International transactions are gaining momentum and more companies are getting involved in foreign investments. Therefore, RBI has placed a mechanism whereby the onus has been put on companies undertaking such transactions to report their Foreign Liabilities and Assets. Foreign Liabilities and Assets (FLA) is an annual return that shall be filed by every company that has either received foreign direct investments or has made any overseas investments.
Any company that has received FDI or made any overseas investment shall be required to file the Annual FLA return. Further, if a company has not undertaken any such transaction during the current year but has outstanding ODIs or FDIs of the previous years, still it needs to file its FLA return disclosing the balance of assets and liabilities. The following persons are required to file the FLA return:
In case of partnerships that have undertaken FDI or ODI transactions, the partnership firm shall request the RBI to issue a dummy CIN pursuant to which it shall file its FLA return. In case the RBI has already issued a dummy CIN, then the partnership firm shall use the same for filing the FLA return. The due date of foreign liabilities and asset return filing is 15th July every year.
Following is the step-by-step procedure to file the FLA return:
1. You need to log in to the FLAIR system i.e., Foreign Liabilities and Assets Information Reporting (FLAIR) System. In case you are a new entity, then click on the ‘Registration (For New Users)’ option.
2. After login, you will find the ‘FLA Online Form’ option. Click on the same and then click on ‘Start Filing FLA Form’.
3. The FLA return is divided into 5 different sections i.e.,
4) After filling in the details in the last section, click on the ‘Submit Return’ option for the final submission of the FLA return. After submission, an acknowledgment of successful submission shall be sent to your Email ID.
In the following cases, it is not required to file the FLA return:
However, it shall be noted that even if the company has not received any foreign direct investment or made any overseas direct investment during the current year but has any outstanding FDI or ODI during the preceding years, then such companies are required to file the FLA return by 15th July for each year.
In case the FLA return is not filed on or before the due date, then it shall attract penal consequences under FEMA 1999. The company that fails to file the FLA return will be liable to a penalty of thrice the amount involved in the contravention in the case where the contravention is quantifiable. However, if the contravention is not quantifiable, then the company shall be liable to pay Rs. 2 lakhs for the contravention. Further, in case of continuing contravention, a penalty of Rs. 5000 per day shall be paid by the company.
Therefore, it is important to comply with the requirements of FLA returns. In case of any assistance in FEMA compliances, please feel free to contact the ASC Group!
The due date for filing the FLA return is the 15th of July each year.
As the due date for filing the FLA return is 15th July, therefore, there is a possibility that there might be changes in the details submitted in the FLA return after the audits. In such a case, a revised FLA return shall be submitted on the basis of audited accounts on or before 30th September.
The RBI has launched a separate portal for filing the FLA return i.e., the Foreign Liabilities and Assets Information Reporting (FLAIR) portal. Before filing the FLA return, you need to get registered in the RBI FLAIR portal. Once registered, an entity can proceed to file the FLA return using the user ID and password.
In case of contravention in the filing of FLA return of delay in the same, Regional Offices of RBI have been authorised to compound the contraventions. Therefore, an application can be made for the same.
The details required in filing the FLA return have been divided into 5 different sections. This include:
Yes. If the partnership firms or limited liability partnership firms have received FDI or have made any ODI, then they shall be required to file the FLA return.
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