A Complete Guide to the Annual Return on Foreign Liabilities and Assets (FLA)
For Indian entities engaged in global business, staying compliant with the Reserve Bank of India (RBI) guidelines is a critical task. One of the most important annual requirements for companies with foreign investment (inbound/outbound) is filing of the Annual Return on Foreign Liabilities and Assets (FLA).
Notified under FEMA 1999, this return provides the RBI with essential data for compiling India’s Balance of Payments (BoP) and International Investment Position (IIP).
Here is everything you need to know about navigating the FLA filing process.
Who Must File the FLA Return?
The return is mandatory for all Indian-resident entities that have outstanding Foreign Direct Investment (FDI) or have made Overseas Direct Investment (ODI) as of March 31st of the reporting year. This includes:
- Companies (per the Companies Act, 2013).
- Limited Liability Partnerships (LLPs).
- SEBI-registered Alternative Investment Funds (AIFs), Partnership Firms, and Public-Private Partnerships (PPP)
Note: If your entity has no outstanding foreign assets or liabilities at the end of March for both the current and previous year, you are not required to submit the return.
Important Deadlines and Financial Data
The Due Date: The FLA return must be filed by July 15 of every year (the deadline).
Provisional Figures: If your accounts are not audited by the deadline, you can file using provisional/unaudited figures. Once your audit is complete, you must request permission through the portal to file a revised return.
Reporting Period: Data must always reflect the period from April to March, regardless of your company’s actual accounting year.
Unit of Reporting: All financial values (except for share counts) must be reported in INR Lakhs. For example, ₹1,50,000 should be entered as "1.5".
Understanding “Other Capital” and Related Party Transactions
One of the most common filing errors is the non-reporting of Other Capital and related party balances.
Other Capital Includes:
Non-equity financial claims and liabilities with foreign related parties such as:
- Loans
- Trade credit
- Debentures
- Compulsorily Convertible Debentures (CCDs)
- Outstanding receivables/payables
Related Party Transactions
Balances with indirectly related foreign parties must also be disclosed in the FLA return in appropriate places, such as the ultimate parent company, Fellow subsidiaries, Group entities under common ownership, and others.
Special Process for Alternative Investment Funds (AIFs)
At present, AIFs do not have a standard online filing facility in the prescribed format.
Filing Process for AIFs:
- Register on the FLAIR portal
- Send an email to flareturn@rbi.org.in requesting the latest FLA filing format
- RBI’s FLA team will share an Excel-based return format
- Complete the format and email it back to the same address
- An acknowledgement is issued after validation
Consequences of Non-Compliance
Delayed or incorrect filing may invite regulatory scrutiny under FEMA. Accordingly, businesses should maintain proper records and complete filing within the prescribed timeline.
In recent past, we have experienced that RBI has raised queries for non-filing, and also queries have been raised on appropriate filing/accounting treatment. This is a recent phenomenon, and it indicates that at the RBI desk there is deeper scrutiny of FLA returns filed.
Conclusion
FLA filing is a yearly compliance requirement for businesses with foreign investment exposure. Accurate timing, timely filing, and proper disclosure will help businesses avoid penalties and regulatory issues and ensure smooth compliance with RBI regulations.
If your entity has FDI, ODI, or foreign shareholding, it is advisable to review the position before July each year and complete the filing on time.
At KDP Accountants, we assist foreign businesses and NRIs with FEMA compliances, FDI & ODI advisory, and annual FLA filings. Our team ensures an accurate and smooth compliance process with evolving RBI regulations.
FAQs
What is the FLA Return filing?
The annual return on Foreign Liabilities and Assets (FLA) is an RBI-compliance filing required under FEMA for Indian entities with foreign or overseas investment exposure.
What is the due date for filing the FLA return?
The FLA return must generally be filed before July 15 every year.
What happens if we miss or do not file FLA returns?
If you have not filed FLA returns in such cases, it may lead to penalties under FEMA provisions, and the RBI also raises queries regarding the report and accounting.
Can a revised FLA return be filed?
Yes, after finalising the audited financial statements, entities can request through the RBI portal to revise the already filed return.
Ujala Prajapati
Author
Ujala Prajapati is a CA Final student in the last year of her articleship with a strong focus on foreign exchange laws and cross-border regulatory compliances. She has practical experience in foreign investments, Overseas Direct Investments (ODI), AIF-related RBI compliances, and regulatory reporting under the RBI framework.
Ujala has assisted clients in managing overseas investments, resolving EDPMS/IDPMS issues, and handling FEMA and income-tax compliances for foreign subsidiaries. With a keen interest in international finance and capital markets, she aims to build expertise in global regulatory frameworks and cross-border investments.