RBI FLA Return

INTRODUCTION :

RBI vide A.P. (DIR Series) Circular No. 37 dated June 28, 2019 introduced new mechanism for filing of FLA Return, to enhance the security-level in data submission and further improve the data quality.

LEGAL REQUIREMENT OF FLA

The RBI has introduced the requirement of Annual Return on Foreign Liabilities and Assets (FLA) in order to capture the statistics relating to Foreign Direct Investment (FDI), both inward and outward in a more comprehensive manner as also to align it with international best practices.

ELIGIBILITY TO FILE FLA

It would facilitate data submission by all Indian Companies, Partnership firms(also included LLP’s vide A.P. (DIR Series) circular no. 22 dated October 21, 2015), eligible entities {including the alternative investment funds (AIF) registered with the Securities and Exchange Board of India (SEBI) as also the reporting of foreign investment in the form of capital/profit share contribution received/transferred in case of LLPs and investment by persons resident outside India in an investment vehicle and as defined in Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations 2017, dated November 7, 2017}.

DETAILS REQUIRED IN FLA

Investor-wise direct investment and other financial details on fiscal year basis as hitherto, where all reporting entities are required to provide information on FATS (Foreign Affiliate Trade Statistics) related variables & other relevant details.

DUE DATE FOR SUBMISSION OF FLA RETURN

FLA return is mandatory under FEMA 1999 and companies are required to submit the same based on audited/ unaudited account by July 15 every year.

MAIN OBJECTIVE BEHIND INTRUDUCING NEW PROCESS FOR FILLING FLA?

As mentioned earlier, this process has been introduces, to enhance the security-level in data submission and further improve the data quality. The email-based reporting system for submission of the FLA return was replaced by the web-based system online reporting portal.

PROCESS FOR FILLING UNDER WEB BASED SYSTEM;

> RBI has provided a web-portal interface https://flair.rbi.org.in to the reporting entities for submitting “User Registration Form” (containing entity identification and business user details, where LLPs and AIFs will no longer required to use dummy CIN). The successful registration on web-portal will enable users to generate RBI-provided login-name and password for using FLA submission gateway and would include system-driven validation checks on submitted data.

> A new login is to be created (KYC details, such as Name, CIN, Contact, etc) at the web-portal along with Authority and Verification letter in the format prescribed by the RBI.

√ Authority letter:

The authority letter is to be obtained from reporting company on its letter-head, in the format as indicated. It should be signed by the consent authorised authority. The scan copy (as PDF/JPG) of the same needs to be uploaded.

√ Verification letter:

Simple typed letter (without any signature) in the prescribed format in MS WORD/ docx file, needs to be uploaded (Please do not scan). Please note that Verification letter will have only the name and designation of the signatory that authorised the user in the authority letter.

> Reporting entities will get system-generated acknowledgement receipt upon successful submission of the form.

> Form can be revised, if required, and view/download the information submitted.

> Entities can submit FLA information for earlier year/s after receiving RBI confirmation on their request email.

CONSEQUENCE OF NON-COMPLIANCE

Indian entities not complying with above will be treated as non-compliant with Foreign Exchange Management Act, 1999 and regulations made there under.

OTHER IMPORTANT FAQ/S

1. What will be the consequences in case we do not file the said FLA Return by 15th July, as our accounts are not audited as yet, and we do not wish to file it with unaudited figures. Will there be any imposition of penalty or prosecution initiated against the company by RBI or FEMA? Since nowhere it is mentioned either in the Circular No. 145 dated June 18, 2014 or in the Annex to AP (DIR Series) Circular No. 145 about the penalty or the prosecution, so, can we assume that we can file the same once our accounts are audited without any risk of penalty or other proceedings from the concerned authority in future?

Annual return on Foreign Liabilities and Assets has been notified under FEMA 1999 and it is required to be submitted by all the India resident companies which have received FDI and/ or made overseas investment in any of the previous year(s), including current year by July 15 every year. Non-filing of the return before due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA.

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

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.

3. In case where Account Closing Period of the company is different from reference period (end-March), can we report the information as per Account Closing Period?

No. Information should be reported for all the reference period, i.e. Previous March and Latest March. If Account Closing Period of the company is different from the reference period, then information should be given for the reference period on internal assessment.

REFERENCE’s

www.rbi.gov.in & RBI vide A.P. (DIR Series) Circular No. 37 dated June 28, 2019.

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Member Since: 23 Jan 2019 | Total Posts: 5
Mr. Karan Nagdev is an associate member of Institute of Company Secretaries of India (ICSI) with a Bachelor's degree in Commerce, pursuing Law and having extensive experience of more than 4 years in the area of Company Secretarial Compliances of various Category / Sector of Companies including liste View Full Profile

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