Earlier, foreign direct investment (FDI) in an Indian company was reported with reserve bank of India (RBI) in two stages. First, at the time of inward remittance by way of filing form ARF. And at the time of allotment of shares (capital instruments) by way of form FC-GPR. This was done online through eBiz portal. There were separate forms for reporting FDI into LLP, transfer of shares between residents and non-residents and issues/transfer of convertible notes. W.e.f 1st September, 2018, all these have been integrated into Single master form (SMF). The Indian Government has taken this initiative to integrate reporting of foreign investment through a single form as a part of ‘Ease of doing Business’ initiative. A new filing platform FIRMS has come into place replacing eBiz platform.
To introduce this new filing system SMF, RBI came out with a circular in June 2018 requiring Indian companies to provide data input on total outstanding foreign investment as on date in form EMF. Link be given to the blog relating to EMF.
The new e-filing portal FIRMS at the moment facilitates filing of following transactions:
- Reporting of FDI into companies
- Reporting of FDI into LLP
- Transfer of share / capital in companies / LLP between resident and non-resident
- Issue / transfer of convertible notes.
Essential features of SMF reporting:
- At present 5 forms viz., FC-GPR, FC-TRS, LLP-I, LLP-II and CN are being made available on SMF.
- Earlier, reporting of foreign remittance was done on ebiz portal in two steps: ARF and FC-GPR but under new reporting regime, ARF and FC-GPR have been merged into single FC-GPR form which is now filed in SMF.
- SMF login ID for business user is to be created only for furnishing forms and returns (as EMF is for furnishing Information).
- Approval of reporting is subject to verification of business user by AD bank. All business users must be eKYC verified by the respective AD banks.
- FDI reporting in Form FC-GPR under SMF has to be done within 30 days after the allotment.
- Reporting under FC-TRS under SMF has to be done within 60 days of transfer of capital instruments or receipt / remittance of funds whichever is earlier.
- Form LLP-I & LLP-II is filed for reporting FDI & transfer of capital contribution or profit share in LLPs, respectively.
- Reporting in respect of issue or transfer of Convertible Notes (CN) is done in Form CN within 60 days of such transfer.
FC-TRS: Filing by Individual:
Reporting in FC-TRS can be done by the transferor / transferee company resident in India. In case of transfer between individuals, reporting can be done by resident individual after registering as business user and in this case the authority letter must be in the name of the person who is reporting.
Has ARF been abolished?
As per the user manual provided by FIRMS RBI, separate filing of form ARF has been done away with and the same is now merged in form FC-GPR. But practically, form ARF should not be ignored completely. There is no uniform practice being followed by the banks. A few banks are still insisting for a clarification letter wherein main details of Form ARF shall be mentioned is to be signed by the authorized director and filed as an attachment along with form FC-GPR / FC-TRS.
FIRMS has reduced the number of stages through which any reporting goes by limiting its reply to: Pending for approval & Approval or Rejection unlike eBiz, where there were multiple stages with the option of resubmission. Hence it is to be noted that under FIRMS, now there is no option of resubmission, resending or attaching any clarification once the reporting is submitted. The Authorized Dealer bank has to take due precaution while approving or rejecting the form and it cannot take more than 5 working days for doing the same.
You may also like to read our other blogs on FDI Reporting:
- New Reporting Structure of Foreign Investment : Practical Issues in Filing SMF at FIRMS
- Integrated Reporting of Foreign Investment in India
- Issue of Securities: A Glimpse into the new FDI Regime
- Reporting Requirement under FEMA (Part 1)
- Delays in Reporting FDI: Late Submission Fees (LSF)