Another major annual compliance requirement is the Foreign Liabilities and Assets (FLA) Return form, which is part of the reporting requirements imposed by the Reserve Bank of India (RBI) on Indian firms, entities, and recipients of foreign direct investment (FDI) or direct foreign investments abroad (ODI). Through the FLA Return, RBI can track the international investment position (IIP) in India and the outflows of funds abroad.

• Authority: Reserve Bank of India (RBI)

• Regulations: Under registration as FEMA (Foreign Exchange Management Act) 1999

• Guideline Issuance: RBI comes up with guidelines on yearly basis on their website and the Foreign Exchange Department.

The FLA Return is very relevant to the RBI, Ministry of Finance and international institutions such as IMF to:

• This was the compilation of India International Investment Position II (IIP)

• Observing both Inflow and outflow of foreign investments

• Knowledge of the amount and pattern of inter-country asset and liability position of the Indian firm

Parties who have to fill the FLA return are:

• Indian companies, which have already obtained FDI in the past years, such as the current year

• Public companies which have alienated the shares /compulsorily convertible debentures to non residence.

• Firms that have undertaken foreign investment (ODI) whether as a 100 percent subsidiaries, or joint ventures overseas

• Any LLP as well as other entities that are foreign invested or overseas invested

Note: Although, there have been no changes in foreign assets/liabilities within the year, still the foreign investments must be the one to file a return.

• Identification Information: CIN, PAN, Name Company, Contact Information

• Foreign Liabilities:

1. Cash in hand of the non-residents
2. Other capital (e.g. intercompany loans)
3. Reinvested earnings

• Foreign Assets:

1. Owner direct investment in overseas firms (ODI)
2. Other investments such as loans and trade credits to foreign organisations

• Financial Details:

1. The balances of the Assets, liabilities and net worth in the balance sheet of Company
2. Reserves and surplus
3. Company profit/Loss

• Registration : The entities should enroll themselves to the FLAIR (Foreign Liabilities and Assets Information Reporting) system, which was launched by RBI in the year 2019.
• Submission Deadline

1. Due Date: 31st July annually on the previous financial year that ends on 31 st March
2. Late filing can be subjected to sanctioning measures within FEMA

• Mode of Filing

1. It is filing through online RBI FLAIR Portal
2. It is filled in Excel format of return and uploaded
3. Upon validation, the system gives out an Acknowledgment Receipt

• Verified or interim balance sheet of the company on 31 st March

• Information regarding FDI and ODI deals

• Shareholding pattern Details

• Foreign subsidiary or JVs (where ODI) fins 0

Late filing of the FLA return or failure to file this type of return will result in possible:

• Penal actions under FEMA Monetary punitive acts

• Having a hard time getting future approvals of RBI

• Not eligible to automatic route of future foreign investment