FLA return is a way for Indian companies to keep the RBI informed about their financial activities outside the country. It's a crucial way for companies to be transparent about their foreign investments and borrowings.
What is FLA return and who needs to file it?
FLA return stands for the "Foreign Liabilities and Assets" return. It is an annual return that Indian companies are required to file with the Reserve Bank of India (RBI) to report their foreign assets and liabilities. The return is applicable to all Indian companies that have received foreign direct investment (FDI) or made overseas investments in any form.
All Indian companies(private, public and LLPs) that have received FDI or made overseas investments in any form are required to file the FLA return.
What is the due date for filing the FLA return?
The due date for filing the FLA return is typically July 15th, for reporting the company's foreign assets and liabilities as of the end of the previous financial year.
What are the consequences of not filing the FLA return?
Failure to file the FLA return may attract in penalties and restrictions on future foreign investments. Also the Reserve Bank of India if it may, take action against the company, such as revoking its foreign investment approvals or blocking its access to foreign currency.
How to file FLA return?
FLA Return can be submitted via the RBI online portal https://flair.rbi.org.in. On its website, RBI website provides detailed guidelines for filing the FLA return.
Who is not required to file FLA return?
An Indian company may be exempt from filing the Foreign Liabilities and Assets (FLA) return, a regulatory requirement for companies to report their foreign investments and borrowings to the Reserve Bank of India (RBI), under certain conditions. If the company has no outstanding investment in respect to inward or outward Foreign Direct Investment (FDI) as of the end of March of the reporting year, it may not be required to file the FLA return, even if it has received only share application money and no allotment has been made until the end of the financial year.
Additionally, companies that have issued shares to non-residents only on a non-repatriable basis may also be exempt from the FLA return filing requirement. However, if non-resident shareholders of an eligible entity have transferred their shares to residents during the reporting period, the eligible entity must not have any outstanding investment in respect of inward and outward FDI as of the end of March of the reporting year to be exempt from filing the FLA return.