The Reserve bank of India has announced the new reporting structure for FDI related transactions in which they have combined different reporting into a single combined form i.e. the Single Master Form (‘SMF’) which subsumed all the existing reporting in different forms such as ARF, FCGPR, FCTRS etc. Also, by implementation of this new structure, a new reporting online portal (FIRMS) has been introduced in place of EBIZ.
FIRMS, RBI is an online reporting platform for reporting of foreign investments in India in SMF. It provides an online platform, 24*7 reporting facility for the users sitting at their respective locations without going/visiting anywhere.
Introduction of New System of Reporting in Single Master Form (Reporting structure- FDI)
The Reserve Bank of India has introduced two phases for making required reporting under the new system.
BENEFITS OF NEW REPORTING SYSTEM OF RBI:
RBI introduced this new system for smoothening the reporting system for transactions which are FDI related. All forms which are used for making required reporting to RBI have been combined in one form so that user can access one common platform for all reporting.
WHAT IS AN ENTITY MASTER FORM (“EMF “)?
The Indian entities (Companies, LLPs or startup) which have received the foreign investment in the past are required to register them by filing this form. The window to enter the information in the EMF was initially opened from 28/06/2018 to 20/07/2018 but the RBI again reopened the window from 01/09/2018, for those Indian entities, which were unable to upload their details under the EMF by submitting the reason for delay along with authority letter (prescribed by RBI).
For new Companies, LLPs or startup which have been set up after 30.07.2018, the EMF window is always open for them without any delay letter.
Note: Entity will authorize one person by issuing authority letter in his/her favour and through the Board Resolution and who will be eligible to add/update the foreign investment details of an Entity in the Entity Master and would be entirely responsible for the data entered and such authorized person shall possess the valid PAN no.
If the entity wishes to change the Entity user, it may contact RBI helpdesk, the details of which are available under “Contact Us” on https://firms.rbi.org.in/firms/. Also, the Entity may send a request to firstname.lastname@example.org for updating the registered email id and resetting the password.
Authority Letter submitted by the entity user will be verified by RBI and after RBI’s approval, the user will receive the password on their registered email ID from RBI email ID email@example.com.
(Note: If the user does not receive the mail notification for approval/rejection of the registration within the next 48 hrs. he/she may contact at firstname.lastname@example.org).
WHAT IS SINGLE MASTER FORM (“SMF “)?
RBI has introduced SMF on 01/09/2018 and merged 9 reporting forms into a single form, RBI also released a user manual (the “SMF Manual “) which clearly prescribed the procedure for filing a single master form (the “SMF “). With the introduction of SMF, ARF has been discontinued with effect from September 01, 2018. Now, a user is required to make a report of FDI received in the section under FCGPR only.
Reporting in SMF (provide one platform for making a different kind of reporting)
After getting the Entity user registration, the entity required to get the business user registration as well. For this, you need to go on https://firms.rbi.org.in/firms/ and select Registration Form for Business User and fill the necessary details and attach the authorization letter (the format of this letter is given in user manual for SMF). Please note that this registration can also be availed by an individual in the case where a resident individual is required to report.
AD Banker is authorized to process such Business user application therefore one should contact AD bank to whom the reporting was made (as per the IFSC chose or branch at the time of Business User registration).
DELAY IN REPORTINGS UNDER SMF:
User needs to attach the reason for the delay in reporting to AD bank which may be forwarded to the respective Regional office. RBI will advice on Late Submission Fee (LSF) as may be decided by the Reserve Bank, in consultation with the Central Government, for any delays in reporting. The payment of LSF is an additional facility for regularizing reporting delays without undergoing the compounding procedure.
However, this does not mean that the applicant cannot apply for compounding. Both options are available to the applicant for the transactions undertaken on or after November 7, 2017.
The late submission fee is for reporting delays only. Contravention for non-issue/ late issue of capital instruments or non-transfer/ late transfer of capital instruments and other contraventions of the provisions FEMA 20(R) will be proceeded against as per the procedure laid down in sections 13 and 15 of FEMA, 1999.
The LSF may be paid by way of a demand draft drawn in favour of “Reserve Bank of India” and payable at the Regional Office concerned.
AMOUNT OF LSF PRESCRIBED BY RBI FOR DELAY REPORTING:
|The amount involved in reporting (in Rs.)||Late Submission Fee (LSF) as % of the amount involved *||The maximum amount of LSF applicable|
|Up to 10 million||0.05 percent||Rs.1 million or 300% of the amount involved, whichever is lower|
|More than 10 million||0.15 percent||Rs.10 million or 300% of the amount involved, whichever is lower|
|* The % of LSF will be doubled every twelve months;
The floor (minimum applicable amount) for LSF will be Rs. 100
About the Author
Author is Divya Goel, ACS working as Assistant Manager- Company Secretary with Neeraj Bhagat & Co. Chartered Accountants, a Chartered Accountancy firm helping foreign companies in setting up business in India and complying with various tax laws applicable to foreign companies while establishing their business in India.