FEMA & foreign investment
Short answer
The Foreign Liabilities and Assets (FLA) return is an annual filing to the RBI by every Indian company that has received foreign direct investment or made overseas investment in any previous year, including years with no new transactions. It is filed on the RBI's FLAIR portal, generally by 15 July each year, based on the previous financial year's figures — audited if available, unaudited with a later revision if not.
The obligation is ongoing, not one-off
This is the misunderstanding that causes almost every FLA default. Companies assume the return is tied to a transaction — that if no foreign investment came in this year, nothing is due. It is not. Once a company has foreign investment on its books, the return falls due every year until that position is gone.
A company that raised from an overseas angel four years ago and has done nothing since still owes an FLA return each July.
What goes into it
The return reports the company's foreign liabilities and assets as at the end of the financial year: equity and other capital held by non-residents, disinvestment during the year, and any overseas investments the company itself holds. It draws on the balance sheet, so the numbers must tie to the financial statements.
Where audited accounts are not ready by the deadline, the return is filed on unaudited figures and revised once the audit is complete.
Why it matters more than its size suggests
The FLA return takes an afternoon and carries no fee. Skipping it is nonetheless a contravention of FEMA, which means it appears as an open item in diligence — and unlike a late FC-GPR, which is a single dated event, missed FLA returns accumulate one per year and make a file look neglected.
Cleaning up several years of missed returns is straightforward but takes time and, where the lapse is significant, may involve compounding. It is worth checking your position now rather than in the middle of a round.
This article is general information, current at the date shown, and is not advice on your specific facts. Tax and corporate law change, and thresholds and deadlines are amended regularly — check the position before you act on it, or ask us.
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