What is FLA Return or RBI Annual Return?
It is a return filed by an eligible entity with the Reserve Bank of India, wherein foreign assets and liabilities held by the company are disclosed.
Why are companies required to file FLA Return?
The information collected from Indian resident companies/LLPs/Others on their foreign financial liabilities and assets position as at end-March of the previous financial year (FY) and end-March of the latest FY, is used in the compilation of India’s Balance of Payments (BoP) and International Investment Position (IIP).
Which companies are required to file FLA Return?
Entities which have received FDI (foreign direct investment) and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who holds foreign assets or/and liabilities in their balance sheets.
The entities here means:
- A Company within the meaning of section 1(4) of the Companies Act, 2013.
- A Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008
- Others [include SEBI registered Alternative Investment Funds (AIFs), Partnership Firms, Public-Private Partnerships (PPP) etc.]
What is the due date for filing Annual Return?
FLA Return should be submitted on or before Jul 15, every year. The Information should be reported for the reporting period only (April -March), i.e. for previous end-March and the latest end-March.
What are the consequences for non-filing of FLA Return?
Annual return on Foreign Liabilities and Assets has been notified under FEMA 1999 and eligible entities are required to submit the return on or before July 15 every year. Non-filing of the return before the due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA (A.P. (DIR Series) Circular No. 29, dated February 02, 2017).
Is it mandatory to provide Audited figures in FLA Return?
No. If the audit is not complete before the due date of FLA Return i.e. Jul 15, then the company shall furnish unaudited figures based on the internal assessment. Once the audit is done and there are revisions from the provisional information, the company can submit the revised FLA return based on audited accounts by end–September.
What should be the reference period if the company is following a different financial year?
The reference period means the period from April to March. Even though the company is following a different financial year, the information should be submitted for the reference period only, based on the company’s internal assessment.
Can FLA Return be filed after the due date?
Yes. FLA Return can be filed after the due date with the permission of RBI.
Can FLA be submitted in old format?
No, FLA Return can only be submitted via online portal https://flair.rbi.org.in. RBI will not accept FLA Return in old format.
Whether filing of FLA return mandatory in following cases:
Company/LLP/Others did not receive FDI or made any overseas investment in any of the previous financial years including current year
If the Company has received only share application money
NO, if the company has received only share application money and does not have any outstanding direct foreign investment or overseas direct investment as on end-March of the reporting year.
Company has not received any inward FDI/ made overseas investment in the current reporting year but has outstanding direct FDI and/or ODI
YES, the company shall submit FLA return till it continues to have outstanding FDI and/or ODI in its balance sheet.
All non-resident shareholders have transferred their shares to resident shareholder during the reporting period and company does not have any outstanding ODI and/or FDI as on end-March of reporting period
NO, the company is not required to file an FLA Return, provided it does not have any outstanding FDI and/or ODI.
Shares issued by a company to non-residents on non-repatriable basis
NO, shares issued on a non-repatriable basis is not considered as an foreign investment, therefore it is not required to submit an FLA return in this case.
Whether FLA Return has any attachments?
NO, FLA Return does not have any attachments. The entities are required to submit only the information as required by the Form.
Whether FLA return filing is applicable only to companies ?
NO, FLA Return should be submitted by registered partnership firms (registered under Partnership Registration Act) or branches or trustees, who have made overseas direct investment.
How to submit an FLA Return ?
Under the new system, the company is required to submit FLA Return only through an online portal https://flair.rbi.org.in. To submit the FLA Return, the entities first need to create a business-user through “Entity-User Registration form”.
Who and how to Register on FLAIR-RBI?
Every eligible entity which is required to submit FLA return with RBI, should first register themselves on the RBI online platform. The company is required to register on https://flair.rbi.org.in The Registration process is web based and simple.
Whether domestic assets and liabilities of Indian Party are required to be reported in FLA Return?
NO, domestic assets or liabilities (even if it is in foreign currency) should not be reported in the FLA return.
If an overseas subsidiary/joint venture is following a different financial year from the reference period/reporting period, what information should be reported in FLA Return?
In such case, the company should furnish information as at end-March of previous year and latest year based on the internal assessment basis.
Whether information to be reported of immediate holding company or of ultimate holding company as well?
The FDI reporting should be based on the country of immediate investors. However, if there are any receivables/payables with the non-resident ultimate holding company, then the same should also be reported at ‘Other capital’.
How to file revised FLA return with RBI?
Yes, a company can file a revised FLA return with RBI for current as well as the previous year(s). For this, the reporting company needs to make a request to RBI to enable the same in the portal. The portal has a provision to make such a request. Or else, the reporting company can also write to RBI ([email protected]) seeking approval for accessing submitted returns for revision in the submitted information.
What are the valuation guidelines for reporting foreign equity investment for listed and unlisted companies?
In case of Foreign Direct Investment:
- For Listed company: The closing share price as on end-March of Indian Company for previous reporting period and current reporting period should be used for valuation of non-resident equity investment.
- For Unlisted company: In case, the Indian company is unlisted, OFBV- Own Fund Book Value Method should be used for valuation of non-resident equity holding.
In case of Overseas Direct Investment:
- For Listed Company: If the Direct Investment Entity is listed overseas, then closing share price as on end-March or previous year and end-March of current year should be used for valuation of equity investment done in such overseas entity.
- For unlisted company: In case, the Direct Investment Entity is unlisted, OFBV- Own Fund Book Value Method should be used for valuation of equity investment done in such overseas entity.
How acknowledgement for submission of FLA Return is provided?
Acknowledgement is system generated. Upon the final submission of FLA Return, acknowledgement is generated. No separate email is sent regarding the same.
What is the due date for submission of FLA Return for FY 2019-20?
The RBI has further extended the date for filing FLA return from July 31, 2020 to August 14, 2020. The said extension is provided due to technical difficulties at RBI-FLAIR portal.
Thank you for visiting my blog. If this article has helped you in any way, then like, share or leave a comment.
Disclaimer: The information given on this site is based on my understanding and knowledge on the subject and does not constitute legal opinion or advice to the users. All information is provided in good faith, to create awareness of legal provisions, compliance and procedures and are solely for knowledge sharing purpose. however, we make no representation of any kind, express or implied, regarding the accuracy, adequacy and completeness of any information on site all the time. Hence you are advised to opt for professional advice before acting on the information provided herein.