FLA Return Filing for Indian Entities
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The FLA (Foreign Liabilities and Assets) Return is an essential annual compliance requirement for Indian entities such as companies, LLPs, and others involved in Foreign Direct Investment (FDI) or Overseas Direct Investment (ODI). Mandated under the Reserve Bank of India (RBI) and the Foreign Exchange Management Act, 1999 (FEMA), this return ensures proper reporting of foreign liabilities and assets appearing in the financial records of these entities.
At RMC, we specialize in providing expert assistance to simplify the FLA Return filing process for Indian businesses and ensure timely compliance.
What is FLA Return
The Foreign Liabilities and Assets (FLA) Return is an annual report that captures detailed data on foreign investments and liabilities of Indian entities. This information is submitted to the RBI and aids in regulating foreign exchange transactions as per FEMA guidelines. Indian businesses engaged in receiving or making foreign investments must comply with this filing requirement to avoid penalties.
Who Should File the FLA Return?
Entities required to file the FLA Return include:
- Indian Companies registered under the Companies Act, 2013.
- Limited Liability Partnerships (LLPs) incorporated under the LLP Act, 2008.
- Other Entities such as SEBI-registered Alternative Investment Funds (AIFs), partnerships, and public-private partnerships involved in foreign investment transactions.
Exemptions from Filing FLA Return
Entities are not required to file the FLA Return if:
- They have not received FDI or made ODI in the current or previous financial years.
- Their foreign investment is limited to share application money without outstanding investments as of March 31 of the reporting year.
- Non-resident investors have transferred their shares to residents, leaving no FDI outstanding by the end of the reporting year.
Due Date for FLA Return Filing
The FLA Return must be submitted by July 15 each year. In cases where accounts are unaudited by the deadline, entities should file the return using provisional or unaudited data. A revised submission is required by September 30 once the accounts are audited.
Penalties for Non-Compliance
Failure to file the FLA Return on time or submitting incorrect data can result in penalties under FEMA:
- Late Submission Fee (LSF): A fee of INR 7,500 may apply if the return is filed late but before enforcement action begins.
- FEMA Penalties:
- Monetary penalty of up to 300% of the transaction amount involved or a minimum of INR 2 lakh if the violation amount cannot be determined.
- Daily penalties of INR 5,000 may apply for continued non-compliance after initial detection.
Information Required for FLA Return Filing
The FLA Return consists of five key sections designed to comprehensively capture an entity’s foreign liabilities and assets:
- Section I – Identification Details:
- Pre-filled entity details such as company name, PAN, and CIN.
- Contact information, including name, phone, email, and website.
- National Industrial Classification (NIC) code for the primary revenue-generating activity.
- Specific details about FDI participation and foreign collaborations.
- Section II – Financial Information:
- Paid-up capital, segregated by participating and non-participating shares.
- Profit/loss before and after tax, dividend payments, and tax on dividends.
- Domestic and foreign sales and purchases.
- Employee count in the reporting entity.
- Section III – Foreign Liabilities:
- Details of FDI in India for both 10% or more equity participation and less than 10% equity holding.
- Information on portfolio investments and other liabilities owed to foreign unrelated parties.
- Section IV – Foreign Assets:
- Information on ODI, including equity holdings abroad and disinvestments.
- Details of portfolio investments and debt securities held outside India.
- Section V – Variation Report:
- Auto-generated comparisons of current and previous year’s data, highlighting discrepancies.
How to File the FLA Return
Since June 2019, the FLA Return filing process has shifted to an online portal known as the FLAIR system. Here’s a step-by-step guide:
- Register on the FLAIR Portal:
- Access the FLAIR portal’s official website.
- Complete the registration form with CIN/Registration Number, PAN, company name, and contact details.
- Provide the details of the authorized person, including PAN and contact information.
- Upload Necessary Documents:
- Submit a verification letter, authorization letter, and PAN card copies for the entity and authorized person.
- Prepare the Return:
- Log in to the portal after receiving credentials from the RBI.
- Complete the five sections of the FLA Return.
- Review and Submit:
- Download the draft return for review.
- Submit the return online and receive an acknowledgment upon successful filing.
Post-Submission Notes
- Ensure the registered email ID is valid, as login credentials and OTPs are sent there.
- Any change in entity details (such as name or email ID) requires account deactivation and re-registration.
- Utilize the draft feature to review and verify data before final submission.
Simplify Your FLA Return Filing
At RMCauditors, our team of professionals is dedicated to assisting you in filing your FLA Return accurately and on time. From understanding compliance requirements to completing the online filing process, we ensure a hassle-free experience for your business.
Start your FLA Return filing journey today with RMCauditors and focus on your business while we handle the complexities of regulatory compliance!
For expert guidance on company incorporation and regulatory compliance, consult .com today RMCAuditors is here to help! Text us on whatsApp or call us today .
FAQs
The Foreign Liabilities and Assets (FLA) Return is an annual report submitted to the RBI by Indian entities engaged in receiving or making foreign investments. It captures detailed information about foreign liabilities and assets as per the financial records
The following entities must file the FLA Return:
- Indian companies registered under the Companies Act, 2013.
- LLPs incorporated under the LLP Act, 2008.
- Other organizations, such as SEBI-registered Alternative Investment Funds (AIFs), partnerships, and public-private partnerships involved in foreign investment activities.
The FLA Return must be filed annually by July 15 of each year.
If accounts are not audited by July 15, the return should be filed using provisional or unaudited data. A revised return must then be submitted by September 30 after accounts are audited.
A Late Submission Fee (LSF) of INR 7,500 may be imposed if the return is filed after July 15 but before enforcement action begins.
Penalties under FEMA for non-filing include:
- A monetary penalty of up to 300% of the transaction amount involved or a minimum of INR 2 lakh if the amount cannot be determined.
- A daily penalty of INR 5,000 for continued non-compliance after detection
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