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FLA Return under FEMA : four important points

July 3, 2017     by Anupama

FLA (Foreign Liabilities and Asset) Return under FEMA (Foreign Exchange and Management Act, 1999) is Annual Return required to be submitted by all the India resident companies, Partnership firms, Branches or Trustees which have received FDI and/ or made overseas investment in any of the previous year(s), including current year.

 

Four important points that one should  know about FLA Returns:

  • Due Date:- FLA is required to be submitted by July 15 every year. In case FLA filed on the basis of provisional accounts, revised FLA is to be filed based on audited accounts before September end.
  • Non Compliance:- Non-filing of the return before due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA. The penalty as prescribed under the FEMA is “THRICE” the sum involved in contravention or Rs. 2 lakh if the offence is non-quantifiable and if the contravention is continuing every day, then Rs. Five Thousand for every day after the first day during which the contravention continues.
  • Compounding for delay in filing:- The powers to compound the contraventions have been delegated to all Regional Offices of RBI (except Kochi and Panaji) without any limit on the amount of contravention.
  • Exemptions:-
    1. Where Indian company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year
    2. If a company has received only share application money and does not have any foreign direct investment or overseas direct investment outstanding as on end-March of the reporting year
    3. Companies which have issued the shares to non-resident only on Non-repatriable basis are not required to submit the FLA Return.

 

Procedure of Filing:-

  • The FLA Return has to be submitted in excel based format, which has inbuilt checks and validations, any other attachment should not be forwarded along with the FLA return.
  • Company’s financial details along with other relevant details needs to be filled in the return based on the audited financial accounts.
  • After filling in the requisite details, the Company can file the FLA Return by e-mailing the same to the RBI at [email protected] from an official E-mail address of any authorized person.
  • On submission of the FLA return, an acknowledgement will be forwarded to the E-mail address of the authorised person
  • The latest format of FLA Return is available on RBI’s web site at the following link: https://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx
  • Any query regarding filling of FLA return should be sent to email [email protected]. You may also contact RBI person handling FLA return.

 

Note:- Partnership firms, Branches or Trustees which are having FDI as on end of the reporting year, then the same are also required to file excel based FLA Return. These persons should send a request mail to get a dummy CIN number which will enable them to file the Excel based FLA Return. If any entity has already got the dummy CIN number from the previous year, they should use the same CIN number in the subsequent years also.

 

 

 

13 thoughts on “FLA Return under FEMA : four important points

  1. Hello Sir!
    How to apply for Dummy CIN for a LLP? Do we need to send an email from the authorised Signatory or anyone can do it? And LLPs capital doesnt constitute Shares rather it is shown as contribution. Is there any other Format for LLPs?How to fill the FLA Return for LLP?

    1. 1. The submission of FLA return is regulated pursuant to RBI Circular (https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10083&Mode=0) wherein all LLPs having FDI or ODI are to report their Assets and Liabilities by 15th July every year in Form FLA. The FLA Return is to be filed in an Excel utility format provided by RBI and for submission of said return, an LLP is required to have Dummy CIN allotted by RBI. (To obtain the dummy CIN mail to: [email protected] ). Kindly note that if the LLP does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year, it need not submit the FLA Return. For further information kindly follow the link (https://m.rbi.org.in/Scripts/FAQView.aspx?Id=95).

  2. An IP has ODI JV and files APR and FLA every year. Is application for compounding for late filing of FLA (ODI) applicable? if yes, what are the supporting documents are to submitted along with compounding appln. In the exemptions “Where Indian company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year” is mentioned. Since this company has only ODI (and not FDI), is the exeption applicable? Pl clarify.

    1. We could not understand why you intend to go for compounding? Has it been directed by the Regulator? We wouldn’t advise to go for compounding suo moto just for late filing of APR.
      The exemption quoted in your query is applicable on such companies which do not have any current as well as previous inward or outward FDI. Outward FDI corresponds to ODI. So the exemption is not applicable in the given case.

  3. Thanks for this informative article. The amount of penalty is not clearly mentioned. you say if it s quantifiable then ___ is the amount and if not then ____. How do we know if this is quantifiable or not?

    1. Quantifiable and non- quantifiable can be interpreted as in case of simple English. Imposing a penalty and a way to impose it, is all at the discretionary power of the appropriate authority .

    1. FLA return is 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).
      Individual investing outside India are not require to file FLA returns.

    1. In accordance to Regulation 238 of Insolvency and Bankruptcy code 2016, any Company under the procedure of winding up has to comply with IBC.
      Though nothing has been mentioned in the FEMA guidelines and regulations, taking a conservative view you can file the FLA return.

  4. One of our client has not filed the FLA, we are ready to file the FLA. Our only concern as we are filing now, will they raise any demand for the late filing of FLA. If yes, is there any case law which is of same nature of our company and waived penalty.

    Thanking you in advance

    1. As per the FAQS issued by the RBI on Annual Return on Foreign Liabilities and Assets (FLA return) under FEMA 1999 “Non-filing of the return before due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA”. Nonetheless, we advise you to file it, better to put a stop to continuity of offence.

    1. An Indian Party (IP) / Resident Individual (RI) which has made an Overseas Direct Investment (ODI) has to submit an Annual Performance Report (APR) in Form ODI Part III to the Reserve Bank by 30th of June every year in respect of each Joint Venture (JV) / Wholly Owned Subsidiary (WOS) outside India set up or acquired by the IP / RI

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