FLA Return Filing – Comprehensive Guide by Vijendra & Co

FLA Return Filing is a critical regulatory requirement under the purview of the Reserve Bank of India (RBI) for Indian companies receiving foreign investments or holding foreign assets. Vijendra & Co provides expert support in ensuring accurate and timely FLA Return Filing to help businesses remain compliant with RBI mandates and avoid penalties.

Understanding the intricacies of FLA Return Filing is essential for all eligible companies, especially those engaged in international transactions or having foreign investment structures. The process involves submitting detailed financial and foreign asset/liability-related data to the RBI.

Introduction to FLA Return

All Indian businesses that received Foreign Direct Investment (FDI) or made foreign investments during the preceding fiscal year are required to file the Foreign Liabilities and Assets (FLA) Return every year. The Reserve Bank of India oversees this return, which is mandated under the Foreign Exchange Management Act (FEMA), 1999.

FLA Return Filing helps the RBI compile comprehensive statistics related to foreign assets and liabilities in India, which is crucial for the formulation of macroeconomic policies and international investment decisions.

Relevance of the FLA Return

All Indian businesses that received FDI during the reporting fiscal year must file the FLA Return, including:

• Companies that have issued shares to non-residents on a repatriable basis.
• Businesses that have made foreign investments in wholly-owned subsidiaries (WOS) or joint ventures (JVs).
• Companies having foreign assets or liabilities in their balance sheet.

Even if no new foreign transactions occurred in the current year, companies holding foreign investment from prior years are still required to file the FLA Return.

Exemptions from FLA Return Filing

The following entities are not required to file the FLA Return:

• Companies that have only received share application money and have not allotted any shares as of the end of the financial year.
• Companies that received non-repatriable investments from non-residents.
• Companies with no outstanding foreign liabilities or assets as of 31st March of the reporting year.
• Individuals and sole proprietors.

Due Date for Filing FLA Return

For data related to the fiscal year ending on March 31st, the FLA Return must be filed by July 15th of each year. The filing must be completed through the RBI's FLAIR (Foreign Liabilities and Assets Information Reporting) system.

It is important for companies to adhere to this deadline, as late filing may attract regulatory scrutiny and penalties.

Penalty for Late Filing of FLA Return

Failure to comply with FLA Return Filing requirements within the due date can result in penalties under FEMA. As per the Act:

• A penalty of up to three times the sum involved in the contravention or ?2,00,000 (whichever is higher) may be levied.
• An additional penalty of ?5,000 per day may apply for continued default.

These penalties emphasize the importance of timely and accurate filing. Professional support from firms like Vijendra & Co can help mitigate such risks.

Information Required for Filing FLA Return

To ensure accurate FLA Return Filing, companies must gather detailed information based on the audited or provisional financial statements for the reporting year. Below is a breakdown of the required sections:

Section I – Identification Particulars

• Name and address of the Indian company
• Corporate Identification Number (CIN)
• PAN (Permanent Account Number)
• Contact details and authorized signatory
• End date of the fiscal year
• Basic business information

Section II: Financial Information

In this section, the company must provide:

• Total paid-up capital
• Reserves and surplus
• Profit or loss for the reporting year
• Total assets and liabilities
• Turnover and net income

These financial indicators give the RBI a comprehensive view of the company’s entire financial status.

Section III – Foreign Liabilities

This is a crucial part of FLA Return Filing, where the company must report:

• Details of FDI received from non-residents
• Types of instruments issued (equity, preference shares, etc.)
• Country of the foreign investor
• Percentage of foreign holding
• Repatriable vs non-repatriable investments

Accurate classification of these investments is essential to avoid errors in the return.

Section IV – Foreign Assets

This section covers:

• Investments made by the Indian company in overseas entities (Joint Ventures, Wholly Owned Subsidiaries)
• Country of investment
• Type and nature of the foreign investment
• Whether the investment is equity, loan, or other financial instruments

Even if the overseas investment was made in prior years, it must be included if it appears in the current financials.

Section V – Variation Report

The variation report explains changes in foreign assets and liabilities from the previous year. It includes:

• Reasons for changes (e.g., new investment, disinvestment, capital infusion)
• Adjustments made due to forex rate fluctuation
• Other movements affecting the values

This helps the RBI track year-over-year variations in the external financial position of Indian entities.

Procedure for FLA Return Filing

At Vijendra & Co, we follow a structured and compliant methodology for FLA Return Filing:

1. Data Collection – We assist in gathering all financial data and foreign transaction records required for the return.
2. Verification of Applicability – We assess whether your company is liable to file the FLA Return and identify relevant foreign investments.
3. Registering on FLAIR Portal – If it’s the first time, we help you register on RBI’s FLAIR portal using authorized credentials.
4. Preparation of Return – Based on audited or provisional financials, we fill in the respective sections with accurate and consistent data.
5. Internal Review – Our team conducts a thorough review before submission to minimize errors or inconsistencies.
6. Submission on RBI Portal – The finalized return is submitted electronically through the FLAIR system.
7. Acknowledgment and Compliance Record – We ensure that you retain the submission acknowledgment and maintain documentation for future audits or inspections.

File Your FLA Return Easily with CS Vijendra & Co

Handling FLA Return Filing can be challenging, especially for companies with complex foreign investment structures. Errors or omissions in the return can invite regulatory penalties and scrutiny. With extensive experience in FEMA compliance and RBI reporting, Vijendra & Co ensures seamless, precise, and timely FLA Return Filing for businesses across sectors.

Whether your company is a startup receiving its first foreign investment or a multinational enterprise with multiple cross-border holdings, our specialized team can simplify the entire FLA Return Filing process.

Vijendra & Co stands as a trusted compliance partner, offering professional assistance for FLA Return Filing and other regulatory filings, helping Indian businesses maintain their statutory obligations effortlessly.