The filling of Annual return on Foreign Liabilities and Assets was mandated under regulations of FEMA Act, 1999. Later, RBI vide notification no- RBI/2010-11/427 A.P. (DIR Series) Circular No. 45 introduced the concept of Foreign Assets & Liabilities Return is required to be submitted directly by the Company to the RBI.
The purpose of introduction of FLA Return is to capture the statistics relating to Foreign Direct Investment (FDI), both inward and outward in a more comprehensive manner as also to align it with international best practices.
Who has to file FLA?
The FLA return must be submitted by
- All Indian companies which have received FDI (foreign direct investment) and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year,
- Any Indian company which has outstanding FDI on its balance sheet during the current year, even if the company has not received any fresh FDI in that year
The FLA return need not be submitted by the following companies
- Where Indian company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year i.e 31st March 2018 for the current year filling,
- If a company has received only share application money and does not have any foreign direct investment or overseas direct investment outstanding as on end-March of reporting year
- If non-resident shareholders of the company have disposed off their shareholding to resident shareholders (i.e. no outstanding foreign shareholding as on 31 March)
Due date for filing FLA
The FLA return must be submitted by 15 July each year
What information has to be shared on the FLA?
In addition to basic company data (name, contact person, address, CIN etc.), the company has to provide the following information
- Nature of business carried on by the company together with the National Industrial Classification (NIC) Code
- Detailed share capital details as on 31 March of current year and that of the previous year, broken down into various classes and by type of shareholder
- Profit earned in the current year before and after tax, with details of dividend declared, if any and tax on dividend paid
- Details of reserves and surplus and net worth calculation.
- Details of sales and purchases made in the year (To be filled in by company where single foreign direct investor holding is more than 50% in total equity (i.e. if reporting Indian company is subsidiary of foreign company).
- Details of foreign liabilities and assets
If the company’s accounts are not audited before the due date of submission, i.e. July 15, then the FLA Return can be submitted based on unaudited (provisional) Financials, Once the accounts are gets audited and there are revisions from the provisional information submitted by the company, then Company can submit the revised FLA return based on audited accounts by end – September.
Consequences of non-filing FLA
Non-filling of return within a due date tantamount violation of FEMA Regulations and Fine can be levied as per the FEMA, 1999. Fine can be levied up to Rs.2,00,000/- under the said act.