FDI begins with inward remittance. The most common form of FDI transactions is on account of issue of shares (by an Indian Company) and transfer of shares (of an Indian company) in favour of a Non-resident. The forms involved are basically of following three types,
With a view to promoting the ease of reporting of transactions under foreign direct investment (FDI), the filing of the ARF, Form FC-GPR and Form FC-TRS has been enabled under the e-Biz platform of the Government of India. The design of the reporting platform enables the customer to login into the e-Biz portal, download the reporting forms, complete and then upload the same onto the portal using their digital signature certificates. The AD banks will be required to download the completed forms, verify the contents from the available documents, if necessary by calling for additional information from the customer and then upload the same for RBI to process and allot the Unique Identification Number (UIN). Physical filing of FC-GPR, ARF and FCTRS forms has been discontinued from February 8, 2016 and online filing through government’s e-Biz portal has been made mandatory.
Summarised below are the forms ARF, FC-GPR, FC-GPR and the FLA return. As mentioned in FEMA Regulations, all the prescribed reportings to the RBI are to be made through the Authorised Persons / Authorised Dealer banks Category – I Banks / Authorised Banks, as the case may be.
|Compliances for Companies|
|On receipt of remittance||Advance Remittance Form (ARF)||Within 30 days from the date of receipt|
|Compliances for LLPs|
|On receipt of capital contribution and acquisition of shares||LLP (I)||Within 30 days from the date of receipt of consideration|
1.1 The following documents should be submitted along with both the forms ARF and LLP (I):
1.2 ARF to be filed on e-Biz portal
|On issue of capital instruments||Foreign Currency-Gross Provisional Return (FC-GPR)||Within 30 days from the date of issue of capital instruments|
2.1 REPORTING OTHER THAN ISSUE OF CAPITAL INSTRUMENTS
Besides issue of the capital instruments to a person resident outside India, the following also needs to be reported in the form FC-GPR:
Note: Allotment of shares under Initial Public Offer or Qualified Institutional Placement need not be reported in form FC-GPR.
2.2 REPORTING OF ISSUE OF SHARES TO A PERSON OTHER THE PERSON SENDING THE INWARD REMITTANCE
In circumstances where shares are issued to a person other than the person from whom the inward remittance has been received, the form FC-GPR shall be filed along with the following documents:
|Purpose||Form Name||To be filed with||Timeline|
|The annual return on Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the Indian companies which have received foreign direct investment and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year||Annual Return on Foreign Liabilities and Assets (FLA)||Regional Office of RBI via email||On or before 15th July of each year|
For further queries on FLA Return, please refer to the FAQs on FLA Return published by RBI in this regard.
|Compliances for Companies|
|On transfer of capital instruments||Foreign Currency-Transfer of Shares (FC-TRS)||Within 60 days of transfer of capital instruments or receipt / remittance of funds whichever is earlier|
|Compliances for LLPs|
|To report disinvestment / transfer of capital contribution or profit share between a resident and a non-resident and vice versa.||LLP (II)||Within 60 days from the date of receipt of funds.|
4.1 TRANSACTIONS FOR WHICH FORM FC-TRS NEEDS TO BE FILED
Form FC-TRS to be filed for the following transactions:
Note: Transfer of capital instruments by way of sale by a person resident outside India holding such instruments on a non-repatriable basis to a person resident in India is not required to be reported in form FC-TRS.
4.2 REPORTING OF TRANSFER OF SHARES WHERE FOREIGN REMITTER AND BENEFICIAL OWNER ARE DIFFERENT
Procedure for reporting transfer of shares where foreign remitter and beneficial owner are different, is same as procedure for reporting of issue of shares to a person other the person sending the inward remittance detailed in point 2.2 above.
Please note that above-mentioned forms (FC-GPR, FC-TRS, LLP-I and LLP-II) have been integrated into Single Master Form (SMF) w.e.f. 1st September 2018. To read more about the same, please visit Single Master Form (SMF) And The New Filing Platform FIRMS.
Covered under Part 1 of the blog series on Reporting Requirements under FEMA are the most common forms under FEMA such as ARF, FC-GPR, FC-TRS and FLA Return. These forms are the most commonly used forms under FEMA. Part 2 of the blog covers the not-so-common forms used for reporting transactions, like the conversion of ECB into Equity, issue of sweat equity shares, reportings to be made by for transactions on stock exchange etc. Part 2 of the series can be read at Reporting Requirements Under FEMA (Part 2).