FLA Return Filing Process 2025: A Complete Guide for Indian Businesses with Foreign Investments

Introduction

As globalization grows, many Indian companies engage in cross-border investments—either by receiving funds from foreign investors (FDI) or investing in overseas ventures (ODI). To monitor these transactions, the Reserve Bank of India (RBI) requires the submission of the FLA Return (Foreign Liabilities and Assets Return) every year.

🔗 Introduction of Annual Return on Foreign Liabilities and Assets reporting

If your business is involved in foreign investments, filing the FLA Return by 15 July 2025 is mandatory under the Foreign Exchange Management Act (FEMA), 1999.

Let’s understand what this return is, who needs to file it, how to file it, and the penalties for non-compliance.

What Is the FLA Return?

The FLA (Foreign Liabilities and Assets) Return is an annual report that Indian entities submit to the RBI. It captures the foreign assets and liabilities reflected in the company’s balance sheet as of 31 March each year.

It is a regulatory requirement under Foreign Exchange Management Act (FEMA), 1999 – not a voluntary disclosure – and is applicable even if there were no new foreign transactions during the financial year.

The information helps RBI track India’s international investment position and maintain financial transparency.

Who Needs to File the FLA Return?

Entities must file the FLA Return if any of the following conditions are met as on 31st March :

• The entity has received Foreign Direct Investment (FDI)
• The entity has made Overseas Direct Investment (ODI)
• The entity holds any foreign assets or liabilities, even if dormant or from past years

This include :

• Companies incorporated under the Companies Act (Private/Public)
• Limited Liability Partnerships registered under the LLP Act, 2008
• Partnership firms, AIFs, and Public-Private Partnerships (PPPs)
• Entities that have issued shares to non-residents (except on non-repatriable basis)

Who is Exempt?

Entities are not required to file the FLA Return if:

• No FDI has been received and no ODI has been made
• Foreign shareholding is limited to share application money and no shares have been allotted as of 31 March
• FDI was received only on a non-repatriable basis and there are no outstanding liabilities
• Foreign investors have fully exited and there are no foreign liabilities or assets remaining

Due Date for FY 2024-25

Note : If audited financials are not ready by the due date – File using provisional or unaudited figures

How to File the FLA Return: Step-by-Step

The FLA Return must be filed online through RBI’s FLAIR (Foreign Liabilities and Assets Information Reporting) portal:

• Step 1: Register on FLAIR
  • New users must register as a “Business User”
  • Provide CIN, PAN, entity details, and contact information
  • Upload required documents: PAN card, authorization letter, and verification letter
  • RBI sends login credentials via email after verification
• Step 2: Prepare and Fill the Return
  • Download the FLA Excel utility from the portal
  • Complete the return in the following sections:
    • Section I: Identification Particulars – Pre-filled Entity information (PAN, CIN, Head of the Institution’s email), Contact Details, NIC (National Industrial Classification) Code, Company Specifics & FDI
    • Section II: Financial details – Capital, Reserves & Surplus, Profit & Loss Account, Sales & Purchases, Employee Information
    • Section III: Foreign liabilities – FDI in India (< 10% of Equity Holding (or) 10% or more Equity Participation), Portfolio Investment in India, Other External Liabilities
    • Section IV: Foreign assets – Overseas Direct Investments (ODI – < 10% Equity Holding (or) 10% or more), Debt Securities and Portfolio Investment Abroad, Other Assets (With Foreign Unrelated Parties, excluding domestic assets)
    • Section V: Variation Report – Auto-generated comparison with previous year (Auto-comparison, non-editable, foreign engagement summary, draft review)
• Step 3: Submit the Return
  • Upload the completed return on the FLAIR portal
  • Review all entries carefully before submission
  • An acknowledgement is generated instantly by the system upon successful submission

Obtaining Approval for Revising Previous Years FLA Returns

To revise the FLA Return for a previous year, an entity must first obtain approval from the Reserve Bank of India (RBI) via the FLAIR portal. The process involves the following key steps:

• Step 1: Login and Navigate to Request Section – Login in to the FLAIR portal using the login credentials. From the homepage, open the MENU tab, then select ONLINE FLA FORM → FLA ONLINE FORM
• Step 2: Submit Revision Approval Request – Click the link titled “Please click here to get the approval to fill revised FLA form for current year after due date /previous year.” Select the financial year you wish to revise and click Request to send your approval request to RBI.
• Step 3: Monitor Request Status – Your request status will be displayed in a table on the screen. Entities must wait at least one working day for the RBI to review the request.
• Step 4: Check Approval and Revise Return – Check the approval status under Multiple Year Enable Screen in the menu. Once approved by the RBI (DSIM), you can revise and submit the FLA return for the selected year.

Required Documents

To ensure smooth filing, keep the following ready:

• Audited or provisional Balance Sheet as on 31st March
• Details of FDI/ODI including investor info, amount, and valuation
• PAN and CIN of the entity
• Authorized person’s details and proof (Director, CFO, or CS)
• Prior year’s FLA Return (if applicable)

Note : For Partnership firms, a dummy CIN must be obtained from RBI for filing purposes.

Mistakes to be avoided

❌ Using outdated Excel templates
❌ Missing indirect foreign holdings
❌ Submitting incorrect contact or CIN details
❌ Not updating changes in email ID or business name
❌ Skipping revision after unaudited submission
❌ Filing incomplete or mismatched financial figures

Penalties for Non-Compliance

Failing to submit the FLA Return, or submitting incorrect data, can lead to penalties under Section 13 of FEMA, 1999:

• 💰 Up to 3 times the amount involved in the contravention, or
• ₹2,00,000 if the amount is not quantifiable
• Additional ₹5,000 per day for continuing defaults
• RBI may also impose a Late Submission Fee (LSF) of ₹7,500

🔗 Late Submission Fee for reporting delays under FEMA

Non-compliance can affect a company’s future dealings with foreign investors and banking relationships.

Regional offices of the Reserve Bank of India (RBI) have the authority to compound contraventions without any monetary limitation. However, it is important to note that this power excludes the RBI’s regional offices located in Kochi and Panaji, which do not possess this compounding authority.

Tips for Hassle-Free Filing

• Start early – gather financials and investor data in advance
• Ensure login access and OTP from the registered email ID
• Review each section before uploading
• Use the FLAIR user guide/manual if in doubt
• If submitting unaudited data, set reminders to revise before 30th September

Final Thoughts

The FLA Return is more than a routine form – it’s a mandatory RBI compliance that helps India track foreign capital inflows and outflows. Whether you’re a startup with angel investors abroad or a mature company with overseas subsidiaries, don’t overlook this important obligation.

Filing on time ensures regulatory compliance and avoids costly penalties.

Useful Definitions – Foreign Liabilities and Assets (FLA) Return

Frequently Asked Questions (FAQs)

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