“If things are going to improve, I was the one responsible for making it happen”. Now, you may be thinking why this kind of an introductory part for Foreign liabilities and Assets(FLA) Annual returns. It’s nothing but for remembering the relevance of updating yourself to grow in the period of continuous evolution. FLA is a must known factor for both the business as well as aspirants who all intend to attain a stable career. Familiarising the concepts is essential for a successive thrive in one’s life.
Coming into the more detailed aspects, Foreign liabilities and assets (FLA) annual returns must be submitted by every company which made a foreign direct investment (FDI). And also the concepts intended that Companies that made an investment in foreign countries of the previous year or current year must submit FLA annual returns before July 15 of every year.
FLA should be applicable for companies, LLP, and other partnership firms or public-private partnership firms. But suppose the company doesn’t invest any amount for overseas investment in the previous and current year till march, there is no need to apply Foreign Liabilities and Assets return. And if the company shares only the application form and doesn’t make any direct foreign investment, it also can avoid submitting FLA on annual returns. However, if a company fails to submit a proper FLA, it must pay the penalty for that.
At present, most companies make direct foreign investments. As a result, the importance which was given to Foreign Exchange Management Act is gradually increasing. Companies who are involved in foreign direct investment must submit FLA without fail. FLA annual returns cover all the foreign direct investments which are made by the company. And those companies directly need to submit to the Reserve Bank of India(RBI)
Who needs to file FLA Annual Returns?
Foreign Exchange Management Act came into existence in 1999. As per this act, companies who made direct foreign investments must have to submit FLA annual returns. Those companies who made overseas investments must submit the previous year’s financial reports as well as the current year’s financial reports or FLA annual returns that indicate outstanding assets and liabilities.The annual return of FLA became mandatory under The Foreign Exchange Management Act (FEMA), 1999, as a circular number 45 on March 15, 2011, as in the case of Indian companies, which all receive foreign direct investment.
FEMA will require all partnership companies to file FLA annual returns if they have done any FDI or Overseas Direct Investment (ODI). In that case, RBI will issue one of the dummy Corporate Identification Number (CIN) based upon the company’s request that can be used to file FLA annual returns. If the dummy CIN number already issued from the government means, the company can use that same CIN number to submit FLA annual returns.
Filing of Foreign Liabilities and Assets (FLA) Return
FLA Return can be filed by using an Excel sheet that must be submitted before July 15 of every year. That filled form must be sent to RBI’s official email id from any of the office authorised member respectively. Moreover, the authorised members should be a Company Secretary, Chief financial officer, and Directors. The details should consist of financial details along with the company audited accounts.
If a company fails to conduct an audit before July 15th, they will be required to submit their unaudited accounts. However, they can still perform the audit at a later time. If any changes are made after the audit is completed, the company must submit another updated form before September. It is important to note that the company must receive an acknowledgement email from the RBI, which will be sent to the respective person’s email address.
Essential points for filing FLA Return
The penalty for non-compliance with the submission of FLA Annual returns within the due date should be imposed on all companies. The amount of penalty should be thrice the sum in contravention. If the amount is not quantifiable, the company should pay a penalty of Rs. 2,00,000. If the penalty is still not paid, a penalty of Rs. 5,000 per day will be levied until payment is made. The deadline for filing Foreign Liabilities and Assets returns is July 15th each year.
If a company submits a report with unaudited accounts, the report must be resubmitted with audited accounts by September of that year. The RBI’s regional offices have the authority to impose penalties, but this rule does not apply to the regional offices located in Kochi and Panaji.
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