FLA Return Filing for FY 2024–25: Law, Applicability, and Compliance Essentials

Introduction

The Foreign Liabilities and Assets (FLA) Return is a statutory obligation imposed by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act, 1999 (FEMA). Applicable to Indian entities with foreign exposure, the return plays a vital role in compiling India’s International Investment Position (IIP).

For the Financial Year 2024–25, entities must report their foreign financial position as on 31 March 2025 through the RBI’s online FLAIR (Foreign Liabilities and Assets Information Reporting) portal. This article outlines the legal basis, eligibility, exemptions, information requirements, filing process, and penalty framework for FLA Return filing.

Legal Framework

The FLA Return is mandated under the following provisions:

• Section 10(4) and Section 11(2) of the Foreign Exchange Management Act, 1999

• Regulation 5 of the FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017

• RBI Master Direction No. 18/2015-16 on ‘Reporting under FEMA’

• RBI notifications through the FLAIR portal from 2019 onwards

The FLA Return ensures proper reporting of foreign investment inflows (FDI) and outflows (ODI), outstanding external borrowings, and other foreign liabilities or assets.

Applicability for FY 2024–25

Entities must file the FLA Return for FY 2024–25 if they meet any of the following conditions as on 31 March 2025:

• Have received Foreign Direct Investment (FDI) and such investment is outstanding

• Have made Overseas Direct Investment (ODI) in a foreign Joint Venture or Wholly Owned Subsidiary

• Have external commercial borrowings (ECBs), trade credit, or inter-company liabilities with non-residents

• Hold foreign assets such as equity, loans, or receivables from overseas entities

Eligible Entity Types

• Indian companies (private or public)

• LLPs that have received FDI

• Start-ups with foreign equity investors

• SEBI-registered AIFs, VCFs, FVCIs

• Registered partnerships and trusts with foreign exposure

• Branches or project offices of foreign companies operating in India

• Dormant entities, if any FDI/ODI is outstanding as on 31 March 2025

Exemptions

Filing of the FLA Return is not required if all of the following apply:

• The entity has not received any FDI up to 31 March 2025

• The entity has not made any ODI

• The entity has no outstanding foreign liabilities or foreign assets as on the reporting date

Note: Receipt of share application money from a foreign investor does not trigger the filing requirement unless the shares have been allotted.

Key Trigger Points

An FLA Return filing obligation arises if any of the following items are recorded in the books of accounts as on 31 March 2025:

• Foreign equity participation (including prior-year investments)

• Reinvested earnings attributable to non-resident shareholders

• Instruments such as CCPS or CCDs held by foreign investors

• ECBs or trade credit from non-resident lenders or suppliers

• ODI in the form of equity capital, loans, or guarantees

• Outstanding foreign receivables from group entities or customers

Due Date and Reporting Period

• Financial reporting cut-off date: 31 March 2025

• Due date for filing: 15 July 2025

• Mode of filing: Online submission via the FLAIR Portal at https://flair.rbi.org.in/fla

If audited accounts are not finalised by the due date, entities must submit the return based on provisional or unaudited figures. A revised return may be submitted subsequently after obtaining RBI’s permission.

Information Required for the FLA Return

A. Basic Identification

• CIN/LLPIN/PAN

• Entity type and constitution

• NIC code, contact details, sector of operation

B. Foreign Liabilities

• Equity capital and share premium held by non-residents

• Reinvested earnings not distributed to foreign shareholders

• ECBs, trade credits, inter-company loans

• Currency-wise figures converted to INR at RBI reference rate

C. Foreign Assets

• ODI in equity, debt, or guarantees

• Other overseas financial assets

• Movements during the year and closing position

D. Financials and Performance

• Paid-up capital, reserves, and surplus

• Turnover, net profit after tax, and net worth

• Year-on-year variation analysis

• Shareholding pattern of residents and non-residents

Step-by-Step Filing Procedure

1. Registration on FLAIR Portal

   • Visit the portal at https://flair.rbi.org.in/fla

   • Submit an authority letter and entity credentials

   • Await RBI’s login approval

2. Download and Fill the Excel Utility

   • Download the Excel-based FLA form specific to FY 2024–25

   • Input relevant data and validate using macros

   • Generate an XML file for upload

3. Upload and Submission

   • Log in with OTP-based authentication

   • Upload the validated XML file

   • Submit the return and download acknowledgment

4. Revision (if applicable)

   • Once audited accounts are ready, seek RBI’s prior approval

   • File the revised return with updated figures

Penalties for Non-Compliance

Non-compliance with the FLA filing requirement is treated as a contravention under FEMA, 1999, and may attract penalties under Section 13 of the Act.

• Late Submission Fee (LSF): Rs. 7,500

• Civil Penalty:

  • Up to three times the amount involved (if quantifiable), or

  • Rs. 2,00,000 for other contraventions

  • Rs. 5,000 per day for continuing default

Regulatory Consequences

• Inability to file or receive approvals for FC-GPR, FC-TRS, ODI, or ECB filings

• Delays in outward remittances and capital account transactions

• Adverse implications in statutory audits and cross-border deals

To ensure timely and accurate compliance:

• Begin review of foreign liabilities and assets by April–May 2025

• File using provisional data if audits are pending

• Cross-check with previous year’s FLA to explain material changes

• Maintain detailed working papers and supporting documentation

• Consult a FEMA advisor for interpretation in complex cases

• Revise post-audit data only with RBI’s prior approval

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