As India continues to integrate with the global economy, the flow of foreign investments has seen a significant surge. Consequently, regulatory compliances under FEMA, 1999 have become crucial. One such annual requirement for Indian companies with foreign exposure is the filing of the FLA Return (Foreign Liabilities and Assets Return) with the Reserve Bank of India (RBI).
This blog outlines everything that Indian companies must know about the FLA return, its relevance, who must file it, and how to comply.
What is the FLA Return?
The FLA Return is a mandatory annual statement to be submitted by Indian entities that have received FDI (Foreign Direct Investment) and/or made ODI (Overseas Direct Investment) during the previous financial year or have outstanding foreign investments as on March 31.
It is governed by the Foreign Exchange Management Act, 1999 and the relevant RBI Master Directions. The data collected is used for India’s Balance of Payments (BoP) and international investment position reporting.
Who Must File the FLA Return?
As per RBI’s notification:
| Category of Entity | FLA Return Required? | Remarks |
|---|---|---|
| Indian Companies with FDI (in any form) | Yes | Even if no transaction in the current year |
| Indian Companies with ODI (foreign subsidiaries/JVs) | Yes | Including equity and loans |
| LLPs receiving FDI or making ODI | Yes | As per FEMA Notification No. FEMA.20(R)/2017 |
| Companies under liquidation with outstanding FDI/ODI | Yes | Only if assets/liabilities remain |
Entities with no foreign assets or liabilities and no outstanding FDI/ODI are not required to file the return.
What Needs to be Reported?
FLA return captures financial data (audited/provisional) as on 31st March. The return has two broad parts:
- Equity held by foreign investors
- Preference shares, debentures, or other capital instruments
- External commercial borrowings (ECBs)
- Trade credits and inter-company payables
- Indian company's investment in foreign subsidiaries/JVs
- Loans or advances given to foreign entities
- Trade receivables, equity capital, and other financial support
Filing Process and Due Dates
| Particular | Details |
|---|---|
| Due Date | 15th July of the following financial year |
| Mode of Filing | Through FLAIR portal |
| Registration | One-time registration required for new users |
| Certification Requirement | No digital signature or CA attestation required, but accurate and consistent data is mandatory |
Audited figures are preferred. In case of unaudited provisional data, the company must update the return post finalisation of accounts.
Consequences of Non-Compliance
Non-filing or incorrect filing of the FLA Return attracts penalty provisions under FEMA, 1999, which may include:
- Monetary penalty up to ₹2,00,000 or more
- Additional fines of ₹5,000 per day for continuing default
- Risk of regulatory scrutiny or denial of further foreign investment approvals
Role of Chartered Accountants
Chartered Accountants must ensure:
- Proper identification of FDI/ODI components
- Timely conversion of values to INR using RBI rates
- Reconciliation of equity and loan data with audited accounts
- Verification of related party transactions with foreign entities
FLA compliance is not merely a reporting formality—it forms the basis of India’s international investment position and contributes to policy decisions.
