If your business has ever received funding from a foreign investor or invested in an overseas entity, there’s an annual FEMA compliance requirement that deserves your attention — the Foreign Liabilities and Assets (FLA) Return.

Surprisingly, many businesses miss this filing simply because they assume that no fresh foreign investment means no reporting obligation. Unfortunately, that’s not how the FLA Return works.

The requirement isn’t triggered by a new foreign transaction. Instead, it depends on whether your business continues to have outstanding foreign liabilities or foreign assets as on March 31 of the relevant financial year. In other words, even if the foreign investment came in several years ago, you may still need to file the return every year until that investment ceases to exist.

In this article, we’ll break down everything you need to know about FLA Return filing, including who needs to file, what information is required, the due date, penalties for non-compliance, and a few practical points that businesses often overlook.

What is the FLA Return?

The Foreign Liabilities and Assets (FLA) Return is an annual return filed with the Reserve Bank of India (RBI) under the provisions of the Foreign Exchange Management Act, 1999 (FEMA).

Through this return, Indian entities report details of their outstanding foreign liabilities, such as Foreign Direct Investment (FDI), as well as foreign assets, including Overseas Direct Investments (ODI).

The RBI uses this information to monitor India’s external financial position and compile important economic statistics such as the country’s International Investment Position (IIP).

While that may sound technical, the takeaway for businesses is simple: if foreign investment appears on your balance sheet as on March 31, it’s worth checking whether an FLA Return is required.

Who Needs to File an FLA Return?

The filing requirement isn’t limited to large corporations. A wide range of entities may fall within its scope, including:

• Companies registered under the Companies Act, 2013;
• Limited Liability Partnerships (LLPs);
• Alternative Investment Funds (AIFs);
• Partnership firms;
• Proprietary concerns; and
• Other resident entities that have foreign assets or liabilities.

A common misconception is that only businesses that received foreign investment during the year need to file. In reality, the obligation continues for as long as the foreign investment remains outstanding.

For example, imagine a startup that raised funds from a foreign investor in 2022. Even if it didn’t receive any additional foreign funding in FY 2025–26, the company would still be required to file the FLA Return, provided the investor continues to hold shares as on March 31, 2026.

Similarly, an Indian company that has invested in a foreign subsidiary may also have an annual FLA reporting obligation.

When is FLA Return Filing Not Required?

Although the scope of the return is broad, there are situations where filing may not be necessary.
Generally, an FLA Return is not required if:

• There are no outstanding foreign liabilities or foreign assets as on March 31;
• Only share application money has been received and the circumstances do not give rise to reportable foreign investment; or
• Shares have been issued to non-residents purely on a non-repatriation basis.

Since FEMA regulations can be nuanced, businesses should assess their specific facts before concluding that no filing is required.

What Information is Required in the FLA Return?

Preparing the FLA Return involves more than just reporting shareholding details.
Entities are generally required to provide information relating to:

• Foreign equity participation;
• Details of Foreign Direct Investment (FDI);
• Outstanding foreign loans and liabilities;
• Overseas investments and assets;
• Investments in foreign subsidiaries or joint ventures; and
• Financial information that aligns with the entity’s financial statements.

Because the data is expected to reconcile with the books of accounts, businesses should start gathering the required information well before the filing deadline.

What is the Due Date for Filing the FLA Return?

The FLA Return must be filed every year on or before July 15 through the RBI’s FLAIR Portal.

One practical challenge businesses often face is that their statutory audit may not be completed by this date. Recognizing this, the RBI permits entities to file the return using provisional financial statements.

Once the accounts are audited, a revised return can be submitted, wherever required, in accordance with the prescribed process.

What Happens if the FLA Return is Not Filed?

Like other FEMA compliances, ignoring the FLA Return can prove costly.

Non-filing or delayed filing is treated as a FEMA contravention and may result in regulatory consequences. At present, the RBI prescribes a Late Submission Fee (LSF) of ₹7,500 per delayed FLA Return.

Apart from the financial impact, non-compliance can create hurdles during future FEMA transactions, due diligence exercises, fundraising rounds, and corporate restructuring activities.

In short, timely compliance today can help businesses avoid unnecessary complications tomorrow.

A Few Practical Points Businesses Should Remember

Over the years, one issue has repeatedly surfaced in FLA compliance — businesses often focus only on new foreign transactions and overlook their existing foreign investment position.

Before the July 15 deadline each year, it is advisable to ask a few simple questions:

• Do we have any non-resident shareholders as on March 31?
• Have we invested in any overseas entity that still exists?
• Are our foreign liabilities and assets properly reflected in the financial statements?
• Has responsibility for FLA compliance been assigned internally?

A quick review can often prevent last-minute surprises.

Final Thoughts

The Foreign Liabilities and Assets (FLA) Return may not receive as much attention as other FEMA filings, but that doesn’t make it any less important.

The key point to remember is this: the obligation is linked to outstanding foreign investments, not fresh transactions. If your business has foreign liabilities or foreign assets as on March 31, it is essential to evaluate whether an FLA Return needs to be filed.

With the annual deadline falling on July 15, businesses should review their foreign investment position well in advance and ensure that this important FEMA compliance doesn’t slip through the cracks.