FLA Return is a mandatory annual report submitted to RBI (Reserve Bank of India). Indian Subsidiaries of a foreign company gives details of the foreign liabilities and assets in their balance sheets to the reserve bank. This report shows the annual return of a company on their balance sheet till 31st March every year.
If there is no fresh foreign investment, the company still has to file the FLA Return report due to the previous outstanding foreign investment in the company on their balance sheet till the end of march.
This report is not similar to FC_GPR (Fresh share given to foreign investor) or FC-TRS (transfer of foreign share).
There is a compulsion on company to file FLA Return report without any fresh foreign investment.
FLA Return is governed by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act, 1999.
RBI uses data like this for the compilation of Balance of Payments (BoP) of India and International Investment Position (IIP), and to participate in Co-ordinated Direct Investment Survey (CDIS) of IMF and Co-ordinated Portfolio Investment Survey (CPIS).
Who should file the FLA return?
Companies that have received FDI (Foreign Direct Investments) from other countries or done ODI (Overseas Direct Investments) in other countries in the previous year including the current year are required to submit FLA Return.
As per RBI:
Companies under section 1(4) of the companies act 2013
LLPs registered under the Limited Liability Partnership Act, 2008
SEBI registered AIFs (Alternative Investment Funds), Partnership Firms, Public-Private Partnerships (PPPs) etc.
EXCEPTION
Companies with no FDIs or ODIs on 31st March of each year.
Companies whose shares are not allotted till 31st March.
Companies who issue shares to NRIs on a non-repatriable basis (these shares are not treated as foreign investments under FEMA).
If all NRIs transfer their share to Indian Citizens till 31 March and there is no FDI or ODI.
Documents required for FLA Return
Certificate of Incorporation or Registration Certificate
PAN Card of Company and the authorized signatory
Audited financial documents
Signed Authority letter and verification letter (uploaded during registration on FLAIR Portal)
FLA Return Report of last year
Valuation of Foreign securities (Listed and Unlisted both)
Filing Guidelines
FLA Return report must be filed on or before 15th July of every year even if the accounts are not audited.
If the FLA Return filing on or before 15th July used temporary data for unaudited accounts, then it must be refiled before 30th September.
If the filing is not done on or before 15th July due to unaudited accounts, it will violated the FEMA guidelines.
Penalty for late filing or non-filing of FLA Return
For the late filing till the enforcement action initiates, LSF (Late submission fee) is applicable – Rs. 7500 per return. LSF can be paid till three years from the original date of filing. I
If an advice is issued for payment of LSF and the fee is not paid within 30 days, the advice will be null and void, and the payment will also not be accepted.
For the non-filing when the contravention amount is quantifiable, fine will be three times of amount concerned with the filing,
And when the contravention amount is non-quantifiable, the fine will be up to Rs. 200000.
For the continuation in non-filing, the fine will be Rs. 5000 per day from the date of violation.
If a person does not file the return or do not pay the amount of LSF in time, that person may be liable under Section 13 of FEMA, 1999.
Conclusion
FLA Return is a necessary report which needs to be sub mitted to RBI so that RBI can have the yearly data of the foreign investments in the country which helps them to present all of this in the CDIS, CPIS and other surveys.
Companies which receive foreign investments or put investments in the foreign subsidiaries, submits their data of foreign investment into this report which compel them not to do anything forged or fraud.