ANNUAL RETURN ON FOREIGN LIABILITIES AND ASSETS

[Mr. M. GOVINDARAJAN]

Annual Return

Vide A.P. (DIR Series) Circular No. 145, dated 18.06.2014, the RBI directed that all Indian companies which have received FDI and/or made FDI abroad in the previous year(s) including the current year, who holds foreign Assets or Liabilities in their Balance Sheets, should file the annual return on Foreign Liabilities and Assets (FLA) in the soft form to the Reserve Bank.   (https://flair.rbi.org.in/fla/faces/pages/login.xhtml)

If the company has not ‘received any fresh FDI and/or ODI (overseas direct investment)’ in the latest year but the company has outstanding FDI and/or ODI, then that company is required to submit the FLA Return.

Non-filing of the return before due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA.

Due Date

The due date of filing the Annual Return of FLA is by July 15^th every year.   If the company’s accounts are not audited before the due date of submission, i.e. July 15, then the FLA Return should be submitted based on unaudited (provisional) account. Once the accounts gets 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.

Who do not require filing return?

The following companies are not required to file the FLA return-

• If the Indian company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year;
• 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 the reporting year,
• If all non-resident shareholders of a company has transferred their shares to the residents during the reporting period and the company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year;
• If all non-resident shareholders of a company has transferred their shares to the residents during the reporting period and the company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year;
• Shares issued by reporting company to non-resident on Non-Repatriable basis should not be considered as foreign investment; therefore, companies which have issued the shares to non-resident only on Non-Repatriable basis.

Form for Annual Return

The present Annual Return form was substituted vide Circular No. A.P.(Dir Series) Circular No. 145, dated 18.06.2014.  The form consists of the following sections-

• Section I – Identification particulars of the company who files the return;
• Section II – Financial Details;
• Section III – Foreign Liabilities;
• Section IV – Foreign Assets;
• Section IV A  - Outward Foreign Affiliates Trade Statistics;
• Section V – Other assets and liabilities with foreign unrelated parties.

The duly filled-in e-form should be emailed to [email protected].   The filled-in Excel based FLA return should be forwarded through the official email id of any authorized person like CFO, Director, Company Secretary etc. Acknowledgement will be forwarded to the both email ids.    Financial statements or any information in separate annex should not be forwarded along with the FLA return.  The return should be submitted in the Excel based format only through email.

Section I

In section I of the Form the following information is required to be filled-

• Name and address of the Indian company;
• PAN number;
• CIN number;
• Contact Details;
• Account closing date;
• Nature of business (As per National Industrial Classification Code, 2008);
• Any name change during the latest financial year;
• Whether the company is listed or not?
• Identification of the reporting company in terms of FDI;
• Whether the Company is Asset Management Company?
• Whether the company has foreign technical collaboration?
• Whether the company has any business activity during the latest financial year.

Section II

Under section II of the form the finance details of the company should be given.   The following information is to be required in section II-

• Block  1A –

• Total paid up capital of the company;
• Nonresident holdings (at face value in lakhs);
•  Nonresident equity  and participating equity share capital percentage.

• Block 1B – Profit and loss Account;
• Block 1C – Reserves and surplus;
• Block 1D – Sales and purchase made during the reference year.

Section III

Under section III of the form the foreign liabilities of the company should be given.   The following information is to be required in section III-

• Block 2A - Investment in India under Foreign Direct Investment (FDI) scheme (10% or more Equity Participation);
• Block 2B - Investment in India under Foreign Direct Investment (FDI) scheme (Less than 10% Equity Holding);
• Block 2C - Portfolio Investment in India

Section IV

Under section IV of the form the foreign assets of the company should be given.   The following information is to be required in section IV-

• Block 3A - Equity Capital (PUC), Reserves & Surplus of Direct Investment Enterprise (DIE) Abroad (10% or more equity holding by Indian reporting company);
• Block 4A - Direct Investment Abroad (10% or more equity holding);
• Block 4B - Direct Investment Abroad (Less than 10% equity holding);
• Block 5  - Portfolio Investment Abroad.

Section IVA

Under section IVA of the form the Outward Foreign Affiliates Trade Statistics should be given.   The following information is to be required in section IVA-

• Block 3B - Imports, Exports, Total Sales and Total Purchase of Direct Investment Enterprise (DIE) Abroad (more than 50% equity holding by Indian reporting company).

Section V

Under section V of the form the Other Assets and Liabilities with foreign unrelated parties should be given.   The following information is to be required in section V-

Block 6 - Other Investment (i.e., position with foreign unrelated parties)

Return by partnership firm

If the Partnership firms, Branches or Trustees have any outward FDI outstanding as of end-March of the reporting year, then they are required to send a request mail to get a dummy CIN number which will enable them to file the Excel based FLA Return. If any entity has already got the dummy CIN number from the previous survey, they should use the same CIN number in the current survey also.  These dummy CIN numbers are provided by RBI for filling the excel based FLA return only and not for any other purpose.

Penalty

If the above said annual return is not filed the following penalty will be levied on the defaulter-

• 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 ₹ 2,00,000/-.
• If, the contravention is continuing every day, then ₹ 5,000/- 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.

Extension of due date

Reserve Bank of India (RBI) through an announcement on the Foreign Liabilities and Assets Information Reporting (FLAIR) system website has extended the due date of filing of Foreign Liabilities and Assets (FLA) Return for FY 2019-20 to 31.07.2020.

Since the web site is facing technical difficulties, the due date for submission of FLA for the year 2019 – 20 is further extended to 14.08.2020.