/135), issued on 22 April 2025 and revised two days later. Anyone citing the compounding framework for an order from late 2025 onward should be citing this Master Direction, not the older 2022 one it replaced.
The reporting obligations themselves sit in Schedule 1 to FEMA 20 — Para 9(1)(A) and 9(1)(B) for remittance reporting and FC-GPR filing respectively, and Paragraph 9(2), read with the 2011 circular, for the FLA Return.
Why the FLA gap is the part worth paying attention to
It would be easy to read this case as a story about the size of the numbers — ₹64.66 crore here, ₹13.20 crore there. I don’t think that’s where the useful lesson is. The useful lesson is in the third item on that list: seven years, not seven months, of a return that nobody filed.
Form FC-GPR is tied to an event. You raise money, you allot shares, you file the form, and in most people’s mental model, the FDI compliance chapter closes there. The FLA Return doesn’t work that way. It is filed every year, by 15 July, based on audited accounts as of 31 March, or provisional accounts if the audit isn’t ready yet. It applies to any Indian company carrying foreign liabilities or foreign assets on its books — which includes companies that received FDI, and companies that made an overseas investment — and it keeps applying every single year until that foreign liability or asset comes off the balance sheet.
In Janapriya Townships’ case, the remittance was reported and FC-GPR was filed, both late, but both eventually done. FLA filing, on the other hand, appears to have never made it onto the company’s compliance calendar at all. That’s a very different kind of failure from a late filing — it’s a missing process, not a missed date.
Is a compounding sum of ₹1.68 lakh actually a light penalty? I don’t think so, for a specific reason
The first reaction most people have on seeing this order is that ₹1,68,160 looks trivial next to roughly ₹78 crore of reporting value. I’d push back on that reading, because it misunderstands how RBI actually prices this category of default, and the misunderstanding has practical consequences for how seriously companies treat FLA compliance.
Under RBI’s computation matrix, reporting or submission contraventions under FEMA 20/20(R) — which covers both the remittance delay and the FC-GPR delay here — are not compounded as a percentage of the transaction size. They’re computed on the length of the delay, using a formula that behaves much more like simple interest on the amount involved than like a fine proportionate to the deal. That’s the actual reason a ₹78 crore FDI round produced a compounding sum in the low lakhs rather than in the crores. It isn’t RBI treating the lapse casually. It’s the formula doing what it’s built to do for procedural, reporting-type defaults, as distinct from the much steeper formula that applies to substantive violations like unauthorised capital account transactions.
There’s a second layer to this worth flagging. In April 2025, RBI added a discretionary cap of ₹2,00,000 per contravention for certain non-reporting defaults, as part of a broader move toward capped, formula-bound compounding amounts. That’s a sensible design for a small company with a genuinely inadvertent, low-value lapse. But for a company sitting on ₹78 crore of FDI-related activity, a compounding exposure measured in lakhs is not, by itself, much of a deterrent. Which is really the point I’d want a client to take away from this case: the compounding fee was never the real cost here. The real cost was seven years of undetected exposure sitting on the company’s compliance record, an ED investigation to close it out, and whatever friction that record now creates the next time the company wants to raise capital or draw an ECB. None of that shows up in the ₹1,68,160 figure, but all of it is the actual price of letting FLA slip off the calendar.
What this means for FDI-backed companies and the professionals advising them
A few things follow directly from how this case played out, and they’re worth building into any FEMA compliance review, not just this one:
- FLA compliance stands entirely apart from income-tax compliance. A company that files its tax returns correctly can still be sitting on a live FEMA default if FLA hasn’t been filed — the two systems don’t talk to each other, and one doesn’t excuse the other.
- RBI does not net contraventions against each other. The remittance delay, the FC-GPR delay, and each of the seven missed FLA years were treated as separate, cumulative defaults, not folded into a single number.
- These gaps surface eventually, and usually not on the company’s own terms. This case came to light through an ED investigation based on credible information — meaning it wasn’t the company that flagged its own default. AD bank monitoring and RBI’s own data-matching are other routes through which this kind of gap gets found.
A practical checklist
For CAs, CMAs, company secretaries and tax advocates advising FDI-backed clients, this case is a good prompt to revisit a few basics:
- Track 15 July as a standalone annual deadline for FLA, completely separate from any fundraising or transaction timeline.
- During due diligence for a funding round or M&A transaction, pull FLA portal acknowledgements for every prior year the entity held foreign liabilities or assets — not just the most recent one.
- If the audit isn’t ready by 15 July, file FLA on a provisional basis rather than skip the deadline, and revise it once the audited numbers are available.
- Where a legacy gap turns up, file a compounding application voluntarily rather than wait for it to be picked up in a review or investigation.
- Keep FC-GPR acknowledgements, FLA filing receipts, and AD bank correspondence in one place, so FEMA compliance status is visible at a glance rather than reconstructed under pressure.
Closing thought
The Janapriya Townships order is unlikely to be remembered for its numbers. What it’s actually useful for is showing, in concrete terms, how a company can get its headline FDI compliance broadly right and still carry years of exposure through a return that was never built into its routine. FC-GPR closes a transaction. FLA doesn’t close anything — it renews every year, quietly, for as long as the foreign liability or asset sits on the books. Treating it as a standing item on the compliance calendar, rather than a follow-up task after a funding round, is really the only reliable way to avoid ending up in a version of this order five or seven years from now.
References
- Foreign Exchange Management Act, 1999 — Sections 13 and 15.
- Foreign Exchange (Compounding Proceedings) Rules, 2024, notified 12 September 2024 by the Department of Economic Affairs, Ministry of Finance, in supersession of the 2000 Rules.
- RBI Master Direction on Compounding of Contraventions under FEMA, 1999 (Ref. No. RBI/FED/2025-26/135, dated 22 April 2025, revised 24 April 2025.
- RBI Master Direction — Reporting under Foreign Exchange Management Act, 1999.
- RBI Compounding Order dated 6 November 2025, in the matter of Janapriya Townships Private Limited.
- ANI, “RBI issues compounding order for FEMA violations in Janapriya Townships Private Limited,” 20 December 2025.
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Disclaimer: This article draws on publicly available reporting of the RBI compounding order dated 6 November 2025 and on RBI’s published Master Directions on compounding. It is written for general professional reading and does not constitute legal or tax advice. The commentary on the compounding formula and its practical implications reflects the author’s own reading of the applicable rules, not an official RBI position. Readers relying on this for a specific transaction should verify the current statutory position independently.
About the Author: Francis D. Kuzhippillil is a Fellow Cost Management Accountant (FCMA) and the founder of Francis & Co., based in Mapusa, Goa. He advises NRIs and expatriates across the UK, USA and Portugal on FEMA, DTAA and cross-border tax matters, with a particular focus on FDI-linked compliance, capital gains, and repatriation. He can be reached at francis@nritaxinfo.net.
