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Concept of Annual Return on Foreign Liabilities and Assets and its Applicability

Updated: Jul 2, 2021



One of the compliance requirement under FEMA is to file an Annual Return on Foreign Liabilities and Assets (FLA) with the Reserve Bank of India (RBI).


I was filing the same for one of my client and that is when he asked me, “Anjali, I don’t know why we need to even file this form.”


That is when I felt, most of the companies who are required to file this Annual Return does not know why they are complying with it in the first place. I thought of writing on what is the reason behind introducing the concept of Annual Return on FLA and its applicability.


The process and documentation required is very nicely explained in the RBI FLAIR Portal, you can find the detail in this link: https://flair.rbi.org.in/fla/faces/pages/login.xhtml



Let me discuss on why it came into existence-


Introduction of Annual Return on FLA


Before introducing the Annual Return on FLA, all the entities who had Foreign Direct Investment (FDI) were required to file Part-B of Form FC-GPR on June 30th every year with RBI. However, the details of investments to be reported would only include all foreign investments made into the company which is outstanding as on the balance sheet date. The details of overseas investments in the company both under direct / portfolio investment was not reported in Form FC-GPR.


Hence, in order to capture the statistics relating to Foreign Direct Investment (FDI), both inward and outward in a more comprehensive manner and also to align it with international best practices, RBI on March 15, 2011, by way of a notification, introduced Annual Return on Foreign Liabilities and Assets and decided to discontinue with Part B of the Form FC-GPR.


Purpose of filing the Annual Return


The Indian entities in annual return are required to disclose their foreign financial liabilities and assets position as at end March of the previous financial year and end March of the latest financial year. The information collected from Indian companies through this annual return are used to conduct Reserve Bank’s Co-ordinated Direct Investment Survey (CDIS) and Coordinated Portfolio Investment Survey (CPIS) under the supervision of International Monetary Fund (IMF). The information is also used in the compilation of India’s Balance of Payments (BoP), International Investment Position (IIP), Coordinated Direct Investment and Coordinated Portfolio Investment.


For whom it is Applicable


The Annual Return on FLA is required to be submitted directly by all the Indian entities which have received FDI and/or made FDI Abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who holds Foreign Assets or Liabilities in their Balance Sheets. The due date for filing the same is July 15th every year whether the financial are audited or unaudited. In case the company has filed unaudited financials earlier, they are required to submit the revised return based on audited financials on or before September 30th every year.



Hope this article is useful to you and gives you a better clarity on the concept of Annual Return on foreign liabilities and assets. In case of any queries or assistance with the filing of the annual return, feel free to write to me at anjalibansalcs@gmail.com

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