The Annual Return on Foreign Liabilities and Assets (FLA) is an important reporting requirement for eligible Indian entities having foreign investment or overseas investment. The return provides the Reserve Bank of India (RBI) with information about an entity’s foreign assets and liabilities and supports the compilation of India’s balance of payments and international investment position.

The normal due date for filing the FLA Return is July 15 every year, based on the financial year ending in March. Eligible entities are expected to file the return even when their accounts have not yet been audited, using provisional or unaudited figures where applicable.

However, businesses sometimes discover that FLA Returns for one or more previous financial years were never filed. In such situations, Catching Up on Years of Missed FLA Returns requires careful review of historical records, identification of the relevant years, and following the RBI process for obtaining approval for delayed filing.

What Is an FLA Return?

FLA stands for Foreign Liabilities and Assets. It is an annual return relating to an entity’s foreign financial assets and liabilities.

The FLA Return is generally relevant to entities that have received foreign direct investment (FDI), made direct investment abroad, or otherwise fall within the reporting criteria prescribed by the RBI. The RBI FAQ specifically includes eligible companies, LLPs and certain other entities within the reporting framework.

The return generally captures information relating to foreign investment, foreign assets, liabilities, equity, and other financial details for the applicable reference periods.

Unlike a regular income-tax or corporate filing, the FLA Return is connected with India’s foreign exchange reporting framework under FEMA.

Who Needs to File the FLA Return?

The requirement primarily applies to eligible Indian entities that have foreign assets or liabilities arising from foreign investment.

According to RBI guidance, entities that have received FDI and/or made FDI abroad in the previous year or current year are required to submit the FLA Return. The RBI FAQ also explains that the return is based on the entity’s foreign assets and liabilities reflected in its balance sheet.

Common examples may include:

• Indian companies receiving foreign investment
• Indian companies making direct investment overseas
• Eligible LLPs receiving investment through capital contribution
• Certain other entities covered by the applicable RBI reporting framework

Businesses should assess their circumstances for each relevant financial year rather than assuming that a return is unnecessary simply because there was no major foreign transaction during the year.

When Is the FLA Return Due?

The standard deadline for filing the FLA Return is July 15 every year.

The reference year follows the April-to-March financial year. Therefore, businesses need to report the relevant information for the applicable financial year according to the RBI’s prescribed reporting format.

For example, if an entity was required to file an FLA Return for a financial year ending March 31 but failed to do so by July 15, the return becomes a delayed filing that needs to be addressed through the prescribed RBI process.

What Happens When Previous FLA Returns Were Missed?

Missing an FLA Return does not necessarily mean that the business cannot regularize its reporting.

The RBI’s FLA FAQ states that an old or new entity can submit an FLA Return after the due date after obtaining approval from RBI. The RBI also notes that the applicable penalty provisions may be invoked for late submission.

This makes Catching Up on Years of Missed FLA Returns an important compliance exercise for businesses that have discovered historical gaps.

The first step should be to identify exactly which financial years were missed and determine whether the entity was required to file for each of those years.

Steps for Catching Up on Years of Missed FLA Returns

1. Identify All Missed Financial Years

Start by reviewing the company’s historical records.

Check:

• Previous FDI transactions
• Overseas investments
• Shareholding records
• Balance sheets
• Annual accounts
• Previous RBI filings
• FLA acknowledgements
• Foreign investment documentation

The objective is to create a year-wise list of FLA Returns that were required but not submitted.

2. Review Foreign Investment Records

Historical investment documents should be carefully checked to determine the foreign assets and liabilities that existed during each reporting period.

The information reported in an FLA Return should correspond with the relevant financial and investment records.

3. Collect Financial Information

For each missed year, collect the required financial information for the applicable reference periods.

Where necessary, businesses may need to coordinate with their accounting and finance teams to reconstruct historical figures from balance sheets, ledgers, investment records, and supporting documents.

4. Apply for RBI Approval

The RBI FAQ provides a process for obtaining approval to file a previous year’s FLA Return.

According to the RBI’s guidance, the applicant can log in to the FLAIR portal, navigate through the FLA online form section, select the option for approval to fill a revised/current or previous-year FLA form after the due date, select the relevant year, and submit the request.

5. File the Relevant FLA Returns

Once the necessary approval is obtained, the entity can proceed with filing the applicable previous-year return through the prescribed RBI system.

Each missed year should be addressed separately according to the applicable reporting requirements.

6. Maintain Filing Evidence

After submission, businesses should maintain copies of the filed returns, acknowledgements, approval communications, supporting documents, and other relevant records.

Keeping a proper compliance file can make future audits and regulatory reviews easier.

Can a Previous FLA Return Be Revised?

Yes. The RBI FAQ states that an entity can modify an already submitted previous-year FLA Return after obtaining the required approval.

This can be useful where a company discovers that information previously reported was incomplete or incorrect.

Businesses should distinguish between a missed return and a previously filed return requiring correction, because the applicable RBI process may differ.

What About Unaudited Financial Statements?

A common reason businesses delay FLA filing is that their financial statements have not been audited by the July 15 deadline.

RBI guidance states that eligible entities should file within the prescribed deadline even if audited financial statements are not ready. Provisional or unaudited figures may be used, and once audited figures become available, the entity can request approval to revise the previously filed return with audited numbers.

Therefore, waiting for the audit should not automatically be treated as a reason to miss the FLA deadline.

Why Should Businesses Regularize Old FLA Returns?

Historical compliance gaps can create uncertainty when a company is preparing for new foreign investment, restructuring its shareholding, conducting due diligence, or reviewing its FEMA compliance.

Regularizing old filings can help create a clearer compliance record and make it easier to identify any outstanding reporting requirements.

The RBI specifically states that late submission may attract applicable penalty provisions.

Professional assistance can also be useful when several years of records need to be reconstructed or when the company has undergone changes in ownership, management, accounting systems, or investment structure.

For businesses seeking assistance with foreign investment and regulatory compliance, Companiesnext can support the review and documentation process.

Common Mistakes to Avoid

Ignoring Older Years

Businesses sometimes focus only on the latest FLA Return while leaving historical gaps unresolved. A year-wise review is important.

Using Incorrect Financial Data

FLA reporting should be prepared using appropriate financial and investment records. Historical data should be checked carefully before submission.

Assuming No New Investment Means No Filing

The requirement should be assessed based on the applicable RBI criteria and the entity’s foreign assets and liabilities, not simply on whether a new investment occurred during the year.

Waiting for Audited Accounts

Where eligible, provisional or unaudited figures can be used to meet the prescribed deadline, followed by revision when appropriate.

Conclusion

FLA Return compliance is an important part of India’s foreign exchange reporting framework. Eligible companies and other covered entities need to assess their reporting obligations and submit the annual return within the prescribed timeline.

If previous FLA Returns were missed, the issue should be addressed systematically by identifying every pending year, collecting historical financial and investment information, obtaining the required RBI approval, filing the relevant returns, and maintaining proper records.

Catching Up on Years of Missed FLA Returns can therefore help businesses bring historical reporting gaps under control and establish a more organized FEMA compliance process for future years. Regular annual monitoring is equally important so that future FLA Returns are prepared and submitted by the applicable July 15 deadline.