Every Indian company or LLP that has foreign investment, or that has invested overseas, must file the Annual Return on Foreign Liabilities and Assets, known as the FLA Return. It goes to the Reserve Bank of India (RBI) by 15 July each year. Many foreign-owned subsidiaries overlook it, especially in their first year, and missing it is a FEMA contravention.
The FLA Return is required under the Foreign Exchange Management Act (FEMA) 1999 and RBI’s Master Direction on Reporting under FEMA. It is filed online on RBI’s FLAIR portal, which stands for Foreign Liabilities and Assets Information Reporting. The return captures the entity’s foreign direct investment, overseas direct investment, and other cross-border assets and liabilities as on 31 March. RBI uses this data for India’s balance of payments and international investment position.
This guide explains who must file the FLA Return, the deadline, how to register and file on the FLAIR portal, how to value foreign investment, and what happens if you do not file.
What Is the FLA Return Under FEMA?
The FLA Return is an annual statement that Indian entities with inward foreign direct investment or outward direct investment file with RBI. It reports outstanding foreign liabilities and assets as on 31 March of the reporting year. It is filed on the FLAIR portal by 15 July and is mandatory under FEMA reporting rules.
The FLA Return is not a tax return and not a company law filing. It is a statistical and regulatory return that feeds India’s external sector data. RBI treats it as a mandatory FEMA filing.
What information does the FLA Return capture?
- Foreign direct investment received, including equity and other capital
- Overseas direct investment made by the Indian entity
- Portfolio investment and other investment
- Loans, trade credits, and other cross-border claims
- Financial details such as reserves and profits
Who Must File the FLA Return?
Every Indian resident company, LLP, SEBI-registered Alternative Investment Fund, partnership firm, and other entity that received FDI or made overseas direct investment in the previous year, or in earlier years, must file. Entities with no outstanding foreign investment at the end of March are generally not required to file.
| Entity Type | FLA Return Required? | Basis |
|---|---|---|
| Indian company with FDI | Yes | Outstanding foreign liabilities |
| Indian company with ODI | Yes | Outstanding foreign assets |
| LLP with foreign contribution | Yes | Covered under RBI directions |
| Alternative Investment Fund with foreign investment | Yes | Covered under RBI directions |
| Branch office or liaison office of a foreign company | No | Files Annual Activity Certificate instead |
| Entity with no outstanding FDI or ODI on 31 March | Generally no | No reportable position |
A foreign subsidiary that received FDI even once, and still has that investment outstanding, must file every year. The obligation does not end after the first filing.
What Is the FLA Return Deadline?
The FLA Return must be submitted to RBI by 15 July every year for the position as on 31 March of that year. If audited accounts are not ready by then, the entity can file using unaudited figures. It must then file a revised return once the audit is complete, by the end of September.
| Event | Timeline | Notes |
|---|---|---|
| Reporting date | 31 March | Position as at financial year end |
| Filing deadline | 15 July | Based on audited or unaudited figures |
| Revised return after audit | By end of September | Required if unaudited figures were used |
| FLAIR registration | Before first filing | One-time, approved by RBI |
The 15 July deadline is fixed. RBI may announce changes through official notices, so check RBI’s website each year before filing.
How Is Foreign Investment Valued in the FLA Return?
Listed companies value foreign equity at market value based on the 31 March share price. Unlisted companies use the Own Funds at Book Value (OFBV) method, which takes the company’s paid-up capital plus reserves and surplus. The foreign share of that total is then reported.
Valuation errors are common, especially for unlisted subsidiaries with accumulated losses. Under the OFBV method, own funds include paid-up capital, free reserves, and the balance in the profit and loss account, which can reduce own funds when negative. Overseas direct investment is valued on the same principles, using the foreign entity’s financials.
How Do You Register and File on the FLAIR Portal?
First, register the entity on RBI’s FLAIR portal using its Corporate Identification Number or LLP Identification Number, PAN, and contact details. Once RBI approves the registration, the entity logs in, fills in the FLA Return form, and submits it by 15 July. Registration is a one-time process.
The FLAIR portal replaced the older email-based submission system. Each entity has its own login and can download its filing history.
Step 1: Register on the FLAIR Portal
Open the FLAIR portal and complete entity registration with CIN or LLPIN, PAN, address, and email. Submit the request so that RBI can verify and activate the entity’s login.
Step 2: Collect Financial and Investment Data
Gather the audited or provisional balance sheet, shareholding pattern, foreign investment details, overseas investment records, and loan data as on 31 March.
Step 3: Value FDI and ODI Correctly
Apply market value for listed shares and the OFBV method for unlisted shares. Calculate the foreign share proportionately and reconcile it with the company’s register of members.
Step 4: Fill the FLA Return Form
Enter the entity details, inward FDI, outward ODI, other investment, and financial data in the online form. Check each section for internal consistency before saving the draft.
Step 5: Submit by 15 July
Submit the FLA Return on the FLAIR portal before 15 July. Download and save the acknowledgment as proof of filing for statutory audit and FEMA compliance records.
Step 6: File Revised Return After Audit
If unaudited figures were used, file a revised FLA Return once the audit is complete, by the end of September, so that RBI records reflect final audited data.
What Happens If the FLA Return Is Not Filed?
Not filing the FLA Return by the due date is treated as a contravention of FEMA. RBI can start penalty action under Section 13 of FEMA. The entity can also apply to compound the contravention with RBI under Section 15 to settle the matter.
| Consequence | Legal Basis | Impact |
|---|---|---|
| FEMA contravention | Master Direction on Reporting | Recorded as non-compliance |
| Penalty up to ₹2,00,000 [approx. USD 2,381] where sum not quantifiable | Section 13, FEMA | Plus up to ₹5,000 [approx. USD 60] per day if continuing |
| Compounding with RBI | Section 15, FEMA and Compounding Rules | Settles proceedings for a fee |
| Problems in future filings | AD bank and RBI review | Delays in FC-GPR, ODI, or other approvals |
Past non-filing often surfaces during due diligence, at the next FDI round, or when the Authorised Dealer Category-I Bank reviews a later filing. It is better to file all pending past returns and then approach RBI to regularise.
How Does the FLA Return Fit with Other Compliances?
The FLA Return sits alongside other FEMA and company law compliances. These include Form FC-GPR and Form FC-TRS on the FIRMS portal, the Annual Performance Report for overseas investment, and annual filings with the Registrar of Companies (ROC) under the Companies Act 2013.
The figures in the FLA Return should match the audited financial statements filed with the Ministry of Corporate Affairs (MCA) in Form AOC-4. They should also match the shareholding disclosed in Form MGT-7. RBI and statutory auditors compare these figures, so a mismatch raises questions.
What Are the Key Insights and Information on the FLA Return?
- The FLA Return is due every year by 15 July for the 31 March position.
- Filing is done on RBI’s FLAIR portal after one-time registration.
- Unaudited figures can be used, with a revised return due after audit by end of September.
- The OFBV method applies to unlisted company valuation.
- Branch offices and liaison offices file an Annual Activity Certificate, not the FLA Return.
- Non-filing is a FEMA contravention that may lead to penalty under Section 13.
- Past missed returns should be filed and regularised through compounding where needed.
How Does a Foreign Parent Manage the FLA Return in Practice?
A foreign parent with an Indian subsidiary should treat the FLA Return as a fixed annual task, set to the 15 July deadline and linked to the audit cycle.
General Example: A Japanese parent set up an Indian subsidiary with 100% FDI. In its first year, the subsidiary’s finance team assumed the FLA Return applied only to large groups. Its auditor pointed out the requirement. The subsidiary registered on the FLAIR portal, valued the FDI using the OFBV method, and filed by 15 July using unaudited numbers. After the audit was completed in September, it filed a revised return. The parent then added the FLA Return to its group compliance calendar for every year.
Frequently Asked Questions on the FLA Return
These answers address difficult FLA Return situations faced by foreign-owned Indian subsidiaries, LLPs, and groups with overseas investments. They are based on FEMA 1999 and RBI’s reporting directions, and cover timing, valuation, eligibility, and non-filing outcomes.
1. Does a newly incorporated subsidiary that received FDI in March need to file?
Yes. If FDI is outstanding on 31 March, the subsidiary must file the FLA Return by 15 July, even if it was incorporated just weeks earlier.
2. Is the FLA Return needed if FDI was only share application money pending allotment?
Share application money pending allotment that is held for a non-resident is a foreign liability. Report it as RBI’s form requires, and take care to classify it correctly.
3. Does a company that fully repatriated FDI during the year still file?
If no FDI or ODI was outstanding on 31 March, filing is generally not required. Keep evidence of the full exit on record.
4. What if audited accounts are delayed beyond September?
File on unaudited figures by 15 July and revise once the audit is complete. If the revised return is delayed, keep records showing why, and file as soon as possible.
5. Do LLPs with foreign partners file the FLA Return?
Yes. LLPs with foreign capital contribution are covered by RBI’s reporting directions and must file the FLA Return.
6. Is the Late Submission Fee available for a missed FLA Return?
RBI’s direction treats non-filing of the FLA Return by the due date as a FEMA contravention. The usual path to regularise it is filing the return and, where needed, compounding.
7. Does a branch office of a foreign company file the FLA Return?
No. Branch offices and liaison offices file an Annual Activity Certificate with the AD Category-I Bank and other authorities, not the FLA Return.
8. How are negative reserves treated in the OFBV method?
Accumulated losses reduce own funds. The foreign investor’s share is calculated on the reduced figure, which can sometimes be low or even negative.
9. Does an Indian company with only overseas investment file?
Yes. An Indian company that has made overseas direct investment and has it outstanding on 31 March must file the FLA Return.
10. Can a consultant file the FLA Return for the company?
A consultant can prepare the return. The entity remains responsible, and the FLAIR login should be controlled by the entity’s authorised official.
11. What happens if the FLA Return contains wrong figures?
File a corrected or revised return as soon as the error is found. Repeated or material errors may draw RBI scrutiny.
12. Can non-filing affect fresh FDI into the company?
Yes. An AD Category-I Bank reviewing a new Form FC-GPR may ask about past compliance, and pending FLA defaults can slow the process.
Non-resident corporations seeking structured support with FLA Return filing on the FLAIR portal, AD Category-I Bank liaison, ROC registration, and Form FNC filing for branch or liaison offices may contact CompanyIN for end-to-end assistance.
Disclaimer: The information provided in this article is solely for general informational and educational purposes regarding Indian corporate and foreign exchange regulations and does not constitute formal legal, tax, or regulatory advice. Foreign entities should consult qualified professionals at CompanyIN before initiating any statutory filings or commercial commitments in India.
