Foreign Assets & Liabilities Return (FLA Return)

CS Shikha Mehra

CS Shikha MehraINTRODUCTION

The concept of Annual return on Foreign Liabilities and Assets was notified under the 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 which is an annual return of all investments made in the company during a financial year, is required to be submitted directly by the Company to the RBI.

Reason behind the 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, it was decided to replace Part B of the Form FC-GPR by a separate ‘Annual Return on Foreign Liabilities and Assets’ .

ELIGIBLE COMPANIES TO SUBMIT THE FLA RETURN

The annual return on Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the 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 i.e. who holds foreign Assets or Liabilities in their Balance Sheets.

However, 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 also required to submit the FLA Return every year by July 15.

While, following companies are not required to submit FLA Return, which are as:

Where Indian company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year, the company need not submit the FLA Return.
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, then that company is not required to fill up FLA return.
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, then the company need not submit the FLA Return.
If Shares are issued by reporting company to non-resident on Non-Repatriable basis, then it should not be considered as foreign investment; therefore, companies which have issued the shares to non-resident only on Non-Repatriable basis, are not required to submit the FLA Return.
SUBMISSION OF RETURN

RBI has prescribed format of FLA Return as an Excel sheet, which is available on RBI website. However, you may click here to download the same. (FLA RETURN)

It is required to be submitted by all the India resident companies which have received FDI and/ or made overseas investment in any of the previous year(s), including current year by July 15 every year. 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.

The duly filled form is required to be mailed to fla@rbi.org.in by July 15 every year from the official email id of any authorized person like CFO, Director, Company Secretary etc. Acknowledgement will be forwarded to the both email ids (sender and mentioned in Contact Details).

SYSTEM REQUIREMENT FOR SUBMITTING FLA RETURN

Company should have MS office Excel – 2003 onwards. Before filling the information in Excel based FLA Return, make sure that you have enabled the macro in Excel. In order to enable the macro, please do the following:

a) In Microsoft 2007

Go to  Office Button >> Excel Options >> popular

Select ‘Show developer tab in the Ribbon’, then

Go to Developer tab >> Macro Security >> select ‘Enable all macros’

b) In Microsoft 2010

Go to File >> option >> trust centre >> trust centre setting >> macro setting

Select ‘Enable all macros’

It is required to save the FLA return in Excel 97-2003 Workbook (.xls format).

In order to save the return as follows:

Go to  Office Button >> Save As >> Save as type Select ‘Excel 97-2003 Workbook’

INFORMATION REQUIRED TO BE REPORTED IN FLA RETURN

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.

If Account Closing Period of the company is different from the reference period, then information should be given for the reference period on internal assessment.

PARTNERSHIP FIRMS VIS-À-VIS FLA RETURN

FLA Return is required to be submitted by Registered Partnership Firms (Registered under Partnership Registration Act) as well, if the Partnership firms, Branches or Trustees have any outward FDI outstanding as on 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.

It is also informed that these dummy CIN numbers are provided by RBI for filling the excel based FLA return only and not for any other purpose.