The FLA Return Checklist provides a comprehensive guide for determining FLA return applicability, gathering required documents and financial data, completing the FLAIR portal filing, meeting reporting deadlines, and ensuring FEMA compliance. It also covers exemptions, section-wise filing requirements, provisional filing procedures, penalties for non-compliance, related FEMA filings, and common errors to avoid.

FLA RETURN CHECKLIST

1. Applicability & Exemption Status

• Mandatory

FLA return is required to be submitted by the following entities that have received Foreign Direct Investment (FDI) and/or made Overseas Direct Investment (ODI) abroad in the previous year(s) including the current year, as per RBI:

• Companies under Section 1(4) of the Companies Act, 2013,
• LLPs under the Limited Liability Partnership Act, 2008,
• SEBI-registered Alternative Investment Funds (AIFs), Partnership firms, and Public-Private Partnerships (PPPs) etc.

• Exempt Entities:
  • Entities with no outstanding FDI or ODI as of March 31 of the reporting year.
  • Entities that received only share application money with zero shares allotted as of March 31.
  • Entities with shares issued to non-residents exclusively on a non-repatriable basis.
  • Entities where all non-resident shareholders transferred their shares to residents during the period, leaving zero outstanding FDI or ODI as of March 31.
• Period Rule: The reporting period April 1 to March 31

2. Section-Wise FLA Return Breakdown

breakdown of the Foreign Liabilities and Assets (FLA) return form structured into its five core sections for your reference and documentation:

3. Pre-Filing Documentation & Data Gathering

• Audited financial statements as of March 31 of the reporting year (or provisional accounts if the audit is pending).
• PAN card of the company and the authorised signatory.
• Certificate of incorporation or registration certificate of the entity.
• Signed authority letter and verification letter in the RBI-prescribed format (uploaded during portal registration).
• Previous year's FLA return (if filed) for reference and continuity.
• Foreign currency conversion data: convert all foreign currency values to USD using the RBI reference rate as of March 31.
• Valuation of foreign securities: value listed equity securities at market price as of March 31, and unlisted securities based on the latest available financial statements of the investee company.

4. Step-by-Step Filing Guide on the FLAIR Portal

5. Deadlines & Unaudited Filing Protocol

• July 15: Fixed primary deadline. Mandatory for all eligible entities, irrespective of whether the audit is complete.
• September 30: Mandatory revised filing deadline if the July 15 submission used provisional figures.
• Audit Status Rule: If your audit is pending by July 15, file using provisional/unaudited accounts and flag them as provisional. Failing to file on the grounds of an incomplete audit is treated as a FEMA violation.

6. Penalties & Compliance Risks

Non-filing of the FLA return is a violation of FEMA 1999. For FLA returns, the LSF is a flat fee of ₹7,500 per return, as prescribed under A.P. (DIR Series) Circular No. 16 dated September 30, 2022 and other penalties apply as per Section 13, FEMA 1999.

The following additional conditions apply:

• The option to pay LSF is available only up to three years from the original due date of filing.
• If an advice for payment of Late Submission Fee (LSF) is issued and the fee is not paid within 30 days, the advice becomes null and void, and any payment made after this period will not be accepted. 
• If a person neither files the return within time nor regularises the delay through LSF, the matter may be liable for penal action under Section 13 of the Foreign Exchange Management Act, 1999.

7. Broader FEMA Context & Interconnections

• FC-GPR: Filed via the FIRMS portal within 30 days of allotment for issuing equity instruments to foreign investors.
• FC-TRS: Filed via the FIRMS portal within 60 days of transfer for secondary share transfers between residents and non-residents.
• FLA Return: Filed via the FLAIR portal by July 15 annually for outstanding foreign liabilities and assets as of March 31.
• APR (Annual Performance Report): Filed via the FIRMS portal by December 31 annually for entities with outstanding ODI.

8. Common Pitfalls to Avoid

• Assuming No Filing Without New Transactions: Remember that filing is mandatory if prior FDI or ODI remains outstanding as of March 31, even if zero transactions occurred during the year.
• Skipping the July Deadline for Audits: Always file provisional data by July 15 if the audit is delayed, rather than skipping the deadline entirely.
• Omitting Indirect Foreign Investment: Include downstream investments where a foreign investor holds shares in your entity through another Indian entity.
• Forgetting the APR: Recognize that entities with ODI must file both the FLA return (July 15) and the Annual Performance Report (December 31) through separate channels.