Published Mon, 19 Jun 2023 FEMA
Foreign Liabilities and Assets (FLA) Return is a crucial annual filing requirement for Indian companies, Limited Liability Partnerships (LLPs), and other entities that have received Foreign Direct Investment (FDI) or made FDI abroad. This comprehensive guide will provide you with all the essential information about the FLA Return, its applicability, provisions, and the process for submission.
FLA Return is an annual report that must be submitted by Indian entities that have received FDI and/or made FDI abroad to the Reserve Bank of India (RBI). The purpose of the return is to capture data on the outstanding foreign liabilities and assets held by these entities in their balance sheets. The FLA Return is governed by the provisions of the Foreign Exchange Management Act, 1999 (FEMA).
The FLA Return is applicable on:
An entity is not required to submit the FLA Return if:
The due date for filing the FLA Return is 15th July of every year. If the accounts are not audited before the due date of submission, the FLA Return must be submitted based on unaudited or provisional accounts. Once the accounts are audited, a revised FLA Return should be submitted by 30th September of the same year.
Registration on the RBI Portal: Entities required to file the FLA Return must register on the RBI Portal at https://flair.rbi.org.in. First-time users need to create an account by submitting the "FLA User Registration Form." The registration process involves uploading a scanned and signed Authority Letter and a Verification Letter in PDF format.
Filing the FLA Return: After successful registration, entities can log in to the portal using their username, password, and a One-Time Password (OTP) sent to the registered email address. They can then start filing the FLA Return by clicking on "FLA Online Form" and "Start Filing FLA Form."
The FLA Return is divided into five sections:
Non-filing of the FLA Return before the due date is considered a violation of FEMA, and penalties may be imposed. The penalties for violating the law or filing false information under FEMA can be up to 300% of the amount involved in the violation or Rs. 2 Lakh if the offense is non-quantifiable. If the violation continues, a penalty of Rs. 5,000 per day may be imposed for each day after the first day during which the violation continues.
The FLA Return is an essential compliance requirement for Indian entities that have received FDI or have made FDI abroad. It is crucial to understand the applicability, provisions, and filing process to ensure timely and accurate submission of the return. By following the guidelines and tips provided in this comprehensive guide, entities can successfully file their FLA Returns and stay compliant with RBI regulations.