Annual Return on Foreign Liabilities & Assets (FLA)

Meaning of Foreign Liabilities & Assets Annual Return (FLA Return)

• Annual Return on Foreign Liabilities and Assets (FLA Return) Under FEMA 1999. As more companies involve themselves with foreign investments, the importance of the interchange Management Act (FEMA) regulations and their compliance becomes a significant a part of the companies’ operations.
• We needed to understand meaning of the FLA Return, FLA annual return are one among the compliances that need to be met by the businesses that are committed FDI (Foreign Direct Investments) or companies who invest in foreign companies either via venture or wholly owned subsidiaries, also termed as Overseas Direct Investment (ODI).
• FLA return is filed Online on RBI web-Portal on which we can file return is Link here https://flair.rbi.org.in/fla/faces/pages/login.xhtml
• Foreign Liabilities and Assets annual return should cover all the foreign investments made by the corporate and/or to the corporate and it must be directly submitted by the corporate to the banking concern of India.

What are requirement to file a FLA Return ?

• Companies that have received FDI (Foreign Direct Investments) and/or made FDI overseas in any financial year must file a FLA Return with the RBI.
• The company’s financial statement for that fiscal year can clearly show the status of Outward FDI or Inward FDI .
• In other words Foreign Liabilities and Assets is required to be submitted by all the Indian Companies which have received Foreign Direct Investment (FDI) or made Overseas Investment abroad within the previous year(s) including this year i.e., who holds foreign Assets or Liabilities in their Balance Sheets.

What is Due date of Filing of FLA Return

• Annual return on Foreign Liabilities and Assets has been notified under FEMA 1999 and it’s required to be submitted by all the India resident companies which have received FDI and/ or made overseas investment in any of the previous year(s), including this year by July 15 once a year.
• Required to be submitted by all the India resident companies which have received FDI and/ or made overseas investment in any of the previous year(s), including current year by July 15 once a year.
• All entities that have received FDI and/or made overseas investment in any of the last years are obligated to file an annual return on foreign liabilities and assets (FLA) (July 15 every year).
• If the FLA Return is submitted on the basis of unaudited accounts by July 15, they must submit a revised FLA Return on the basis of audited accounts by the end of September, i.e. September 30th.

In case Audited or Unaudited Financials

• If the company’s financials haven’t been audited or finalised by the deadline for filing the return, the FLA Return must be filed using unaudited or provisional financials.
• It should be noted, however, that once the financials have been audited, the company must file a revised FLA Return on the RBI Portal based on the audited accounts.
• Non-filing of the return before the maturity are treated as a violation of FEMA and penalty clause could also be invoked for violation of FEMA.

PERSONS REQUIRED TO FILE FLA ANNUAL RETURN

• As per the regulations of FEMA, 1999, any company who has either made ODI or received FDI, is required to file the FLA annual return. the businesses must report this financial year’s FLA furthermore because the previous year(s) assets and liabilities. within the case where an organization doesn’t have any foreign assets or liabilities for this year but has outstanding FDI or ODI from the previous year(s), it must file the FLA annual return providing the details of their outstanding assets or liabilities.
• The FEMA regulations also require partnership firms to file FLA annual return if they need received FDI or made ODI. within the case of partnership firms, the RBI will issue a dummy CIN upon its request which is able to be used just for the filing of FLA annual return.
• just in case a dummy CIN has already been issued, the partnership firm will use the identical for the filing of the FLA return.

How Do begin filling out FLA Return?

• After logging in homepage will display with the option “FLA ONLINE FORM” on the left hand side.
• When we click on FLA Online Form, we will see an option to “START FILING FLA FORM.”
• Start Filing FLA Form by clicking the Start Filing FLA Form button. The Form will appear, and you will be able to fill in the details that apply to your company.

FILING OF FLA RETURN

• It is provided that the filing of FLA annual return shall be made via an excel sheet. it’s required to be filed by all the businesses falling under the factors already mentioned.
• The filing of the FLA annual return needs to be done before the 15 of July of the respective year and must include data of FDI or ODI received or made by the corporate respectively for any previous year(s) and also the current year. the shape is to be mailed by any authorized member of the corporate from their email ID to the official email ID of the RBI i.e., fla@rbi.org.in. The members of the corporate authorized to file the FLA return are Company Secretary, Chief money dealer, and Directors.

• The filing of the FLA annual return is required to be made before 15^th July of the relevant year. The shape is to be mailed by any authorized member of the corporate from their email ID to the official email ID of the RBI i.e., fla@rbi.org.in.
• The members of the corporate authorized to file the FLA return are Company Secretary, Chief money handler, and Directors.
• The details filed must comprise of the financial details also as other required details in accordance with the businesses audited accounts. If the company’s accounts don’t seem to be audited before the maturity date of submission, i.e., July 15, then the FLA Return should be submitted supported an unaudited (provisional) account.
• Once the accounts get audited and there are revisions from the provisional information submitted by the corporate, they’re purported to submit the revised FLA return supported audited accounts by the top – September.
• No. Information should be reported for all the reference period, i.e. Previous March & Latest March. If the Account Closing Period of the corporate is different from the reference period, then the knowledge should lean for the reference period on internal assessment.
• After the filing of the FLA return, an acknowledgment mail is going to be sent by the RBI to the e-mail ID of the authorized person.
• Format for the FLA return can be found on link https://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx.
• Your queries is also addressed by sending an e-mail to fla@rbi.org.in.

FILING OF FLA RETURN BY PARTNERSHIP FIRM

• In case of Partnership firms, Branches, or Trustees have any outward FDI outstanding as by end-March of the reporting year, then they’re required to send asking mail to induce a dummy CIN number provided by RBI. which is able to enable them to file the Excel-based FLA Return.
• If any entity has already got the dummy CIN number from the previous survey, they ought to use the identical CIN number within the current survey also.

TRANSFER OF SECURITIES BY A NON-RESIDENT INVESTOR TO A RESIDENT INVESTOR

• If all non-resident shareholders of a corporation have transferred their shares to the residents during the reporting period and therefore the company doesn’t have any outstanding investment in respect of inward and outward FDI as on end-March of the reporting year, then the corporate needn’t submit the FLA Return.
• The details filed must comprise of the financial details similarly as other required details in accordance with the businesses audited accounts. just in case the corporate doesn’t have their accounts audited before 15 July, the corporate is to file the FLA return consistent with the unaudited accounts and have their accounts audited thereafter.
• After the audit, if there are any changes regarding the small print filed, the corporate has got to file another form with the updated details before the Judgment Day of September of the identical year.

What happen After the filing of the FLA return?

• An acknowledgement mail is going to be sent by the RBI to the e-mail ID of the authorized person. The format for the filing of the FLA return is often found on https://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx.
• Queries could also be addressed by sending an e-mail to, fla@rbi.org.in.

IMPORTANT POINTS FOR FILING FLA RETURN

• When submitting basic credentials, use the accountant’s e-mail address and cellphone number rather than the director’s or partner’s to ensure that the OTP is received without trouble.
• While filing FLA, make sure you have a stable internet connection because even a small disruption can create issues.
• Keep financial and other data on a spread sheet.
• The filled form can be saved as a PDF.

COMPANIES EXEMPTED FROM FILING FLA RETURN

Below are companies that are not required to file a FLA return

• Companies having issued shares on non-repatriable basis to the non-residents of India.
• The Corporates who don’t have any outstanding balance of FDI or ODI by the tip of the year are exempt from filing FLA return.
• Companies that have only received share application money and haven’t received any FDI or not made any ODI, are exempt from filing FLA return.

What is the penalty for failure to comply with the FLA Provision?

• Failure to file the return by the due date will be considered a breach of FEMA, and the penalty clause may be enforced.
• The penalties for violating the law or filing false information under the FEMA Act is 300 percent of the amount involved in the violation or Rs. 2 lakh if the offence is non-quantifiable; if the violation continues every day, the penalty is Rs. 5,000 for each day after the first day during which the violation continues; and the power to compound the violations has been delegated to all Regional Offices of RBI without any limit on the amount.
• The maturity for the filing of FLA return is on 15 of July of that year. just in case the FLA return filed is predicated on unaudited accounts, a revised form should be filed supported audited accounts before the tip of September of the identical year.
• Regional offices of RBI have the facility to compound contraventions with none limit.
• However above doesn’t apply to the regional offices of Kochi & Panaji

Conclusion :

Companies that have received FDI or made ODI must comply with the annual return on FLA requirements. If you’re a foreigner wanting to start a business in India contact us.

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