FLA Return Under FEMA, 1999: The Complete Guide Every Company with Foreign Investment
If your company has received Foreign Direct Investment (FDI) or made an Overseas Direct Investment (ODI), there's one RBI compliance you cannot afford to miss — the Annual Return on Foreign Liabilities and Assets (FLA).
Miss the deadline, and you're staring at a FEMA violation with penalty consequences. Here's everything you need to know, simplified.
📌 What is the FLA Return?
The FLA return is an annual filing under FEMA, 1999 (notified via A.P. (DIR Series) Circular No. 45, dated March 15, 2011) that captures a company's outstanding foreign investment position — both inward (FDI) and outward (ODI) — as on end-March.
Why does it matter to RBI? The data feeds into:
India's Balance of Payments (BoP) International Investment Position (IIP) of India IMF-mandated surveys — Direct Investment Position (DIP) and Portfolio Investment Position (PIP) by Counterpart Economy
🔒 Confidentiality: Entity-level data stays confidential. Only consolidated aggregates are published by RBI.
👥 Who Must File? Entity Type Applicability Companies (Section 1(4), Companies Act, 2013) ✅ If holding FDI/ODI LLPs (registered under LLP Act, 2008) ✅ If holding FDI/ODI SEBI-registered AIFs ✅ Via email format Partnership Firms / Proprietary Firms ✅ If holding FDI/ODI Public Private Partnerships (PPP) ✅ If holding FDI/ODI
The trigger: Any entity holding outstanding FDI and/or ODI as on end-March of the previous year or the current year.
🗓️ The Deadline You Can't Miss
July 15 of every reporting year — based on audited or unaudited financials.
What if accounts aren't audited by July 15?
No problem — file with provisional/unaudited figures. Once audited accounts are ready:
Raise a request for revision approval on the FLAIR portal Once approved, file the revised FLA return Do this promptly — don't sit on it What if you miss the deadline entirely?
It's treated as a FEMA violation, and penalty provisions can be invoked (Notification No. FEMA. 395/2019-RB and A.P. (DIR Series) Circular No.16/2022). Late filers must contact their jurisdictional Regional Office (FED) to pay the Late Submission Fee (LSF).
💻 How to File: Step-by-Step
FLA return filing happens entirely online via the FLAIR portal: flair.rbi.org.in
Register — Click "Registration for New Entity Users" Fill the FLA user registration form and upload: Verification Letter Authority Letter Submit — You'll receive a User ID and default password via email Login to FLAIR and file your return Refer to the portal's user manuals — "FLA User Registration Form," "Filling Online FLA Form," and FAQ-2 — for section-wise guidance
Special case — AIFs: No online format yet. Register on FLAIR, then email flareturn@rbi.org.in to receive the Excel-based format. Fill and return it via email for acknowledgment.
❓ Do You Even Need to File? (Common Exemptions)
You don't need to file if:
No outstanding FDI/ODI as on end-March of both reporting year and previous year You've received only share application money (no FDI/ODI outstanding) Shares were issued to non-residents strictly on a non-repatriable basis All non-resident shareholders transferred shares to residents and no outstanding investment remains
You do need to file if:
Any outstanding FDI/ODI exists as on end-March of either the current or previous year (even if nil in the other) Shares were issued on a repatriable basis, even if the shareholder later became a resident/non-resident Your entity is registered under IFSCA in GIFT City and holds foreign investment — yes, GIFT City entities are covered too 🧮 Key Concepts, Demystified Term Meaning Direct Investment A lasting-interest cross-border investment, made up of Equity Capital + Other Capital FDI in India Non-resident holds ≥10% equity + participating preference shares in an Indian entity Reverse Investment Indian DIE holds <10% equity in its own non-resident Direct Investor Other Capital Trade credit, loans, debentures, non-participating shares, receivables/payables (non-equity debt items) Net Worth Total Equity + Participating Preference Capital + Reserves & Surplus (auto-calculated on FLAIR) Foreign Subsidiary Non-resident holds >50% voting power/equity Foreign Associate Non-resident holds 10%–50% voting power/equity
💡 CCDs (Compulsorily Convertible Debentures) are not part of paid-up capital — but if held by a non-resident direct investor, report them under "Other Capital." If held only as CCD without equity, report under Portfolio Investment.
📊 Reporting Sales & Purchases — The Grey Area
A recurring doubt: what exactly counts as "Sales" or "Purchases" in the FLA return?
Report only what relates to regular business operations:
✅ Revenue from operations (sale of goods/services) ✅ For NBFCs/leasing/forex entities — interest, commission, or forex gain (if that's their core business) ❌ Interest on fixed deposits, sale of fixed assets, other income, forex fluctuation gains (unless that's your core revenue) ❌ Prepaid expenses relating to a different year ❌ Capital expenditure, goodwill, intangible asset amortization, non-cash adjustments, taxes (GST/income tax) 🔄 Handling Changes: CIN, Entity Details & Revisions Situation What to Do Change in entity name/address/contact Email flareturn@rbi.org.in for account deactivation → re-register with same CIN (data carries forward) Change in CIN after filing File with the old CIN for that reporting year, including future revisions Want to revise/delete a past FLA return Take RBI approval via FLAIR → Menu → "Multiple Year CIN Enable Screen" Never filed for a past year Can still file after RBI approval — but penalty clause may apply ⚡ Quick-Fire FAQs
Q: Is a balance sheet or P&L required with the FLA return? No — only the online return needs submission.
Q: What if my accounting year-end isn't March? Doesn't matter — you still report based on end-March figures, using internal assessment.
Q: GIFT City / IFSCA entities — are they covered? Yes, both as recipients of FDI and as ODI investors.
Q: Valuation method for unlisted companies? IMF's Own Funds at Book Value (OFBV) method — auto-calculated by FLAIR based on Net Worth × % non-resident holding.
Q: Valuation for listed companies? Closing share price as on end-March (previous & current year) — also auto-calculated.
Q: FDI reporting — immediate investor or ultimate parent? Report FDI based on the immediate investor's country. Any receivables/payables with the ultimate parent go under "Other Capital" in Section III.
✅ Compliance Checklist for FY Reporting Confirm FDI/ODI outstanding as on end-March (current + previous year) Register/verify FLAIR portal login Compile financials (audited or provisional) File FLA return by July 15 If provisional, plan the audited revision promptly Retain acknowledgment for records
Disclaimer: This guide is based on RBI's official FAQs on FLA return under FEMA, 1999 (updated March 25, 2026). Always cross-check with the latest RBI circulars and the FLAIR portal before filing.
This post is for general informational purposes and does not constitute legal advice. For guidance specific to your situation, consult a qualified professional.
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