1. Introduction on filing of the FLA return

(i) RBI is compiling the information’s as to be collected through filing of the FLA return for the purpose of knowing India’s Balance of Payments (BOP) position and International Investment Position (IIP) in India and Outside India both as on March 31st every year.

(ii) Filing of the FLA return up to 31st March, 2018 through Email

    • All Indian companies, LLPs and Alternative Investment Funds (AIFs) hereafter to be called as Indian corporate entities (corporates) were required to submit the FLA return in excel format upto 15th July of succeeding year for their Foreign Direct Investments (FDIs) and Overseas Direct Investments (ODIs) through mail ID as [email protected] based on unaudited information’s which can be revised further based on the audited information’s up to 30th September where substantial changes are existed between unaudited and audited financial statement.

(iii) Filing of the FLA return from 31st March, 2019 through web portal

(a) Now RBI is providing a web-portal flair.rbi.org.in for filing of the FLA return by the corporates

(b) Corporates are required to have their registrations by filing of User Registration Form (URF). This form is containing entity’s

(ba) Identification particulars

(bb) Business user details

(bc) Authority letter etc.

(c) Now LLPs and AIFs are not required to use dummy Corporate Identification Number (CIN) for filing of the FLA return after registration at web-portal of the RBI.

(d) Now web-portal is permitting to generate login-name and password for filing of the FLA return after filing of URF and thereafter completion of registration process on this web-portal.

(e) Now corporates are required to furnish the details of investor wise of the ODIs, FDIs and Foreign Portfolio Investments (FPIs) in India and outside India.

(f) Now corporates are permitted to receive system generated acknowledgement after successful submission the FLA return.

(g) Now revision of data in filing of the FLA return is permitted after submission of the original FLA return.

(h) Now view and download of the information’s are permitted after submission of FLA return

(i) Now corporate entities are permitted to submit or revise the information’s of the earlier years also after receiving of confirmation from the RBI through sending of request email.

(j) (a) The RBI has not clarified till now that filing of the FLA return for the year ending on 31st March, 2019 which was already submitted through email mode whether is to be resubmitted or not to be resubmitted through web-portal mode

(b) It’s our suggestion that filing of the FLA return for the year ending on 31st March, 2019 may be resubmitted through web-portal mode beside already submitted through email mode to avoid any confrontation with the RBI

2. Clarifications on Filing of the FLA return

(i) Penalty for Non Filing of the FLA return

    • Non filing or late filing of the FLA return will be treated as violation of FEMA and accordingly maximum penalty @300% may be levied against the amount of FDIs and ODIs. However maximum penalty @300% is not generally is being levied. The RBI has prescribed certain criteria’s for levy of penalty under the head compounding of penalty concept which are now much lower than 300%.

(ii) Filing of the FLA return based on Unaudited financial statements

    • Corporate entities are permitted to submit the FLA return up to July 15th based on unaudited accounts as on March 31st thereafter revise return can be submitted up to September 30th based on audited accounts where substantial changes are existed between unaudited and audited financial statement.

(iii) Filing of the FLA return based on year ending as on March 31st

    • Corporate entities are required to submit the FLA return based on the financial year i.e April to March beside that actual accounting period is other than April to March.

(iv) Filing of the FLA return Not Required

    • Corporate entities are not required to submit the FLA return where only share application money is received but the allotment of shares is not made up to March 31st. However filing of the FLA return is required where share application money is received from the existing non-resident investors.

(v) Filing of FLA return where No FDIs and No ODIs Outstanding as on March 31st

    • Corporate entities are not required to submit the FLA return where no FDIs and no ODIs are outstanding as on 31st March beside that foreign trade receivables and trade payables are outstanding from unrelated foreign entities as on 31st March.

(vi) Filing of FLA return where No Additional or Fresh FDIs and ODIs

    • Corporate entities are also required to submit the FLA return where no additional or fresh FDIs and ODIs are received during the year under consideration.

(vii) Filing of the FLA return by LLPs and AIFs

    • LLP and AIFs are also permitted for FDIs and ODIs in certain selected areas only. Henceforth LLPs and AIFs are also required to submit the FLA return for the FDIs and ODIs.

(viii) Filing of the Annual Performance Report (APR) and FLA (both)

    • Corporates are also required to file the FLA return for the ODIs where the APR has already been filed for the ODIs.

(ix) Non-filing of the FLA return where 100% shares Transferred to a Resident

(a) Corporate entities are not required to submit the FLA return where 100% non-resident shareholding is already transferred to a resident of India before 31st March.

(b) Corporate entities are required to inform the RBI about 100% shareholding is transferred to a Resident of India through AD-Category I bank (bank)

(x) Filing of the FLA return where FDIs received on Non-Repatriable basis

    • Corporate entities are not required to submit the FLA returns where FDIs are received from non-resident investors on non-repatriable basis.

(xi) Form for Filing of the FLA return

    • Corporate entities are required to submit the FLA return based on the latest updated return form as available on the RBI web-portal as on date of submission of the FLA return.

(xii) Information’s for Clarification’s on Filing of the FLA return

    • Corporate entities are permitted to get any clarification for submission of the FLA returns on landline no. of RBI :- (022) 26578662/ 26578217 / 26578348 / 26578214 / 26578340 / 26578241 and through mail ID as [email protected]

(xiii) Filing of Hard Copy of the FLA Return

    • Corporate entities are not required to submit the hard copy of the FLA return

(xiv) Re-filing of the FLA return

    • Corporate entities are required to re-submit the returns where errors are noticed by the RBI.

(xv) Valuation of the FDIs for Filing of the FLA return

    • Corporate entities are required to compute a valuation of the FDIs

(a) For the Listed Companies

    • Closing share price at BSE/NSE as on 31st March is to be adopted for a valuation of the FDIs.

(b) For the Unlisted Companies

(ba) Foreign liabilities are to be valued based on the Own Fund of Book Value (OFBV) method similar to net owned fund method.

(bb) Closing net worth of the company as multiply with percent of the FDIs is required to be adopted for valuation of the FDIs based on the OFBV method.

(c) For the Traded Debt Securities (TDSs)

(ca) TDSs are to be valued at market realizable price and other types of debts like loans, trade credits, deposits and other accounts payables and receivables are to be valued at the book value.

(cb) Corporate entities are required to report in foreign exchange rate as available for 31st March for current and previous years both.

(cc) Net worth is equivalent to Paid up Equity and Participating Preference share capital of the company + free reserves, share premium and any other Surplus – Accumulated losses

(xvi) Filing of the FLA return against Trade Credits and Trade Payables

(a) Corporate entities are also required to include the debts under head other capital like trade credits, ECBs, other structure loans, debentures as convertible and nonconvertible and also nonparticipating preference share capital along with other receivables and payables where FDIs and ODIs are also outstanding as on 31st March.

(b) Equity and participating preference shares are not twicely to be included under head other capital and under head equity share.

(c) Corporate entities are not required to submit the FLA return where FDIs and ODIs are not outstanding as on 31st March beside the trade credits and trade payables are outstanding as on 31st March

(xvii) Inclusion of share Premium in the FDIs and ODIs

    • Corporate entities are also required to include the amount of Share premium under the head free Reserves and surplus for computation of OFBV

(xviii) Bifurcation of the FDIs under head less or more than 10%

    • Corporate entities are also required to bifurcate in the FLA return for FDIs between 10% or more and less than 10%.

(xix) Filing of FLA return by individual residents and by non-corporates of India

(a) Individual residents of India are not required to file FLA returns besides they have ODIs under the Liberalized Remittance Scheme or (LRS) or having ODIs otherwise like acquired through gift or inheritance etc.

(b) Hence individual residents and non-Corporates of India are not required to file FLA returns besides they have ODIs

(xx) Special Instructions for Filing of the FLA return

(a) Corporate entities are required to study the definitions before filing of the FLA return. These definitions are available in Excel format of the FLA return form and also available in Annex-1 as is attached with the FLA return Form

(b) Corporate entities are required to report in lakhs only in Block 1, 2, 4 & 5 and to report in actual Foreign Currencies in Block 3A of section IVForeign Assets.

Foreign Liabilities and Assets (FLA) return filing by Indian Corporates

3. Structure of the FLA return

  • The FLA return is structured in 5 Sections

> Section I – Identification Particulars of the Indian corporate entity

> Section II – Financial details of the Indian corporate entity

> Section III – Foreign Liabilities of the Indian corporate entity

> Section IV – Foreign Assets of the Indian corporate entity

> Section VVariation report

(i) Section I– Identification Particulars of the Indian corporate entity

(a) Name and address

(b) PAN

(c) CIN

(d) Contact details

(e) Accounting closing date

(f) Nature of business etc.

(ii) Section IIFinancial details of the Indian corporate entity at face value in lakh

(a) Total paid up capital

(b) Non-resident holdings

(c) Profit and loss account

(d) Reserves and Surplus

(e) Sales and Purchase

(f) Number of employees on payroll

(iii) Section III – Foreign liabilities of the Indian corporate entity at computed price

(a) Investments in India under the head FDIs where equity participation is minimum 10%

(b) Other capital like liabilities to direct investor and claims on direct investor

(c) Disinvestment in India during the year

(d) Investments in India under the head FDIs where equity participation is maximum 999%

(e) Investments in India under head FPIs in corporate entity other than FDIs at computed price

(f) Other Investments like outstanding liabilities with foreign unrelated parties

(iv) Section IV – Foreign Assets of the corporate entity at computed price

(a) ODIs where equity participation is minimum 10%

(b) Equity capital, reserves and surplus of foreign entity which is known as Direct Investment Enterprises (DIE)

(c) Direct investments Outside India generally known as ODI where equity participation is maximum 999%

(d) Portfolio investment Outside India at computed price

(e) Other Investments like outstanding claims on foreign unrelated parties

(v) Section V – Variation Report

(a) Paid up capital

(b) Net worth

(c) Total Sales

(d) Total Purchase

(e) Other Investments (liabilities)

(f) Other Investments (Assets)

4. Conclusion on Filing of the FLA Return by Corporates of India

(i) (a) Corporates are required to file the FLA return for the FDIs and ODIs (both) where these are outstanding as on 31st March through web portal of the RBI up to July 15th with the unaudited financial statements and up to September 30th with the audited financial statements.

(b) Hence filing of the FLA return is not required where FDIs and ODIs are not outstanding as on March 31st

(ii) Corporates are also required to file the FLA return for the ODIs where the APR has already been filed for the ODIs.

(iii) Corporates are not required to file the FLA return for the FDIs and ODIs where:

(a) FDIs are already transferred to a resident of India before March 31st

(b) FDIs are received on nonrepatriable basis

(c) Foreign trade receivables and credits payable are outstanding without FDIs and ODI as on March 31st

(iv) Individual residents and non-Corporates of India are not required to file FLA returns besides they have ODIs

(v) Corporates are liable for the penalties under the concept of compounding under the FEMA contraventions where the FLA return is filed late or not filed.

(Author can be reached at email address [email protected] or on Mobile No. 9811081957)

Disclaimer :  The contents of this article are solely for informational purpose. Neither this article nor the informations as contained herein constitutes a contract or will form the basis of a contract. The material contained in this article does not constitute or substitute professional advice that may be required before acting on any matter. While every care has been taken in the preparation of this article to ensure its accuracy at the time of publication. Satish Agarwal assumes no responsibility for any error which despite all precautions may be found herein. We shall not be liable for direct, indirect or consequential damages if any arising out of or in any way connected with the use of this article or the informations as contained herein.

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3 Comments

  1. Deepak Kumar says:

    Hi Sir,
    If an foreign investor purchases Shares of an Indian Company from an existing Resident share holder. whether the company needs to file FLA in this case?

    1. Satish Agarwal says:

      Question: What information should be reported in FLA return, if balance sheet of the company is not audited before the due date of submission?

      Answer: If the company’s accounts are not audited before the due date of submission, i.e. July 15, then the FLA Return should be submitted based on unaudited (provisional) account. Once the accounts gets audited and there are revisions from the provisional information submitted by the company, they are supposed to submit the revised FLA return based on audited accounts by end – September.

      Source:- Q.2 of FAQ under the head General Instruction dated 18/06/2014
      https://m.rbi.org.in/Scripts/FAQView.aspx?Id=95

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