FLA Return Filing for LLPs with NRI Partners: A FEMA Compliance Essential

The Reserve Bank of India (RBI), under the Foreign Exchange Management Act (FEMA), mandates the submission of the Foreign Liabilities and Assets (FLA) Return by Indian entities that have foreign investments or outbound investments. While the requirement is widely known among companies, Limited Liability Partnerships (LLPs)—especially those with Non-Resident Indian (NRI) partners—often overlook this critical compliance.

This blog explores the FLA return obligations specifically for LLPs with NRI involvement, key dates, consequences of non-compliance, and filing steps to ensure smooth compliance with FEMA.

Who is Required to File the FLA Return?

The FLA return must be filed annually by:

• Indian companies, LLPs, or other entities that have received Foreign Direct Investment (FDI).

• Indian entities that have made Overseas Direct Investment (ODI).

• Any entity holding foreign assets or liabilities in its financial records as of March 31st.

This compliance is not limited to large corporations—even a single foreign investment can trigger the requirement to file the return.

Applicability to LLPs with NRI Partners

Many LLPs formed in India operate with a combination of resident and non-resident partners. If:

• An LLP receives capital contribution from a non-resident partner (including NRIs); or

• Any profit share is credited to a non-resident’s account,

such inflow is classified as Foreign Direct Investment (FDI) under FEMA regulations.

Accordingly, these LLPs fall under the purview of FLA Return filing—even if the foreign contribution is small or infrequent.

Important Due Dates for FLA Return Filing

Filing the FLA return is a time-sensitive compliance activity. The critical dates are:

• Initial Submission Deadline:
  July 15 of every year — based on unaudited/provisional financials as on March 31.

• Extended/Revised Deadline:
  September 30 — in case audited financials were not available by July 15 and changes are required post audit.

Early registration and preparation are strongly recommended to avoid last-minute issues.

How to File the FLA Return

Filing is done online via the FLAIR portal of RBI:
🔗 https://flair.rbi.org.in

Steps:

1. Registration:

   • Visit the FLAIR portal and register your entity using a valid email and company identification.

   • Upload verification documents like authority letters, PAN, etc.

2. Log In & Fill the Form:

   • Complete the FLA return by filling in details of foreign liabilities (FDI) and assets (ODI).

   • If audited statements are not available, you may use unaudited or provisional figures.

3. Submission & Confirmation:

   • Submit the form online.

   • Ensure an acknowledgment is received as proof of compliance.

Consequences of Non-Compliance

Failure to file the FLA return within the prescribed deadline is treated as a violation of FEMA and may attract regulatory consequences, such as:

• Late Submission Fee (LSF):
  Up to ₹7,500 as per RBI discretion.

• Penalties under FEMA:
  Can extend to 300% of the amount involved, in extreme cases.

• Reputational Risk & Compliance Red Flag:
  Non-compliance may affect future FDI approvals, bank due diligence, or creditworthiness.

Conclusion: Don’t Ignore FLA Compliance for LLPs

FLA Return filing is more than a formality—it’s a mandatory disclosure that ensures India's macroeconomic data is accurate and reflects actual foreign investments. LLPs with NRI partners often miss this obligation due to limited awareness, but ignorance is no excuse in the eyes of law.

If your LLP has received any form of foreign capital or remittance, consult your compliance advisor or Company Secretary immediately to ensure timely filing. It’s always better to be proactive than penalized.

🔍 Need Assistance?

If you’re unsure about the applicability or how to proceed with the filing, our team at Vikram Grover & Co., Company Secretaries can help you complete the FLA filing with accuracy and peace of mind.