The FLA return NRI NRO investment applicability query frequently arises for NRIs holding investments in India through an NRO account. Many are unsure whether such indirect foreign investments require annual FLA return filing with the RBI. This blog explains the rules, process, and compliance requirements for NRIs making investments via NRO accounts.
FLA return is an annual RBI compliance for companies/LLPs with foreign investment.
NRO account investments can trigger indirect foreign investment status.
FLA filing is mandatory if the entity has foreign direct or indirect investment.
RBI filing deadline is 15 July every year via the online FLAIR portal.
Non-compliance can lead to penalties under FEMA regulations.
The Foreign Liabilities and Assets (FLA) Return is an annual report submitted to the Reserve Bank of India (RBI) under FEMA, 1999.
It records foreign assets, liabilities, and investment positions of Indian entities.
Both companies and LLPs receiving foreign direct investment (FDI) or making overseas investments must file it.
Filing is done through the FLAIR portal of RBI.
Understanding NRO Accounts and NRI Investments
An NRO (Non-Resident Ordinary) account is used by NRIs to manage income earned in India,such as rent, dividends, or pension.
Funds in an NRO account are usually from Indian sources but can be invested in Indian businesses or assets.
If an NRI invests in an Indian entity via NRO funds, it can sometimes be treated as indirect foreign investment under RBI rules.
When It Is Mandatory ?
FLA return filing becomes mandatory if:
The Indian company/LLP has any outstanding foreign investment at the end of the financial year.
The NRI’s NRO account investment qualifies as a foreign holding under FEMA definitions.
Even if the NRO funds are from Indian income, the investor’s residential status under FEMA is “Non-Resident.”
Example:
If an NRI uses NRO funds to subscribe to equity shares in an Indian private limited company, the RBI may still treat this as foreign investment for FLA purposes.
When It May Not Be Required ?
FLA filing is not required if:
The Company holds no outstanding foreign investment as of 31 March.
The NRI investment was withdrawn/sold before the financial year-end.
The NRO account is dedicated entirely for personal expenses and not for capital investment.
According to FEMA (Non-debt Instruments) Rules, 2019:
“Foreign investment” means any investment made by a person resident outside India, directly or indirectly, in capital instruments of an Indian company or to the capital of an LLP.
This definition includes NRIs, even if they invest through an NRO account. The RBI focuses on the investor’s residency status, not the source of funds.
1.Check Applicability
Confirm if the NRI/NRO investment is treated as foreign investment under FEMA rules.
Review shareholding patterns as on 31 March.
2.Gather Information
Details of foreign liabilities (FDI, ECBs, etc.).
Foreign assets held abroad.
Balance sheet and audited financials.
3.Register on the FLAIR Portal
Access RBI’s FLAIR portal.
Create a login ID using company/LLP details.
4.Fill out FLA Return Form
Enter investment details, foreign liabilities, and assets.
Provide sectoral classification and investor information.
5.Submit Before the Due Date
The deadline is 15 July each year.
If audited accounts are not ready, file with unaudited data and revise later.
6.Retain Acknowledgement
Keep the FLAIR acknowledgment as proof of compliance.
Under Section 13 of FEMA, 1999:
Monetary penalty up to ₹2,00,000 for the first default.
Additional ₹5,000 per day for continuing contravention.
RBI can also demand compounding of offences for regularisation.
Review investment structure annually to check FEMA classification.
Maintain clear documentation of source of funds for NRO investments.
Consult a FEMA expert to determine FLA applicability early.
File on time to avoid late fees and compliance risks.
FLA return NRI NRO investment applicability depends on FEMA residential status, not just fund source. If applicable, file by 15 July to avoid penalties. EbizFiling can manage your FLA return end-to-end, ensuring timely and error-free compliance.
FLA Return Filing Online to RBI in India
Step-by-Step Guide to FLA Return Filing
Applicability of FLA Return – Who Needs to File?
FLA Return Filing Fees and Packages
The FLA (Foreign Liabilities and Assets) return is an annual statement submitted to the RBI. It records the details of foreign assets and liabilities held by Indian companies and LLPs, helping the RBI track foreign investment and overseas assets.
Any Indian company or LLP that has received foreign direct or indirect investment or has made overseas investments must file it. The obligation applies even if the investment is small or came through an NRO account.
Yes. Under FEMA rules, an NRI is considered a person resident outside India, so investments made via their NRO account are usually treated as foreign investment for compliance purposes.
The due date is 15 July each year, covering the data as on 31 March of the same year. If audited accounts are not ready, provisional figures can be submitted and later revised.
Yes. The RBI allows filing with unaudited or provisional data to meet the deadline, but a revised return must be filed once audited accounts are available.
No. FLA return applies only to registered companies and LLPs, not to sole proprietorships, partnerships, or individuals.
Non-filing can attract a penalty of up to ₹2,00,000 for the first default and ₹5,000 per day for continuing delays. RBI may also require compounding of the offence.
The return must be filed online through RBI’s FLAIR portal. Registration is required for first-time filers, and credentials must be used for annual submissions.
No. It is only required when there is equity, capital contribution, or other capital instrument investment in Indian companies or LLPs, not for mutual funds.
Check if the investment is still held in an Indian entity as of 31 March. If yes, and you are an NRI under FEMA, it likely qualifies for FLA filing. Consult a FEMA expert for confirmation.
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