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Annual Return on Foreign Liabilities and Assets (FLA render) under FEMA 1999

General Didactics

Q1. What will exist the consequences in instance we do not file the said FLA Render by 15th July, as our accounts are not audited as yet, and nosotros practise not wish to file it with unaudited figures. Will in that location be any imposition of penalty or prosecution initiated against the visitor past RBI or FEMA? Since nowhere it is mentioned either in the Round No. 145 dated June xviii, 2014 or in the Addendum to AP (DIR Series) Circular No. 145 most the penalty or the prosecution, so, tin nosotros assume that we can file the same once our accounts are audited without any risk of penalty or other proceedings from the concerned authority in future?

Ans.: Annual return on Foreign Liabilities and Assets has been notified nether FEMA 1999 and it is required to be submitted by all the India resident companies which have received FDI and/ or fabricated overseas investment in any of the previous twelvemonth(s), including electric current year by July fifteen every yr. Not-filing of the return before due date will be treated equally a violation of FEMA and penalty clause may be invoked for violation of FEMA.

Q2. What data should be reported in FLA return, if balance sheet of the company is not audited before the due appointment of submission?

Ans.: If the visitor's accounts are non audited before the due engagement of submission, i.eastward. July 15, then the FLA Return should be submitted based on unaudited (conditional) account. One time the accounts gets audited and there are revisions from the provisional information submitted by the visitor, they are supposed to submit the revised FLA render based on audited accounts by stop - September.

Q3. In instance where Account Closing Menstruum of the visitor is unlike from reference menstruum (end-March), can we report the information as per Account Endmost Period?

Ans.: No. Information should be reported for all the reference flow, i.e. Previous March and Latest March. If Business relationship Closing Menstruation of the company is different from the reference period, then information should be given for the reference catamenia on internal assessment.

Eligible Companies to Submit the FLA Return

Q4. Which companies are required to submit the FLA Return?

Ans.: The annual return on Foreign Liabilities and Avails (FLA) is required to be submitted straight by all the Indian companies which accept received FDI (foreign direct investment) and/or fabricated FDI abroad (i.due east. overseas investment) in the previous twelvemonth(south) including the current twelvemonth i.east. who holds strange Assets or Liabilities in their Residue Sheets.

Q5. If a company did not receive FDI or made overseas investment in any of the previous year(south) including the current year, do we need to submit the FLA Return?

Ans.: If the Indian company does not have any outstanding investment in respect of in and outward FDI as on stop-March of reporting yr, the company need not submit the FLA Render.

Q6. If a company has but share application money, then is that company supposed to submit the FLA Render?

Ans.: If a company has received only share application money and does not have any foreign directly investment or overseas directly investment outstanding as on end-March of the reporting year, then that visitor is not required to make full upward FLA return.

Q7. If the company has not received whatever inward FDI / made overseas investment in the latest year, do they need to submit the FLA Render?

Ans.: If the company has not 'received any fresh FDI and/or ODI (overseas straight investment)' in the latest year simply the company has outstanding FDI and/or ODI, and then that company is required to submit the FLA Return every year by July xv.

Q8. Whether FLA Return is required to be submitted by Registered Partnership Firms (Registered under Partnership Registration Act) or branches or trustees, who have fabricated Overseas Direct Investment or it is mandatory just for Companies (Registered nether Companies Act, 1956)?

Ans.: 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 transport 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 utilize the aforementioned 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 render only and non for any other purpose.

Q9. Is information technology required to submit Annual Functioning Report for ODI, if we have submitted FLA Render?

Ans.: FLA Return and Annual Performance Written report (Apr) for ODI are two dissimilar returns and monitored by two different departments of RBI. So you lot are required to submit both the returns if these are applicable for your company.

Q10. If not-resident shareholders of a company has transferred their shares to the residents during the reporting period, and then whether that company is required to submit the FLA Return?

Ans.: If all non-resident shareholders of a company has transferred their shares to the residents during the reporting menstruation and the company does non have any outstanding investment in respect of in and outward FDI as on terminate-March of reporting yr, then the company demand not submit the FLA Render.

Q11. If company issued the shares to non-resident on Non-Repatriable footing, whether that company is required to submit the FLA Return?

Ans.: Shares issued by reporting visitor to not-resident on Non-Repatriable basis should non exist considered equally strange investment; therefore, companies which accept issued the shares to non-resident simply on Non-Repatriable basis, is not required to submit the FLA Render.

Procedure for Submission of the FLA Return and
Acknowledgement therefor

Q12. Where can visitor become revised format of Almanac Render on Foreign Liabilities and Assets (FLA Return)?

Ans.: The revised format of FLA is bachelor on RBI's spider web site,

http://rbi.org.in/scripts/BS_ViewFemaForms.aspx

(Home >> Forms >> Strange Commutation Management Act Forms)

Annual render on Foreign Liabilities and Assets

Visitor can download the updated FLA return every year past end of May. Company should use the updated FLA render only.

Q13. What is the due date of submission of the FLA return?

Ans.: FLA return is mandatory under FEMA 1999 and companies are required to submit the aforementioned based on audited/ unaudited account past July 15 every year.

Q14. Where should we submit the FLA return?

Ans.: Filled-in the Excel based FLA return should exist sent by email by fifteen July. Whatever other attachment should not be forwarded along with the FLA return.

Q15. Where should nosotros contact regarding whatever clarification for submission of FLA Return?

Ans.: Whatever query regarding filling of FLA return should be sent to email. Y'all may also contact RBI person treatment FLA return at

(022) 26578662/ 26578217/ 26578348/ 26578214/ 26578340/ 26578241

Q16. From whose mail id the FLA Return should exist eastward-mailed? Whether it is necessary to eastward-mail the FLA Return from the mail id of the person mentioned in Contact Details?

Ans.: The filled-in Excel based FLA render should be forwarded through the official email id of any authorized person like CFO, Manager, Company Secretary etc. Acknowledgement volition be forwarded to the both email ids (sender and mentioned in Contact Details).

Q17. Is it required to submit whatever financial statements like residuum canvass or P&50 accounts (audited/ unaudited) along with the FLA render?

Ans.: You lot are required to submit only the filled-in Excel based format of FLA by email before due date. Financial statements or any information in split annex should not be forwarded along with the FLA render.

Q18. We have already submitted a hard copy of the FLA return with your function. Do nosotros demand to submit the FLA render in revised format again?

Ans.: The Return has to be submitted in the Excel based format, which has inbuilt checks and validations. So if there are any discrepancies in the furnished data, you will exist able to know and rectify them at your terminate before submitting the data to RBI. Further, past submission of the information in Excel based format past email will ensure that you will receive the confirmation email from RBI within a week for successful processing of data submitted past you. In view of this, you are brash to resubmit the information in revised format of FLA render through email.

Q19. As per the circular, excel file of render is required to be mailed. Notwithstanding, there is no column for the signature in the soft form. Should we, therefore, submit the signed hard copy or scanned copy of return to your function later or sending soft copy (validated) only would be sufficient compliance?

Ans.: Information technology is sufficient to submit the validated excel based soft copy of filled-in FLA return through official electronic mail id of whatsoever authorized person of company like CFO, Director, Company Secretary etc. at email before due date for compliance purpose.

Q20: How would an acknowledgement is provided to the states on submission of the form via eastward-mail?

Ans.: Later sending the Excel based FLA return to email, y'all will receive an acknowledgement. Ensure that you accept received a successful processing acknowledgement. If some error is mentioned in the acknowledgement rather than successful processing statement, then you lot have to resubmit the grade by rectifying the mentioned error.

Q21. Can nosotros send the PDF re-create of the FLA return as we are facing some technical problem while furnishing the data in excel based format?

Ans.: You need to submit the information in the Excel based format only through email. In example of technical problem, you lot may forward the filled-in excel based form as it is as draft excel based FLA return to email in for rectifying the trouble faced past y'all.

System Requirement for the FLA Render

Q22. What is the organisation requirement at company's side for filling the FLA Render and procedure for filling it electronically?

Ans.: Visitor should have MS office Excel – 2003 onwards. Earlier filling the information in Excel based FLA Return, brand certain that you have enabled the macro in Excel. In club to enable the macro, please do the post-obit:

a) In Microsoft 2007

Go to Office Push >> Excel Options >> pop
Select 'Evidence developer tab in the Ribbon', then
Go to Developer tab >> Macro Security >> select 'Enable all macros'

b) In Microsoft 2010

Become to File >> option >> trust middle >> trust heart setting >> macro setting
Select 'Enable all macros'

Q23. How should we save the render?

Ans.: Information technology is required to save the FLA return in Excel 97-2003 Workbook (.xls format).

In gild to save the render as follows:

Go to Office Push >> Save As >> Relieve every bit type Select 'Excel 97-2003 Workbook'

FAQs Related to Section I

Q24. Where tin we find the detailed description of NIC-2008 code (item-vi)?

Ans. In the FLA Return, industry codes are given equally per the National Industrial Classification (NIC) -2008 codes. The details on NIC-2008 codes can be accessed through the following link, http://mospi.nic.in/mospi_new/upload/nic_2008_17apr09.pdf.

Q25. If a company has more than 1 activity during the twelvemonth then which NIC code should be reported by company (particular-six)?

Ans.: Company will select that activeness, from which, they have earned major revenue.

Q26. If Company has just Outward Investment and no in FDI, and then what should we select in Identification of the reporting company (in terms of inward investment) nether Section I (Item 9)?

Ans.: Option 'Others' tin can be selected in respect of Identification of the reporting company nether Department I.

Q27. What is the pregnant of Technical Strange Collaboration (item-11)?

Ans.: Indian company which has entered into an agreement with a foreign entity in terms of technology transfer, know-how transfer, use of patent, brand name etc, so such blazon of agreements are treated equally Foreign Technical Collaboration (FTC). If Indian reporting company has such blazon of FTC during the reporting catamenia, so they should select 'Yes' against the detail xi nether Department I of the FLA return.

FAQs Related to Section 2

Block 1A

Q28. The section Two Password is asked while inbound data. Is the Return password protected?

Ans.: Don't try to fill purple cells in the Return, as those are locked/ countersign protected. Fill-in the yellow cells only. Purple cells denote calculated fields, which are computed automatically.

Q29. What are participating and non-participating preference shares?

Ans.: Participating preference shares are those shares which accept 1 or more than of the following rights:

(a) To receive dividend, out of surplus profit after paying the dividend to disinterestedness shareholders.

(b) To have share in surplus assets remaining after the unabridged majuscule is paid in case of winding upward of the visitor.

On the other hand Non-participating Preference Shares are those shares which practice non accept one or more of the above said rights.

Q30. Whether equity participation includes disinterestedness shares as well as compulsorily convertible debentures (CCD)?

Ans.: Compulsorily convertible debentures (CCD) issued past the visitor should non exist included in the paid upwardly capital while furnishing the information in Block 1A (in Department Ii) of the FLA Return. Nevertheless, if the CCDs / Debentures are held by the non-resident direct investor who is property the equity shares of Indian reporting company, so CCD / Debentures property should be reported in 'other capital' component of either Block 2A or 2B (in Department Iii), depending upon the per cent equity held by the non-resident direct investor.

However if the investor holds just CCD as on stop March, then it should be reported in item 2.ii of Block 2C. Like handling should exist considered while reporting the compulsory convertible preference shares also.

Q31. Whether, in Section II- Block 1A- Item 3.0, the Non-Resident Equity and participating Preference Shares Capital holding (%) is beingness calculated with respect to Detail 1.0 (Total Paid-upwards capital) or Item ane.1 (Total Equity and participating Preference Shares Capital letter)?

Ans.: Since Non-Participating share capital is a type of debt investment and is part of Particular ane.0, Non-Resident Equity and participating Preference Shares Capital holding (%) is calculated with respect to detail 1.one of Block 1A (in Scion 2).

Block 1C

Q32. Where should we report the premium on issue of Equity Share Uppercase?

Ans.: Premium on issue of Equity Share Capital is a part of Reserve, which should be reported under the particular 4.one of Block 1C- Reserves and Surplus, (in Department II).

Q33: Nosotros are not able to insert negative figures at item iv.1 of Block 1C. What should we exercise?

Ans.: At item iv.ane of Block 1C, you are supposed to mention the information on Reserves excluding Profit & Loss account balance , which is always be positive and Profit & loss business relationship balances (carried forrard to the residue canvass) should be reported separately at item 4.2 of Block 1C, which can be negative. Ensure that the item four.3 of Cake 1C (i.east. Item 4.ane + Item 4.2), which is machine calculated figure, must be equal to the Reserve and Surplus mention in Balance sail of the company.

Cake 1D

Q34. What should nosotros include in Block 1D?

Ans.: In Block 1D, you are required to provide the information relating to all purchases (including capital and revenue of goods and services)/ sales made domestically every bit well as foreign during the reference flow (April - March).

The detail information in Block 1D should be furnished as below:

a. All expenses/sales shown in turn a profit and loss account to be taken as total purchases/total auction.

b. Both goods and services are to be included.

c. All foreign purchases/ sales i.e. imports and exports, should be captured from P& 50 Account.

FAQs Related to Section III

Block 2A/2B

Q35. How will we do the valuation of the equity capital for unlisted companies?

Ans.: To calculate the market value of disinterestedness uppercase for unlisted companies apply the OFBV method equally follows:

Market value of equity capital held by Non- resident at OFBV

= (Net worth of the company) * (% non-resident equity holding)

Where, Cyberspace worth of the company

= (Paid up Disinterestedness & Participating Preference share majuscule of company + Reserves & Surplus - Accumulated losses)

However, in excel based format of FLA Return, Net worth of company will be automatically calculated at detail 4.4 of Block 1C under Section II, which may be used for valuation of non-resident disinterestedness investment nether Section III.

Q36. What valuation guidelines should be used while reporting strange disinterestedness investment under Section III for listed companies?

Ans.: If the Indian reporting company is listed and then endmost share toll as on reference flow, i.east. stop-March of previous and latest year should be used for valuation of not-resident equity investment.

Q37. What constitute the 'Other Majuscule' component of FDI?

Ans.: Other capital letter is a debt which is to be reported as follows:

(a) Other capital, item 2.i & ii.two of Block-2A includes all other liabilities and claims at Nominal value, except equity and participating preference shares, (i.e. merchandise credit, loan, debentures, Non-participating share capital, other accounts receivable and payables etc.) of Indian reporting company with its direct investors property more than than ten per cent disinterestedness.

(b) Other capital, particular 2.1 & 2.two of Block-2B includes all other liabilities and claims at Nominal value, except equity and participating preference shares, (i.e. trade credit, loan, debentures, Non-participating share capital, other accounts receivable and payables etc.) of Indian reporting visitor with non-resident investors property less than x per cent equity and indirect related parties (boyfriend enterprise or ultimate parent company or group company etc.).

Q38. What is the definition of related party?

Ans.: A related political party is a person or entity that is related to the entity that is preparing its financial statements (referred to equally the 'reporting entity').

A person or a close member of that person'due south family is related to a reporting entity if that person:

(i) has control or joint control over the reporting entity;

(ii) has significant influence over the reporting entity; or

(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

In the definition of a related party, an associate includes subsidiaries of the associate and a joint venture includes subsidiaries of the joint venture. Therefore, for example, an acquaintance's subsidiary and the investor that has significant influence over the associate are related to each other.

Q39. Where should nosotros report the non-participating preference share issued to not-resident?

Ans.: Non-participating preference share are treated as debt securities. (a) If the Non-participating preference shares are held past strange investor who is also holding equity shares of Indian reporting company, and then Non-participating preference share should be reported at item 2.1 of Block 2A or 2B (depending upon the % equity & participating preference share held by strange investor) at nominal value.

Q40. Where should we report Fully/Partially/Non-convertible debentures issued to the non-residents in FLA Return?

Ans.: Fully/Partially/Non-convertible debentures are treated equally debt securities. (a) If the debentures (of any blazon) are held by strange investor, the amount should exist reported at detail 2.i of Block 2A or 2B (depending upon the % equity plus participating preference share held by foreign investor) at nominal value.

Q41. What treatment should be given to share application money received from non-resident investor?

Ans.: If the share application money is received from the existing non-resident shareholder, so the outstanding share application money should exist reported at particular two.1 of Block 2A or 2B, depending upon per cent of disinterestedness plus participating preference share holding by not-resident investor.

Q42. On validating section III of the FLA Render we are getting the error message regarding mismatch of not-resident equity and participating preference share belongings (%) between Section 3 and Section Two. How should nosotros resolve the error?

Ans.: Non-resident equity holding per cent (%) is calculated for current year at detail 3.0 of Block 1A under Section II. Ensure that the sum of Non-resident disinterestedness belongings per cent (%) reported under Block 2A, 2B & 2C of Section III must be equal to value given at item 3.0 of Block 1A of Section II.

Q43. In the FLA Return, whether FDI should exist reported based on the country of immediate investor or land of ultimate property company? Where should we report the receivable/ payables with non-resident ultimate holding company?

Example: A visitor incorporated in Mauritius has invested into Indian visitor. The parent visitor of Mauritian company is incorporated in United states. So whether claims and liabilities of Indian company with parent company incorporated in USA also needs to be disclosed in the FLA Render and if yes, where?

Ans.: While filling the FLA return, FDI reporting should exist based on the state of immediate investor. However, if in that location are whatever receivables/payables with the non-resident ultimate property company, then same should also be reported at 'Other capital letter' component of Cake 2B nether Section III.

In respect of the to a higher place instance, claims and liabilities of Indian company with the parent Usa Company will be reported at 'Other capital letter' component of Block 2B under Section III.

Block 2C

Q44. What establish in the Equity Securities under portfolio Investment?

Ans.: Please furnish hither the outstanding disinterestedness investments (secondary / stock marketplace investment) by non-resident investors, other than those made nether Foreign Direct Investment Scheme in Bharat (i.e. other than those reported in Block-2A & Cake-2B).

Q45. What establish in the Debt Securities under portfolio Investment?

Ans.: Post-obit items are included in Debt Securities:

(a) Money Market Instruments and Bonds & Other instruments are invested by non-resident investors, (other than those are reported in Block-2A & Block-2B)

(b) Non-participating preference shares and debentures are held by foreign investor who is not belongings equity share, and so the same should exist reported at item two.2 of Block 2C (Bonds & Notes) at nominal value.

FAQs Related to Section IV

Cake 3A

Q46. Can you explain, what exactly is the pregnant of Block 3A of Section IV nether Foreign assets?

Ans.: Block 3A of Section Iv on foreign assets captures the data on financial details of Overseas Company in which your company'due south equity holding is 10 per cent or more.

Q47. If the overseas subsidiaries/ joint venture company's bookkeeping period is dissimilar from the reference/reporting period (i.e. April-March) in the Return, so what information should we furnish in Section Four?

Ans.: Companies are required to furnish the information on outstanding external liabilities and avails as on cease-March of previous and latest twelvemonth. In case if the accounting menses of overseas subsidiaries/ joint venture of Indian reporting visitor is dissimilar from the reference period, so the information for end-March should be given on internal assessment footing.

Block 4A

Q48. In case where overseas company (Dice) is unlisted, how can we calculate the market place value of overseas equity investment using OFBV method under Block 4A of Section Iv?

Ans.: For valuation of overseas disinterestedness investment OFBV Method should be used, every bit explained below:

OFBV Method:

Market value of equity capital held by you at OFBV

= (Net worth of the DIE) * (% of equity held by you) Where,

Net worth of the DIE = (Paid upward Disinterestedness & Participating Preference share uppercase of company +Reserves & Surplus - Accumulated losses)

As per Block 3A of section Iv the formula is given below:

Item one.i of Block 4A = (Item three.2/ Item three.one)* (Item iii.6* Particular three.7)/100000 for reference menstruation Where, Item 3.one, Item iii.ii, Particular iii.vi and Detail iii.vii are extracted from block 3A

Q49. How will we practice the valuation of the equity capital for listed DIE?

Ans.: If the overseas visitor is listed then closing share price equally on reference catamenia, i.e. end-March of previous and latest yr should exist used for valuation of equity investment.

Q50. What plant the 'Other Capital' component of ODI?

Ans.: Other capital is a debt which to be reported as follows:

(a) Other uppercase, detail 2.i & ii.2 of Block-4A includes all other claims and liabilities at Nominal value, except equity shares, (i.e. trade credit, loan, debentures, Non-participating share capital, other accounts receivable and payables etc.) of Indian reporting company with its Dice reported in Block-4A.

(b) Other majuscule, item 2.ane & 2.ii of Block-4B includes all other liabilities and claims at Nominal value, except equity, (i.due east. trade credit, loan, debentures, Non-participating share majuscule, other accounts receivable and payables etc.) of Indian reporting company with non-resident companies where Indian company holds less than 10 per cent equity and as well with indirect related parties (fellow enterprise or ultimate parent visitor or group company etc.).

Block 5

Q51. What constitute in the Equity Securities nether Portfolio Investment Abroad?

Ans.: Please furnish here the outstanding equity investments (strange stock market investment) past reporting company, other than those fabricated under Foreign Straight Investment Abroad (i.eastward. other than those reported in Cake-4A & Block-4B).

Q52. What constitute in the Debt Securities under Portfolio Investment Abroad?

Ans.: Coin Market Instruments and Bonds & Other instruments are invested past reporting company (other than those are reported in Block-4A & Block-4B) are included in the Debt Securities under Portfolio Investment Abroad.

FAQs Related to Department Four (A)

Cake 3B

Q53. What information should we written report in Block 3B?

Ans.: In Block 3B, yous are required to provide the information of Direct Investment Enterprises (Die) abroad relating to all purchases (including majuscule and revenue of goods and services)/ sales made domestically too as foreign during the reference menses (Apr - March).

The detail information in Block 3B should exist furnished as below:

a. All expenses/sales of Die away shown in profit and loss account to be taken every bit total purchases/total auction.

b. Both goods and services of Dice abroad are to be included.

c. All strange purchases/ sales of Dice away i.e. imports and exports, should be captured from P& L Business relationship.

FAQs Related to Department Five

Cake: 6

Q54. In case of department-5 of the class, information technology is written that position with foreign unrelated parties to be given. Please clarify what transactions are to exist reported under the same?

Ans.: All financial outstanding liabilities and claims (Trade Credit, Loans, Currency & Deposits, and other receivable & payable accounts) with foreign unrelated Parties should be reported in Cake 6. Any domestic liabilities or assets (even if it is in foreign currency) should not be reported in the FLA return.

Further, if the share awarding money is received from strange investor who does not hold equity shares of Indian reporting company as on reference engagement, so outstanding share application money should be disclosed nether Department Five, at point half dozen.4: Other receivable and payable accounts.

Q55: Will EEFC business relationship with Banking concern come up nether Section V (Currency and Eolith of Outstanding Claims)?

Ans.: EEFC account with Bank is not creating whatever external Avails and Liabilities. Therefore information technology volition non come nether Department V.

Q56. Whether, any assets or liabilities for Indian political party (i.e. domestic assets and liabilities) are to be included in the FLA Return?

Ans.: Any domestic liabilities or avails (even if information technology is in foreign currency) should not be reported in the FLA return.

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Source: https://m.rbi.org.in/Scripts/FAQView.aspx?Id=95

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