Introduction
FLA is an abbreviation that stands for 'Foreign Liabilities and Assets. The submission of a 'FLA' form is referred to as the 'FLA Return,' and it is required under the Foreign Exchange Management Act (FEMA) in India.
For Indian resident enterprises that have received foreign direct investment (FDI) and/or made overseas investments during the financial year, the Foreign Direct Investment (FDI) and Overseas Investment Report (FLA Return) is a necessary yearly reporting requirement. The international obligations and Assets Return, or FLA Return, is a form that Indian businesses are required to fill out in order to record and keep track of their international obligations (such as outstanding external commercial borrowings) and foreign assets (such as investments in overseas subsidiaries or joint ventures).
Key Points
1. Filing Obligation: Indian resident enterprises that are required to file the FLA Return because they have either received FDI or made investments outside of India. Companies that are listed and Companies that are not listed, as well as companies that have 100% foreign ownership of their Indian subsidiaries, are included in this category.
2. Reporting Period: The FLA Return collects information for the entire financial year, which begins in April and ends in March of the following year. It is required that the return be submitted for each financial year by the given deadline, which is often is 15th July.
3. FLA Return Contents: The Foreign Investment in India (FDI) and Overseas Investments (Overseas Investments), External Commercial Borrowings (ECB), Trade Credit (Trade Credit), and Other Financial Liabilities return collects information about foreign assets and liabilities.
4. Online Filing: The FLA Return can be filed online using the Reserve Bank of India's (RBI) dedicated FLAIR (FLA Returns) portal. The mode of filing is referred to as "filing." In order to view and submit the FLA Return, the reporting entity is required to first register on the portal.
5. Reporting Entity: The reporting entity is often the Indian resident corporation that has either made overseas investments or received foreign direct investment (FDI).
6. Penalties for Non-compliance: The Reserve Bank of India (RBI) reserves the right to levy penalties on those who fail to comply with the duty to file a FLA Return. In order for qualifying businesses to avoid incurring fines, it is necessary for them to submit the FLA Return within the allotted amount of time.
7. Data Confidentiality: The RBI will not disclose any information obtained from the FLA Return because it is considered to be private information. It does not expose information about particular businesses, as it is only utilised for the purpose of producing macroeconomic data.
Importance
1. Compliance with Regulations: Under the Foreign Exchange Management Act (FEMA) in India, submitting the FLA Return is a requirement that must be fulfilled. It assures compliance with the regulatory framework that was established by the Reserve Bank of India (RBI) for the purpose of monitoring and regulating the Indian enterprises' overseas obligations and assets.
2. FLA Return: The foreign Liabilities and Assets Return (FLA Return) provides insightful data on the overseas obligations and assets held by Indian corporations, which may then be analysed. These data are useful in the process of compiling macroeconomic statistics and enhance the process of formulating and analysing policy. It is helpful in understanding the entire overseas exposure that Indian enterprises have and contributes to the analysis of the external sector of the country.
3. Monitoring of Overseas Investments: The Foreign Linkage Account Return (FLA Return) enable the Reserve Bank of India (RBI) to monitor and track foreign direct investment (FDI) as well as investments made overseas by Indian enterprises. It helps in analysing trends, detecting patterns, and evaluating the impact that foreign investments have had on the economy of India. The decision-makers in government, including politicians and regulators, absolutely need to have access to this information.
4. Transparency and Accountability: Submitting the FLA Return increases both transparency and accountability in matters pertaining to transactions involving foreign investments. It does this by ensuring that Indian corporations appropriately declare their foreign liabilities and assets, which provides a clear picture of the companies' financial positions. The confidence of investors can be increased as a result of this transparency, and the integrity of the financial system can be preserved.
What is included in this
- Preparation of documents
- FLA Return
- Laisioning with department
- 24/7 help to assist you
FAQ’s
What exactly is meant by the FLA Return?
In India, Certain Companies are required to submit an annual FLA Return as part of the mandated reporting requirements imposed by FEMA. It compiles data on the foreign liabilities and assets of Indian resident enterprises that have either received foreign direct investment (FDI) or made investments outside of India during the fiscal year in question.
Who exactly is responsible for submitting the FLA Return?
The filing of the FLA Return is required for Indian resident entities that have either received FDI or made investments overseas. firms that are listed and firms that are not listed, as well as companies that have 100% foreign ownership of their Indian subsidiaries, are included in this category.
When should the FLA Return be filed? What is the reporting period?
The reporting period for the FLA Return is the fiscal year, which begins in April and ends in March of the following year. The tax return is required to be filed on an annual basis, once for each financial year.
When is the last day for which the FLA Return can be submitted?
The month 15th July of the next financial year is traditionally the cutoff for submitting the FLA Return by the deadline. However, in case the return is being filed on the basis of provisional balance sheet, then the final FLA Return is required to be submitted by 30th September.
How to file the FLA Return is ?
The FLA Return must be submitted digitally via the FLAIR (FLA Returns) portal that is exclusively maintained by the RBI. For the reporting entity to view and submit the FLA Return, it is necessary for them to register on the portal.
What kinds of information are submittedin the FLA Return?
This includes the specifics of foreign direct investment (FDI), investments made overseas, external commercial borrowings, trade credit, and other types of financial liabilities.
If you fail to submit your FLA Return by the due date, will you be subject to any penalties?
Penalties may be levied by the RBI for non-compliance with the FLA Return or for filing the return later than required. In order to avoid incurring such fines, it is important to ensure that the deadline for filing is met.
Is the information that is provided through the FLA Return kept in confidence?
The RBI does, in fact, consider the information that is provided through the FLA Return to be confidential. It is used for purposes of aggregate analysis as well as research on the macroeconomic environment; individual corporate information is kept confidential.