FLA Return Filing: Process, and Applicability

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.

Who Needs to File FLA Return?

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:

• Companies
• Limited Liability Partnerships (LLPs)
• Any other body [like partnerships, SEBI registered AIFs, Public-Private Partnerships (PPP) etc.]

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.

How Do I File FLA Return Online in India?

Following is the step-by-step FLA Return Process for FLA Return Filing:

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 Return 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.,

• Section-I: Identification Particulars: This section includes identification details of your company.
• Section-II: Financial Details: This section includes the financial details of the company at the end of the financial year.
• Section-III: Foreign Liabilities: This section includes the details of the investments made in India. It normally includes foreign direct investments, portfolio investments etc. 
• Section-IV: Foreign Assets: This section includes overseas direct investments, portfolio investments abroad, etc.
• Section-V: Variation Report: This is an auto-populated section that will capture the details from the previous four sections.

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. 

Non-Applicability of FLA Return

In the following cases, it is not required to file the FLA return:

• If a company has not made any overseas direct investment or received any foreign direct investment either in any of the preceding years or the current year.
• If a company has only received application money and does not have an outstanding balance of overseas direct investment or foreign direct investment as of the end of the financial year.
• In the case of companies that have issued shares only to non-residents on a non-repatriable basis shall not be required to file the FLA return in case of transfer of shares by non-resident shareholders to resident shareholders.

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.

Penalty for Not Filing FLA Return

In case the FLA return is not filed on or before the due date, then it shall attract penal consequences under FEMA Act 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.

Also, Check "FEMA Compliance Consultant"
 

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 ASC Group.