The Foreign Liabilities and Assets (FLA) Return is an annual return that needs to be filed by Indian resident entities which have received Foreign Direct Investment (FDI) or made Overseas Direct Investment (ODI) in any preceding financial year, including the current financial year. It is a mandatory filing as per the Foreign Exchange Management Act (FEMA), 1999, and is collected by the Reserve Bank of India (RBI).

The data collected through the FLA Return is crucial for the RBI and the Government of India for policymaking, balance of payments statistics, and other economic analyses related to foreign investment.

Who Needs to File FLA Return?

Every Indian resident entity (company, LLP, etc.) that has:

• Received FDI: Holds foreign equity in its books as on March 31st of the reporting year.

• Made ODI: Has made overseas direct investment in any Joint Venture (JV) or Wholly Owned Subsidiary (WOS) abroad as on March 31st of the reporting year.

• Both: Has both FDI and ODI.

Even if the company has not received any fresh FDI or made any new ODI during the latest financial year, but has outstanding FDI/ODI from previous years, it still needs to file the FLA Return.

What if an entity has no FDI/ODI outstanding? If an entity has no foreign liabilities or assets as on March 31st of the reporting year, it generally does not need to file the FLA Return. However, if it had FDI/ODI in previous years but now has zero outstanding, it might still need to file a "NIL" return to confirm the cessation. It's always best to check the latest RBI guidelines or consult a professional.

Due Date for Filing FLA Return

The due date for filing the FLA Return is July 15th of every year, for the financial year ending on March 31st of the same year.

• For example, for the financial year ending March 31, 2025, the FLA Return due date is July 15, 2025.

Information Required for FLA Return Filing

The FLA Return requires comprehensive financial details related to foreign liabilities and assets. Companies typically need to gather the following information (as of March 31st of the reporting year):

1. Company Details: CIN (Corporate Identification Number), PAN, Name, Address, Email ID, Contact Person details.

2. Financials:

   • Audited Financial Statements: Balance Sheet and Profit & Loss Account for the latest financial year. If audited statements are not available by July 15th, provisional unaudited financial statements can be used. However, once the audited statements are finalized, the company must resubmit the FLA Return with audited figures by September 30th.

   • Paid-up Equity Capital: As on March 31st.

   • Reserves & Surplus: As on March 31st.

   • Preference Capital: If any.

   • Net Worth: Calculation based on equity and reserves.

3. Foreign Liabilities (FDI in India):

   • Investment from Non-residents into India:

     • Equity (listed/unlisted, fully paid-up/partly paid-up).

     • Foreign currency convertible bonds (FCCBs).

     • Convertible preference shares.

     • Amount of calls in arrears, share application money.

     • Other capital contributions.

   • Foreign Shareholder Details: Name, country of residence, percentage of equity holding.

   • Inter-company Debt: Loans from foreign direct investors (e.g., parent company, group companies).

   • Other Payables: Trade credits, non-trade credits, other accounts payable to non-residents.

4. Foreign Assets (ODI by India):

   • Investment by Indian entity abroad:

     • Equity investment (in JV/WOS abroad).

     • Preference share capital.

     • Loan extended to JV/WOS abroad.

     • Guarantees issued to/on behalf of JV/WOS abroad.

   • Foreign Entity Details: Name, country of location, percentage of equity holding.

   • Other Receivables: Trade credits, non-trade credits, other accounts receivable from non-residents.

5. Sales and Purchase of Foreign Entities: Turnover, profit/loss of foreign JVs/WOSs.

6. Other Details: Any other significant foreign currency exposure or transactions.

FLA Return Filing Process (Online)

The FLA Return is filed online through the RBI's FLA portal.

1. Registration on FLA Portal (One-time):

   • If a company is filing for the first time, it needs to register on the RBI FLA portal.

   • This involves providing basic company details, contact person information, and attaching a Board Resolution for authorization and a verification letter (format provided by RBI).

   • Upon successful registration, the company receives a unique username and password.

2. Login to FLA Portal:

   • Use the registered username and password to log in to the FLA portal.

3. Fill the Online FLA Form:

   • The portal provides an online form with various sections corresponding to the information required.

   • Carefully fill in all details, ensuring accuracy and consistency with the company's financial records.

   • The form has different parts (e.g., Part I - Identification, Part II - Foreign Liabilities, Part III - Foreign Assets, Part IV - Financial Details of Indian Company, Part V - Financial Details of Overseas Subsidiary/JV).

4. Save and Validate:

   • Regularly save the entered data.

   • The portal often has validation checks to ensure data consistency and format. Rectify any errors indicated.

5. Submission:

   • Once all details are filled and validated, submit the form online.

   • Upon successful submission, a system-generated acknowledgment email with a Unique Identification Number (UIN) is sent to the registered email ID.

6. Confirmation/Query from RBI:

   • The RBI processes the submitted return.

   • If there are any discrepancies or queries, the RBI may send an email seeking clarification or additional information. The company must respond to these queries promptly to ensure the return is accepted.

   • Once the return is processed and accepted, the RBI sends a final acknowledgment.

Consequences of Non-Filing or Late Filing

Non-compliance with the FLA Return filing requirements can lead to severe penalties under FEMA, 1999:

• Monetary Penalties: The RBI has the power to levy significant penalties for non-filing, late filing, or submission of incorrect information. Penalties can go up to thrice the amount involved in contravention or INR 2 lakh, where the amount is not quantifiable. For continuing contravention, an additional penalty of INR 5,000 per day can be imposed.

• Legal Action: In serious cases of non-compliance or fraudulent reporting, legal action can be initiated.

• Impact on Future Transactions: Non-compliance can negatively impact the company's ability to undertake future foreign exchange transactions or obtain necessary approvals from the RBI.

Important Tips

• Maintain Records: Keep proper records of all foreign investments and liabilities throughout the year to simplify the data compilation process for the FLA Return.

• Audited vs. Unaudited: Prioritize using audited financial statements. If using unaudited data, ensure a re-submission with audited figures by September 30th.

• Consult Professional: Given the intricacies of FEMA regulations and the financial data required, it is highly recommended to seek assistance from a Company Secretary, Chartered Accountant, or a financial consultant specializing in FEMA compliance. This helps ensure accurate and timely filing, minimizing the risk of non-compliance.

• Distinguish between FDI and FPI: Ensure clear understanding of what constitutes Foreign Direct Investment (FDI) for FLA reporting purposes, as distinct from Foreign Portfolio Investment (FPI).

• Review Instructions: Always refer to the latest instructions and FAQs issued by the RBI regarding FLA Return filing on their official website (www.rbi.org.in).

Filing the FLA Return accurately and on time is a critical compliance obligation for Indian entities engaged in international investment activities. The Foreign Liabilities and Assets (FLA) Return is an annual reporting requirement by the Reserve Bank of India (RBI) for Indian resident entities that have received Foreign Direct Investment (FDI) or made Overseas Direct Investment (ODI). This return is crucial for the RBI to compile data on India's external sector, including the Balance of Payments (BoP) and international investment position.

Who Needs to File FLA Return?

Every Indian resident entity (including companies, LLPs, SEBI-registered Alternative Investment Funds (AIFs), Partnership Firms, Public Private Partnerships (PPPs)) is required to file the FLA Return if they have:

• Outstanding FDI: Received FDI and hold foreign equity in their books as on March 31st of the reporting year, even if no new FDI was received during the year.

• Outstanding ODI: Made overseas direct investment in any Joint Venture (JV) or Wholly Owned Subsidiary (WOS) abroad as on March 31st of the reporting year, even if no new ODI was made during the year.

Exceptions/Clarifications:

• If an entity has no outstanding foreign liabilities or assets as on March 31st of the reporting year (e.g., all FDI/ODI from previous years has been fully repatriated or settled), it generally does not need to file. However, it's prudent to confirm with current RBI guidelines or a professional.

• Entities that have only received share application money and have not allotted shares by March 31st are generally not required to file.

• If 100% non-resident shareholding has been transferred to residents before March 31st, and there are no other foreign liabilities/assets, the company is typically not required to file.

• FDI received on a non-repatriable basis is generally not considered foreign investment for FLA reporting.

Due Date for Filing FLA Return

The standard due date for filing the FLA Return is July 15th of every year, for the financial year ending on March 31st of the same year.

• For the financial year ending March 31, 2025, the original due date is July 15, 2025.

Important Note on Provisional vs. Audited Data: If a company's accounts are not audited by the July 15th deadline, it can file the FLA Return based on unaudited or provisional accounts. However, once the audited financial statements are finalized, a revised FLA Return must be submitted by September 30th of the same year, incorporating the audited figures.

Information Required for FLA Return Filing

To successfully file the FLA Return, companies typically need the following information:

1. General Details:

   • Corporate Identification Number (CIN) / LLP Identification Number (LLPIN) / Unique Identification Number (UIN).

   • Permanent Account Number (PAN).

   • Name and registered office address of the Indian entity.

   • Contact person details (Name, Designation, Email ID, Phone Number).

2. Financial Details of the Indian Company (as on March 31st of the reporting year and previous year):

   • Paid-up Equity Capital (Ordinary/Equity shares, Participating Preference Shares).

   • Non-Participating Preference Share Capital.

   • Reserves & Surplus (including Profit/Loss account balance).

   • Profit/Loss before and after tax for the reporting year.

   • Dividend declared for the reporting year.

   • Sales (Domestic and Exports) and Purchases (Domestic and Imports) for the reporting year.

   • Number of employees on payroll.

3. Foreign Liabilities (FDI in India - from non-residents into the Indian entity):

   • Equity: Value of equity shares held by non-residents (both listed and unlisted entities). For unlisted companies, valuation is typically based on the Own Fund of Book Value (OFBV) Method. For listed companies, it's based on the closing share price as on March 31st.

   • Debt: Loans from foreign direct investors (e.g., foreign parent company, overseas group companies), trade credits received from non-residents, other accounts payable to non-residents.

   • Details of foreign shareholders/investors (Name, Country).

4. Foreign Assets (ODI by India - investment by the Indian entity abroad):

   • Equity: Investment in equity and/or participating preference shares of overseas Joint Ventures (JVs) or Wholly Owned Subsidiaries (WOSs).

   • Debt: Loans extended to overseas JVs/WOSs, trade credits extended to non-residents, other accounts receivable from non-residents.

   • Details of the foreign entity (Name, Country).

   • Financial details (Sales/Turnover, Profit/Loss, Reserves & Surplus, Paid-up Capital) of the overseas JV/WOS.

5. Other Information:

   • Any other foreign currency assets or liabilities on the balance sheet.

FLA Return Filing Process (Online)

The FLA Return is filed online through the RBI's dedicated FLAIR portal (Foreign Liabilities and Assets Information Reporting portal).

1. One-Time Registration:

   • For first-time filers, registration on the FLAIR portal is mandatory.

   • This involves submitting basic company details, designated contact person information, and uploading scanned copies of:

     • Board Resolution (authorizing the individual to file the FLA Return).

     • Verification Letter (in the format prescribed by RBI).

   • Upon successful registration, the company will receive a unique username and password on its registered email ID.

2. Login to FLAIR Portal:

   • Use the generated username and password to log in to the FLAIR portal. An OTP (One-Time Password) will be sent to the registered email for each login.

3. Fill the Online FLA Form:

   • Navigate to the "FLA Online Form" section.

   • The form is divided into several parts (e.g., Identification, Financial Details of Indian Company, Foreign Liabilities, Foreign Assets, Variation Report).

   • Carefully input all the required data based on the company's financial records as of March 31st.

   • The portal may have inbuilt validation rules to check data consistency. Rectify any errors highlighted by the system.

4. Save and Submit:

   • It is advisable to save the data periodically while filling the form.

   • Once all sections are completed and validated, proceed to "Submit" the form.

   • Upon successful submission, a system-generated acknowledgment email containing a Unique Identification Number (UIN) will be sent to the registered email ID.

5. RBI Processing and Confirmation:

   • The RBI processes the submitted return.

   • If any discrepancies or clarifications are needed, the RBI may send a query email. The entity must respond promptly with the requested information or corrections.

   • Once the return is successfully processed and accepted by the RBI, a final acceptance email will be sent.

Penalties for Non-Compliance

Non-filing, late filing, or submission of incorrect information for the FLA Return constitutes a contravention of FEMA, 1999, and can attract severe penalties:

• Monetary Penalty: Up to thrice the amount involved in the contravention. If the amount is not quantifiable, a penalty of up to INR 2 lakh can be imposed.

• Daily Penalty: For continuing contraventions, an additional penalty of INR 5,000 per day may be levied for each day the contravention continues after the first day.

• Impact on Future Transactions: Non-compliance can affect the company's ability to undertake future foreign exchange transactions or obtain necessary approvals from the RBI.