Introduction
As per section 6 of Foreign Exchange Management Act, 1999 (“FEMA”) the Reserve Bank of India (“RBI”) permit certain capital account transactions with respect to acquisition of shares, transfer, borrowing, lending, giving guarantee, deposits, export, import etc. to a person resident outside or transactions between resident and non-resident. The RBI issues certain regulations and directions with respect to the capital account transactions.
RBI has issued guidelines and directions to report such instances in particular forms. Since 2018, RBI has introduced an online application/portal FIRMS (Foreign Investment Reporting and Management System) which would provide a Single Master Form (“SMF”) subsuming all existing reports. FIRMS was made available in two phases. In the first phase the first module viz. Entity Master was made available online. In the second phase the second module was made available. With the impletion of SMF, the reporting of FDI, which was a two-step procedure viz., ARF and FC-GPR were merged into a single revised FC-GPR. In the year 2018, various forms were made available on FIRMS for reporting such as FC-TRS, FC-GPR, LLP-1, LLP-2, ESOP, DRR and DI. Form InVi was made available for filing in SMF in the year 2019.
Business User (“BU”)
A BU is an applicant who reports the transaction in Single Master Form in FIRMS. A BU can use his login credentials for only the entity that has authorized him/her to report the transactions. If the person wants to act as a BU for another entity, he must register himself separately. Further, at the time of registration, the BU must select the IFSC code of the bank which would approve the e-KYC (explained under the head “Registration of Business User”). In case the IFSC details are changed i.e., BU wishes to submit the reporting to another branch or another bank, while the entity being the same, the BU needs to repeat the registration process for Business user with the new IFSC code and obtain separate Login.
Every BU has to be KYC verified before any reporting is made in the SMF. For the remittance received from any non-resident investor, the KYC of the same is to be provided along with the forms in SMF as and where applicable.
Process Flow for Business User
Entity User
A Entity user is a person authorized by Entity (company/LLP/startup) to register an Entity in the Entity Master of FIRMS application.
The entity user would be the sole person authorized to add/update the foreign investment details of an Entity in the Entity Master and would be entirely responsible for the data entered.
Various details are to be inserted such as Name, User Name, email, PAN of authorized person, mobile no. entity name, type of entity, CIN/LLPIN, regional office name, registered office address, authority letter to be attached. Once the credentials are created, further, information of the entity to be inserted such as CIN/LLPIN, Date of Incorporation, registration number if allotted by RBI, whether the company/LLP is under investigation by Directorate of Enforcement or any other investigative agency for violation of FEMA Act, Address of the entity, email, NIC code, Paid up capital as on date, Foreign Portfolio Investment, Foreign Investment in the Company/LLP, date of issue/transfer etc.
Business User
FIRMS portal for filing forms by BU users can be accessed over internet via http://firms.rbi.org.in
Step 2: At the login page click on Registration form for New Business User fill in the details
After entering the details, click on submit button, a message will pop record saved successfully.
Within 2-3 days of submitting the details, a login will be created and the user will be able to fill in the details. If there is an error, the User will receive an email with the details enlisted for the errors. The user has to rectify the details and re-submit the details.
Once, the approval email is received from RBI, the user has to file forms for reporting of capital account transactions.
Conclusion
With the introduction of FIRMS SMF the reporting has become very efficient and with less hassle.
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