FLA Return Under FEMA, 1999
As more companies involve themselves with foreign investments, the importance of the Foreign Exchange Management Act (FEMA) regulations and their compliance becomes a major part of the company’s operations. FLA return is one of the compliances that have to be met by the companies that have either received FDI or made ODI.
What is FLA Return and who is required to file it?
Annual return on Foreign Liabilities and Assets (FLA) has been notified under FEMA 1999 and it is required to be submitted by all the Indian resident companies which have received FDI and/ or made overseas investment in any of the previous year(s), including the current year.
Entities which are required to file FLA Return are stated below:
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), Branches, or Trustees].
Companies exempted from filing FLA return
Companies that have only issued shares on a non-repatriable basis to the non-residents of India are exempt from filing FLA return.
Companies that do not have any outstanding balance of FDI or ODI by the end of the financial year are exempt from filing FLA return.
Companies that have only received share application money and have not received any FDI or not made any ODI, are exempt from filing FLA return.
Due Date of Filing FLA
FLA return is mandatory under FEMA 1999 and companies are required to submit the same based on audited/ unaudited accounts by July 15 every year. However, for submitting Form FLA for the FY 2019-20, the due date has been extended to 14th August, 2020.
If the company’s accounts are not audited before the due date of submission, i.e. July 15 (or extended date 21st July, 2020), then the FLA Return should be submitted based on unaudited (provisional) account. Once the accounts get audited and there are revisions from the provisional information submitted by the company, they are supposed to submit the revised FLA return based on audited accounts by end – September i.e. 30th September.
There are no specific penalties for FLA however, asper. (A.P. (DIR Series) Circular No. 29, dated February 02, 2017), Non-filing of FLA return before the due date will be treated as a violation of FEMA and penalty will be levied on defaulters which shall be–
If, the amount against which offense is quantifiable, then the penalty will be “THRICE” the sum involved in the contravention.
Where the amount cannot be quantified the penalty may be imposed up to 2 lakh rupees.
If, the contravention is continuing every day, then Rs.5000 for every day after the first day during which the contravention continues.
Further, in addition to the penalty, any currency, security or other money or property involved in the contravention may also be confiscated.
How to file Form
FLA RBI has provided a web-based interface https://flair.rbi.org.in for filling form FLA.
On the FLA Portal, click on the “New Entity User” for the Entity User Registration, fill the form and attach the authority letter and verification letter in the prescribed format. After filling the “User Registration Form”, a mail will be received with a User ID and password code on the registered email id. Change the password using the password code and the registration procedure is complete. Go to Login Page (user will receive email OTP every time you log in the portal) for Further Reporting.