Expert Assistance

The Foreign Liabilities and Assets (FLA) return is a mandatory annual compliance requirement prescribed by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA), 1999.

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About FLA Filing

 

• Purpose: The return collects data on the extent of foreign investment received in India and investment made by Indian entities abroad.

• RBI's Use: The collected data is crucial for the RBI to compile India’s national statistics, specifically the Balance of Payments (BoP) and International Investment Position (IIP), which are vital for economic policy and regulatory decisions.

• Reporting Status: It reports the outstanding position of all foreign liabilities and assets as on 31st March of the preceding financial year.

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Who Must File (Applicability)

 

FLA filing is mandatory for any Indian entity, including Companies, Limited Liability Partnerships (LLPs), SEBI-registered Alternative Investment Funds (AIFs), Partnership Firms, and Public Private Partnerships (PPPs) that meet either of the following criteria:

1. The entity has received Foreign Direct Investment (FDI) in any previous financial year, and that investment remains outstanding on its books as of March 31st.

2. The entity has made Overseas Direct Investment (ODI) in a foreign entity (e.g., a Joint Venture or Wholly Owned Subsidiary abroad), and that investment remains outstanding as of March 31st.

Crucial Note: Even if the company has not received any fresh FDI or made any new ODI in the latest financial year, but has outstanding balances from previous years, the FLA Return must be filed every year.

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Due Date and Penalties

 

• Deadline: The FLA Return must be submitted online to the RBI on or before July 15th of the succeeding financial year.

  • Example: For the position as on March 31, 2025 (FY 2024-25), the due date is July 15, 2025.

• Filing with Unaudited Accounts: If the entity's accounts are not audited by the July 15th deadline, it must submit the return based on unaudited/provisional figures.

• Revised Filing: If provisional figures were used, a revised return based on the final, audited financial statements must be filed by September 30th.

• Penalty (Non-Compliance): Non-filing or delayed filing is a serious violation of FEMA regulations. The RBI may levy a penalty, which can include a Late Submission Fee (LSF). Continued non-compliance can attract significant statutory penalties under FEMA, 1999.

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How to File (The FLAIR Portal Process)

 

FLA filing is done exclusively through the web-based FLAIR (Foreign Liabilities and Assets Information Reporting) portal, which is managed by the RBI.

1. Entity Registration (First-Time Users):

   • The entity must first register as a Business User on the FLAIR portal.

   • This requires filling out an online registration form with the entity's details (CIN/LLPIN, PAN, Contact details).

   • Mandatory documents to be uploaded during registration include a Verification Letter and an Authority Letter in the prescribed formats, signed by the authorized signatory.

   • Upon successful verification by the RBI, the entity will receive the login credentials (User ID and Password) via the registered email.

2. Filing the Return:

   • The authorized user logs in to the FLAIR portal using the credentials and a One-Time Password (OTP) sent to the registered email.

   • The online form is structured into multiple sections (typically five sections), which the user must fill with data as on March 31st:

     • Section I: Identification Particulars (Basic Company/LLP details).

     • Section II: Financial Details (Paid-up Capital, Reserves, P&L, Sales/Purchases, Employee count).

     • Section III: Foreign Liabilities / FDI (Inward Investment details).

     • Section IV: Foreign Assets / ODI (Outward Investment details).

     • Section V: Variation Report (Auto-generated comparison with the previous year).

   • The entity must ensure the financial figures are reported in INR Lakhs as required by the form.

3. Submission and Acknowledgement:

   • After filling all sections and validating the data, the form is submitted.

   • The system generates an immediate Acknowledgement receipt confirming the filing, which should be saved for records. The RBI does not send a separate email acknowledgement.

The shift to the online FLAIR portal ensures a more secure, standardized, and streamlined reporting process compared to the earlier email-based excel filing system.

Do you need the link to the official RBI FLAIR portal, or would you like to know more about the specific data points required in Sections III and IV?

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Detailed Reporting Sections (FLAIR Portal)

 

The FLA Return is generally structured into five sections. Sections I (Identification) and II (Financial Details) cover basic company information and balance sheet/P&L figures (like Reserves and Surplus, Sales, Purchases, etc.) in INR Lakhs. The key details are in the sections below:

 

1. Section III: Foreign Liabilities (FDI into India)

 

This section focuses on the non-resident (foreign) stake in the Indian reporting entity. This data must be provided for both the current reporting year and the previous year for comparison.

 

A. Direct Investment in India (FDI)

 

This covers investment by a foreign entity that holds 10% or more of the total equity of the Indian reporting company. The reporting company must provide separate, investor-wise details for each direct investor, including:

• Country of Residence of the investor.

• Sector/Industry Code (NIC 2008 code) of the investor.

• Total Equity Held: The total outstanding equity capital (including fully convertible preference shares) held by the non-resident investor as on March 31st.

• Participating Preference Shares: If any.

• Reinvested Earnings: The foreign investor's share in the Indian company's retained earnings (calculated using a specific RBI formula).

• Other Capital: This includes items like loans, trade credit, and other payables to the direct foreign investor.

• Valuation: The value of the equity capital must be reported at the book value/historical cost.

 

B. Portfolio Investment in India (FPI)

 

This covers investments by non-resident entities that hold less than 10% of the total equity of the Indian reporting company.

• Equity: Total outstanding equity held by all non-resident investors with less than 10% stake.

• Debt Securities: Value of outstanding debt instruments (like bonds, debentures, and non-participating preference shares) held by non-residents.

 

C. Other Liabilities (Trade Credit & Loans)

 

This captures outstanding foreign liabilities to unrelated foreign parties (not direct investors or their related entities), such as:

• External Commercial Borrowings (ECBs): Outstanding principal of loans taken from foreign sources (excluding loans from the direct investor, which go under "Other Capital" above).

• Trade Credit: Outstanding payables on import of goods or services from foreign unrelated parties.

• Other Accounts Payable: Any other outstanding payables to foreign entities.

 

2. Section IV: Foreign Assets (ODI by Indian Entity)

 

This section focuses on the Indian entity's investment outside India, specifically its Overseas Direct Investment (ODI). The data must be provided for both the current reporting year and the previous year.

 

A. Direct Investment Abroad (ODI)

 

This covers the Indian entity's investment in a foreign entity where the Indian entity holds 10% or more of the total equity of the foreign entity (Joint Venture or Wholly Owned Subsidiary). Separate, investee-wise details must be provided for each foreign entity, including:

• Country of Residence of the foreign entity.

• Sector/Industry Code (NIC 2008 code) of the foreign entity.

• Total Equity: The total outstanding equity capital and participating preference shares of the foreign entity held by the Indian reporting company.

• Reinvested Earnings: The Indian company's share in the foreign entity's retained earnings.

• Other Capital: This includes outstanding loans, trade credit, and other receivables from the foreign entity.

• Disinvestment: Details of any full or partial disinvestment of the overseas entity during the reporting year.

 

B. Portfolio Investment Abroad

 

This covers any investment the Indian entity holds in foreign entities where its stake is less than 10% of the total equity of the foreign entity, or any other foreign securities:

• Foreign Equity: Value of shares held in non-resident companies (less than 10% stake).

• Foreign Debt Securities: Value of bonds, debentures, and other debt instruments issued by foreign entities.

 

C. Other Assets (Trade Credit & Loans)

 

This captures outstanding foreign assets/receivables from unrelated foreign parties (not direct investees or their related entities), such as:

• Loans Extended: Any loans given to foreign unrelated entities.

• Trade Credit: Outstanding receivables on the export of goods or services to foreign unrelated parties.

• Currency and Deposits: Foreign currency accounts (excluding EEFC accounts) held outside India.

• Other Accounts Receivable: Any other outstanding receivables from foreign entities.

 

Key Points for Data Submission

 

• Currency: All amounts must be reported in Indian Rupees (INR) Lakhs.

• Valuation: The market value/fair value is used for traded debt securities and portfolio equity. Most other items, including Direct Investment Equity and all debt instruments (loans, trade credits), are reported at book value (as per the balance sheet).

• Previous Year Data: Providing the previous year's data is mandatory, as the FLAIR system automatically compares the two years and flags major variations in Section V (Variation Report) for scrutiny.