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FLA Return Filing under FEMA

Ashish M. Shaji

| Updated: Mar 31, 2021 | Category: FEMA

FLA Return Filing under FEMA

FLA stands for Foreign Liabilities and Assets. FLA Return is a mandatory filing under Foreign Exchange Management Act 1999. Not filing this return before the due date shall be counted as a violation of FEMA, and penalty clause would be invoked for the violation of FEMA. In this article, we shall discuss about Foreign Liabilities and Assets Return and the process of the filing of the same.  

FLA Return- Meaning

It is an annual return on Foreign Liabilities and Assets, which is to be filed by an Indian Company and LLP to the Reserve Bank within the prescribed due date. This return can be filed online on the RBI portal.

Requirements to file the FLA Return

Companies that have received Foreign Direct Investment and or made such investments abroad in any of the financial year should submit the FLA return to the reserve bank.

The financial statement of the company for such particular financial year can explain the status of inward Foreign Direct Investment or outward Foreign Direct Investment.

What is the due date for filing this return?

Companies must submit the FLA Return based on audited/unaudited account by the 15th of July every year. In case the return is submitted on the basis of the unaudited account by the 15th of July, they are required to submit the revised return based on audited accounts by the end of September.

Audited or unaudited financials

In case the financials of the company are not audited or is not finalized prior to the due date of submission of return, then the return should be submitted on the basis of unaudited or provisional financials.

It may be noted that after the financials are audited, the company is supposed to file the revised FLA return on the basis of Audited accounts on the RBI portal.

Registration on the RBI portal

The company is supposed to get itself registered first on the RBI portal for filing the FLA return. This is for first time users. After you open the portal, you will find the draft of the Authority letter and verification letter at the bottom of the page. You are supposed to download it and get that printed and signed by the authorised personnel and also upload it on the portal in order to get successful registration. Again, this process is for companies registering for the first time.

Thereafter you may just simply log in using the username and password set by the company. When you enter the login details, it shall ask for the OTP (One Time Password), which will be sent to the registered phone number. Once you enter the OTP, you would be logged in successfully. 

How to file FLA Return?

When you log in, the homepage will be displayed, and therein you will find an option “FLA online form.” Click on that option, and then you will find another option, “Start Filing FLA form.” Now click on that option, and the form will be displayed, and you can enter the details as applicable to your company.

Division of FLA Return

This return is divided into 5 sections. They are as follows:

Division of FLA Return
  • Section I- Identification Particulars

Section I includes the details of the identification of the company. Some of the details required are the name of the company, PAN, CIN, name of the contact person, E-mail ID, Mob. No., nature of business, company whether listed or not, etc.

  • Section II- Financial Details

Section II requires details of the financials of the company. For this section, we are required to have the financials ready so as to enter correct data as on the end of the Financial Year. The details required in this section are total paid-up capital of the Indian Company, profit and loss, reserve and surplus, sales and purchase made, etc.

  • Section III- Foreign Liabilities

Section III requires details of the investments made in India. Some of the details include investment in India under Foreign Direct Investment scheme (10 per cent or more equity participation), investment in India under Foreign direct Investment scheme (less than 10% equity holding), portfolio investment in India, etc. 

  • Section IV- Foreign Assets

Section IV requires details regarding the Overseas Direct Investment. Some of the details include Overseas Direct Investment (10% or more equity holding), direct investment abroad (less than 10% equity holding), portfolio investment abroad, etc.

  • Section V- Variation Report

Section V is an auto-filled section. It means that you don’t require entering any data in this section. It will reconcile data automatically from the rest four sections filed earlier as may be applicable to the company.

And being the last section, click on the option “Submit Return” for final submission of the FLA return for such particular financial year. Acknowledgement shall be obtained on your mail-ID on successful submission of return.

What will be the consequence in case of non-filing of FLA Return?

The annual return on Foreign Liabilities and Assets should be submitted directly by all Indian Companies that have obtained FDI and or made FDI abroad in the previous year(s), including the current year.

There are no specific penalties for FLA however, not filing this return before the due date will be treated as violation of the Foreign Exchange Management Act, and penalty would be levied.

  • If an amount against which offence is quantifiable, a penalty of thrice the sum involved in the contravention;
  •  If the amount can’t be quantified, a penalty of up to 2 lakh rupees may be imposed; and
  • If the contravention is of continuing nature, a penalty of 5000 rupees for every day after the first day during which the contravention continues.

Conclusion

FLA return should be timely filed. In case you have any query related to the same, then you can reach out to RBI through mail. You can also run through some FAQs released by the reserve bank[1] in respect of the same.

Read our article:Penalties under FEMA Act Act, 1999

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Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on criminal and corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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