Written by the Delhi Legal Company India Entry & FDI Advisory team · Last updated August 2026 · Reviewed against A.P. (DIR Series) Circular No. 45 of 2011 and Circular No. 16 of 2022
Introduction
If your Indian company has foreign investment on its balance sheet, it has an RBI filing due every July — whether or not anything happened during the year, whether or not the accounts are audited, and whether or not the company traded at all.
The Foreign Liabilities and Assets return is the compliance foreign groups miss most reliably, for a structural reason: it is a stock return, not a transaction return. FC-GPR is filed when something happens. FLA is filed because something exists.
A company that took foreign investment in 2022, filed its FC-GPR properly, and has done nothing since still owes an FLA return every year the investment sits on its books. Groups that map their FEMA obligations transaction-by-transaction do not find it.
Two things make August 2026 the right moment to check. The deadline for the year ending 31 March 2026 has passed. And the consequence of not filing is not primarily the penalty — it is that RBI and AD banks may refuse to process new inward or outward remittances until FLA compliance is current.
Which means an unfiled return quietly blocks your next capital infusion and your next dividend.
This guide covers who must file, what the return actually captures, the excuse that is not an excuse, and what to do if the date has already gone.
About this guide
Delhi Legal Company works exclusively with foreign companies establishing and operating in India. The FLA return is the item most often absent when we review a subsidiary’s FEMA position, and the one whose absence causes the most inconvenient surprise — because it surfaces when the group is trying to move money.
Where a rule is settled we state it. Where reputable sources currently differ — and on one procedural point they do — we say so rather than picking a side.
Primary source: the Reserve Bank of India, A.P. (DIR Series) Circular No. 45 dated 15 March 2011, A.P. (DIR Series) Circular No. 16 dated 30 September 2022, and the FLAIR portal.
1. Who must file
An Indian entity must file the FLA return if any of the following exists as at 31 March: inward FDI, including equity, share application money and compulsorily convertible instruments; outward direct investment, including equity, loans or guarantees to overseas joint ventures or subsidiaries; or external commercial borrowings, being all outstanding ECBs.
Every Indian entity with outstanding FDI or ODI as of 31 March must file the FLA return — there is no minimum threshold.
1.1 ECB is in scope, and this surprises people
Most groups think of FLA as an FDI return. It covers external commercial borrowings as well.
A company with a loan from its overseas parent has a foreign liability, and it is reportable here even if there is no equity investment at all. Following the February 2026 ECB reforms, more groups are using debt to fund Indian entities — and each of those loans creates an FLA obligation. See external commercial borrowings.
1.2 Entity types
The obligation applies to all Indian entities — companies, LLPs, AIFs and partnerships — with FDI received or ODI made, even if there were no new transactions during the year.
LLPs must file the FLA return if they have received FDI or made ODI and have any outstanding foreign assets or liabilities.
1.3 When no filing is required
No filing is required if there are no outstanding FDI, ODI or ECB balances on 31 March.
Note what that does not say. It does not exempt a company that had foreign investment during the year and none at year end without more, and it does not exempt a company that is dormant. The test is the balance at 31 March.
2. Why it is missed: stock, not flow
This is the conceptual point that explains the pattern.
| FC-GPR / FC-TRS | FLA Return | |
|---|---|---|
| Triggered by | A transaction | A balance existing on 31 March |
| Filed | Within 30 days of the event | Annually, every year |
| Where | FIRMS, through the AD bank | FLAIR portal directly, not through the AD bank or FIRMS |
| Captures | The individual transaction | Stock positions — outstanding balances |
| If nothing happened this year | Nothing to file | Still due |
The FLA complements, rather than replaces, FC-GPR and SMF reporting. Assuming FLA is the same as FC-GPR or SMF reporting is a common pitfall.
2.1 The typical failure
A foreign group incorporates an Indian subsidiary, remits capital, allots shares and files FC-GPR within 30 days. Everything correct.
The following July, nothing prompts anyone. No transaction has occurred, the AD bank does not ask, and the company secretary’s calendar is built around ROC deadlines. The FLA return is not filed.
Three years later the group wants to remit a dividend, and the bank asks whether FLA filings are current.
2.2 Dormant does not mean exempt
Even if the overseas entity is dormant and not generating revenue, the Indian parent must continue to report the outstanding ODI in its FLA return.
The same logic runs the other way. A dormant Indian subsidiary with foreign equity on its books files, because the liability exists regardless of activity.
3. The deadline, and what happened this year
The FLA return is an annual filing for Indian entities with foreign investments, due by 15 July each year.
3.1 The FY 2025-26 position
There is a wrinkle worth recording, because it illustrates how the date should be treated.
For FY 2025-26 the RBI extended the deadline to 31 July 2026, so foreign assets and liabilities as of 31 March 2026 were reportable by 31 July 2026.
Guidance published in June, before the extension was announced, put the point well: in 2025 the RBI extended the deadline from 15 July to 31 July, however this is not guaranteed every year. Prepare and file by 15 July and treat any extension as a bonus, not a plan.
That is the correct posture. An extension that arrives in late June is useful; a plan that depends on it is not a plan.
3.2 As at the date of this guide
The FY 2025-26 window has closed on either date. A company that has not filed for the year ended 31 March 2026 is in default now, and section 8 sets out the route back.
4. What the return captures
The position as at 31 March, across five sections of the form.
| Part | Content |
|---|---|
| Identification | Entity details, PAN, CIN, nature of business |
| Financial details | Balance sheet and profit position for the year |
| Foreign liabilities | Inward FDI equity, inter-company loans and other foreign liabilities |
| Foreign assets | Outward direct investment; nil where there is none |
| Variation during the year | Movements — for example an inter-company loan drawn during the year |
4.1 Reinvested earnings
A subtlety worth flagging because it is frequently mishandled.
Where an Indian company earns profits during the year, the foreign investor’s share of those profits, based on its holding, is reported as reinvested earnings.
So the foreign liability is not simply the capital originally remitted. Retained profits attributable to the foreign shareholder form part of the reported position, which means the number changes every year even where no transaction occurred.
That is another reason the return cannot be copied forward from last year.
4.2 Consistency with the accounts
While no statements are uploaded, RBI expects consistency between FLAIR entries and audited accounts.
Nothing is attached, but the numbers should reconcile. Keep the working papers.
5. “Our accounts are not audited yet” is not an excuse
This is the single most common reason for non-filing, and it is expressly addressed.
If the audit is pending, file with provisional or unaudited figures by the deadline and flag them as provisional within the portal. Once the audit is complete, file a revised return by 30 September. Non-filing on the grounds that accounts are not yet audited is treated as a FEMA violation.
If you do not file by the deadline, the RBI treats the entity as non-compliant, regardless of audit status.
5.1 Why this catches foreign groups particularly
Indian statutory audits are frequently not complete by mid-July. A group whose finance team is waiting for signed accounts before filing anything is applying a reasonable instinct to a filing that does not permit it.
The correct sequence is: file provisional by the deadline, revise after audit.
5.2 A procedural point where sources differ
On how the revised return is filed, published guidance currently conflicts.
One position: to file a revised FLA return, the entity must first raise a request for permission through the FLAIR portal and obtain RBI approval, and only after approval may the revised return be filed.
The other: you can submit a revised return by 30 September, and no separate RBI approval is needed for this.
We cannot reconcile those, and the difference matters for timing — if approval is required, the request has to be raised well before 30 September. Check the position on the FLAIR portal when you file the provisional return, so that the revision route is known before you need it rather than discovered in late September.
6. How to file
All FLA returns must be filed on the RBI’s FLAIR portal at flair.rbi.org.in. No offline Excel-based or email submissions are accepted, except for AIFs, which may email.
| Step | Detail |
|---|---|
| 1. Register on FLAIR | Upload the Verification Letter and Authority Letter, formats available on the portal |
| 2. Obtain a DSC | A Class 3 Digital Signature Certificate is required |
| 3. Prepare the data | Foreign liabilities and assets including equity investments, loans and other balances as reflected in the balance sheet as at 31 March |
| 4. Complete the form | Five sections, with all heads combined |
| 5. Submit | Before the deadline, provisional if necessary |
| 6. Revise | By 30 September where provisional figures were used |
6.1 Registration is the item to start early
The registration process, the verification letter and the DSC are not same-day items. A group filing for the first time should begin in May, not in the second week of July.
Gather head-wise schedules in April and May, and practise on a dummy login to avoid surprises during the final filing.
6.2 One return covers everything
Where an entity has multiple lines of foreign liabilities and assets, combine all heads — FDI, ODI and ECB — in a single FLA return. There is no separate form.
7. The consequences
7.1 The Late Submission Fee
Non-filing of the FLA return is a violation of FEMA 1999. For FLA returns the LSF is a flat fee of ₹7,500 per return, as prescribed under A.P. (DIR Series) Circular No. 16 dated 30 September 2022.
You can file after the deadline with audited figures, but you must pay the Late Submission Fee and then file a revised return once audited numbers are available.
7.2 The three-year window
The option to pay LSF is available only up to three years from the original due date of filing.
This is the point that decides how urgently a historical gap should be dealt with. Within three years, ₹7,500 per return regularises it. Beyond three years, the LSF route is closed and the position has to be addressed through compounding, which is a different exercise with a different cost.
7.3 The FEMA penalties
Non-filing attracts an LSF of ₹7,500, with potential FEMA penalties of up to three times the amount involved. Continuing default attracts an additional ₹5,000 per day for every day the contravention continues after the initial penalty.
Where the amount is not quantifiable, the penalty is up to ₹2,00,000, plus ₹5,000 per day for continuing default.
7.4 The consequence that actually bites
Not the fee. This one:
RBI and AD banks may refuse to process new inward or outward remittances until FLA compliance is current.
Non-filing disrupts future investment approvals.
Foreign investors should ensure their Indian entity files the FLA return every year to avoid delays in future funding rounds.
Think about what that means in sequence. A group closes a funding round, remits capital, and the bank asks about FLA compliance before releasing it. Or a board approves a dividend and the remittance stalls at the AD bank.
At that moment the group is not dealing with a ₹7,500 fee. It is dealing with a transaction that has stopped, and a regularisation process that takes as long as it takes.
8. If you have missed it
Given the date, this section is the operative one for many readers.
| Step | Action |
|---|---|
| 1. Establish the years | Identify every year since foreign investment first appeared on the balance sheet, and which returns are outstanding |
| 2. Check the three-year window | Returns within three years of their due date can use the LSF route; older ones cannot |
| 3. Register on FLAIR | If not already registered — verification letter, authority letter, DSC |
| 4. Reconstruct the positions | Balance as at each 31 March, including reinvested earnings for each year |
| 5. File with LSF | ₹7,500 per return, within the window |
| 6. Address older years | Compounding where the LSF route has closed — see FEMA compliance and FDI reporting |
| 7. Install the calendar entry | Annually, in May, so preparation begins before the deadline |
8.1 Do it before you need to move money
Opt for the LSF route promptly to avoid harsher FEMA penalties.
The regularisation is straightforward and cheap when done deliberately. It is neither when done under the pressure of a stalled remittance with a funding round waiting.
9. Two situations, worked through
Scenario A — The subsidiary that filed once
A US group incorporates an Indian subsidiary in 2022, remits USD 500,000 for equity, and files FC-GPR correctly within 30 days. In 2024 the parent advances an inter-company loan of USD 200,000, properly registered as an ECB.
What was filed. FC-GPR in 2022. ECB registration and returns from 2024.
What was not. FLA returns for the years ended March 2023, 2024, 2025 and 2026. Four returns, each reporting the outstanding foreign liability — equity, then equity plus the loan — and the reinvested earnings attributable to the parent.
How it surfaced. The group approved a dividend in 2026 and the AD bank asked whether FLA filings were current.
The remediation. Four returns at ₹7,500 each, all within the three-year window except the earliest, which needs checking. Total cost modest; the delay to the dividend, less so.
Scenario B — The audit that was never going to be ready
An Indian subsidiary’s statutory audit routinely completes in September. Its finance team, sensibly, does not like filing numbers that may change, and each year waits for signed accounts before addressing the FLA return — by which time the deadline has passed.
The problem. Non-filing on the grounds that accounts are not audited is expressly a FEMA violation. The instinct to file only final numbers is the wrong instinct for this particular return.
The correct rhythm. File provisional in July, flagged as provisional. Revise after the audit, by 30 September — checking on the portal whether the revision requires a permission request, since guidance differs on that point.
What changed. Two calendar entries: one in May to begin preparation, one in September to revise.
10. Twelve mistakes
- Treating FLA as transaction-driven. It reports a balance, so it is due even when nothing happened.
- Assuming FC-GPR covers it. They are different filings on different systems for different purposes.
- Waiting for audited accounts. Non-filing on that ground is a FEMA violation; provisional figures are permitted.
- Forgetting ECB. Outstanding external commercial borrowings are reportable in the same return.
- Assuming a dormant company is exempt. The test is the balance at 31 March, not activity.
- Filing through the AD bank or FIRMS. FLA goes directly on FLAIR.
- Copying last year’s numbers forward, when reinvested earnings change the position annually.
- Starting registration in July. Verification letter, authority letter and DSC take time.
- Planning around an extension. The FY 2025-26 extension to 31 July was not guaranteed and was announced late.
- Forgetting the 30 September revision after filing provisional figures.
- Letting a gap run past three years, after which the LSF route closes and compounding is required.
- Discovering the gap when a remittance stalls, rather than fixing it deliberately.
11. Checklist
April to May
- FLAIR registration confirmed or completed — verification letter, authority letter, Class 3 DSC
- Head-wise schedules gathered: FDI equity, share application money, convertible instruments, ECB, ODI
- Position as at 31 March established for each head
- Reinvested earnings computed — the foreign investor’s share of the year’s profits
- Figures reconciled against the draft accounts
By the deadline
- Single return covering all heads — FDI, ODI and ECB combined
- Filed by 15 July, or the extended date if one has been announced
- Provisional figures used and flagged as provisional if the audit is incomplete
- Submission acknowledgement retained
- Revision route confirmed on the portal — whether a permission request is needed
By 30 September
- Revised return filed with audited figures where provisional were used
- Consistency between FLAIR entries and audited accounts confirmed
- Working papers retained
Where returns are outstanding
- Every year since foreign investment first appeared identified
- Three-year LSF window checked for each outstanding year
- Positions reconstructed for each 31 March
- LSF paid at ₹7,500 per return and returns filed
- Compounding considered for years beyond the window
- Done before any remittance is required, not after it stalls
Not sure whether your Indian entity has ever filed one?
Most have not, and the answer usually emerges when a dividend or a capital infusion stalls at the bank. Tell us when foreign investment first came onto your Indian balance sheet and we will tell you which returns are outstanding, which are still inside the three-year window, and what the regularisation costs.
12. Frequently asked questions
Q1. What is the FLA return?
An annual filing to the Reserve Bank of India reporting an Indian entity’s outstanding foreign liabilities and foreign assets as at 31 March, submitted through the FLAIR portal. It helps the RBI monitor foreign direct investment and overseas direct investment flows and assess India’s external financial position.
Q2. Who has to file it?
Every Indian entity with outstanding inward FDI, outward direct investment or external commercial borrowings as at 31 March. There is no minimum threshold. It applies to companies, LLPs, AIFs and partnerships, and it is due even if there were no new transactions during the year.
Q3. Do we file if nothing happened during the year?
Yes. This is the point most often missed. FLA reports a stock position — a balance that exists on 31 March — rather than transactions. A company that took foreign investment years ago and has done nothing since still files every year that the investment sits on its books.
Q4. Is FLA the same as FC-GPR?
No, and confusing them is a common pitfall. FC-GPR is filed within 30 days of an allotment, through the AD bank on FIRMS, and reports that transaction. FLA is filed annually, directly on the FLAIR portal, and reports outstanding balances. The FLA complements rather than replaces FC-GPR and SMF reporting.
Q5. Does the return cover external commercial borrowings?
Yes, and this surprises groups who think of it as an FDI return. Outstanding ECBs are foreign liabilities and are reported in the same return. A company funded by a parent loan rather than equity still has an FLA obligation.
Q6. When is it due?
15 July each year, reporting the position as at 31 March. For FY 2025-26 the RBI extended the deadline to 31 July 2026. Extensions are not guaranteed and are typically announced late, so the sound approach is to prepare and file by 15 July and treat any extension as a bonus rather than a plan.
Q7. Our accounts are not audited by July. Can we skip filing?
No. Non-filing on the grounds that accounts are not yet audited is treated as a FEMA violation. File with provisional or unaudited figures by the deadline, flagged as provisional in the portal, and file a revised return with audited figures by 30 September.
Q8. Does a revised return need RBI approval?
Published guidance currently conflicts on this. One position is that a permission request must be raised through the FLAIR portal and approval obtained before the revised return can be filed; another is that no separate approval is needed. Check the position on the portal when filing the provisional return, because if approval is required the request must be raised well before 30 September.
Q9. Does a dormant company have to file?
Yes. The test is whether foreign investment balances exist at 31 March, not whether the entity traded. A dormant Indian subsidiary with foreign equity on its books files, and an Indian parent with a dormant overseas subsidiary continues to report the outstanding ODI.
Q10. When is no filing required?
Where there are no outstanding FDI, ODI or ECB balances on 31 March. Note that this is a balance test at a point in time — it is not an exemption for inactivity, small size or the absence of transactions during the year.
Q11. Where is the return filed?
On the RBI’s FLAIR portal at flair.rbi.org.in. Filing is online only — no offline Excel or email submissions are accepted, except for AIFs which may email. It does not go through the AD bank or the FIRMS portal, which is a common source of confusion.
Q12. What do we need to register?
A verification letter and an authority letter in the formats available on the portal, and a Class 3 Digital Signature Certificate. None of these is a same-day item, so a first-time filer should begin registration in May rather than in the second week of July.
Q13. What are reinvested earnings and why do they matter?
Where the Indian company earns profits during the year, the foreign investor’s share of those profits based on its holding is reported as reinvested earnings. This means the reported foreign liability is not simply the capital originally remitted, and the number changes every year even where no transaction occurred — so last year’s return cannot be copied forward.
Q14. Do we file separate returns for FDI, ODI and ECB?
No. Where an entity has multiple lines of foreign liabilities and assets, all heads are combined in a single FLA return. There is no separate form for each.
Q15. Are financial statements uploaded with the return?
No statements are uploaded, but the RBI expects consistency between the FLAIR entries and the audited accounts. Working papers supporting the figures should be retained, because the reconciliation may be asked for even though the accounts themselves are not filed.
Q16. What is the Late Submission Fee?
A flat fee of ₹7,500 per return, prescribed under A.P. (DIR Series) Circular No. 16 dated 30 September 2022. It allows a late return to be regularised without the harsher consequences of an unresolved FEMA contravention.
Q17. How long is the LSF route available?
Up to three years from the original due date of filing. Within that window a late return is regularised for ₹7,500. Beyond it the LSF route closes and the position must be addressed through compounding, which is a different exercise with a different cost.
Q18. What are the FEMA penalties for non-filing?
Up to three times the amount involved where quantifiable, or up to ₹2,00,000 where it is not, plus ₹5,000 per day for every day the contravention continues after the initial penalty. In practice, prompt use of the LSF route avoids reaching that position.
Q19. What is the practical consequence of not filing?
The one that actually bites is not the fee. RBI and AD banks may refuse to process new inward or outward remittances until FLA compliance is current, and non-filing disrupts future investment approvals. An unfiled return therefore blocks the next capital infusion or dividend.
Q20. We have never filed. What now?
Identify every year since foreign investment first appeared on the balance sheet, check which outstanding years fall within the three-year LSF window, register on FLAIR if not already registered, reconstruct the position as at each 31 March including reinvested earnings, and file with LSF. Years beyond the window need compounding.
Q21. Should we wait until a remittance is needed?
No. The regularisation is straightforward and inexpensive when done deliberately, and neither when done under the pressure of a stalled remittance with a funding round waiting. Opting for the LSF route promptly also avoids harsher FEMA consequences.
Q22. How do we make sure this does not recur?
Two calendar entries. One in May, to begin gathering head-wise schedules and confirm FLAIR registration and DSC validity. One in September, to file the revised return where provisional figures were used. The failure is almost always an absence of a prompt rather than a decision not to file.
Related reading
- Opening a bank account for your Indian subsidiary — the AD bank that will ask whether FLA is current
- External commercial borrowings — the parent loan that is also an FLA reportable liability
- Share valuation for FDI — the FC-GPR filing FLA is often confused with
- Repatriating profits from India — the dividend an unfiled FLA return can stall
Talk to us before the next remittance
Delhi Legal Company works exclusively with foreign companies establishing and operating in India. FLAIR registration and annual FLA filing, historical regularisation through LSF or compounding, FC-GPR and FC-TRS reporting, and the ECB returns that sit alongside — run as one FEMA calendar, because the AD bank looks at all of it together.
How we usually start. Tell us when foreign investment first came onto your Indian balance sheet, whether there are outstanding parent loans, and whether the entity has ever filed on FLAIR. We come back with which returns are outstanding, which sit inside the three-year window, what regularisation costs, and a calendar that prevents a recurrence.