Foreign Exchange Management Act 1999 (FEMA) governs every cross-border flow between your Indian subsidiary and your foreign parent — capital infusion, dividend out, royalty, intercompany loans, share transfers. Each flow has a corresponding reporting / approval requirement. Miss a filing and the cleanup is a compounding application to RBI.
Annual FEMA compliance calendar
| Filing | When | Frequency |
|---|---|---|
| FC-GPR (after share allotment) | Within 30 days of share allotment to non-resident | On every share issuance |
| FC-TRS (share transfer between resident and non-resident) | Within 60 days of transfer | On every transfer event |
| FLA Return (Foreign Liabilities and Assets) | By 15 July each year | Annual |
| External Commercial Borrowing returns | Monthly ECB-2 + Form 83 for new ECBs | Monthly / event-based |
| ODI reporting (if Indian subsidiary invests abroad) | Various forms | Event-based |
| Form 15CA / 15CB (cross-border remittances) | Before each remittance | Per remittance |
FC-GPR — the foundational filing
Form FC-GPR is filed every time your Indian subsidiary allots shares to a non-resident. The filing happens through your AD bank's RBI system. Required attachments:
- Board resolution approving the share allotment.
- Foreign Inward Remittance Certificate (FIRC) from the bank confirming the inward remittance.
- KYC of the foreign investor (passport / Cert of Incorporation, address proof, board resolution).
- Share certificate copy.
- Valuation certificate from a SEBI-registered merchant banker or Cat-I valuer.
- Declaration on pricing guidelines compliance.
- Declaration on sectoral compliance (the activity is permitted under automatic / approval route).
The AD bank reviews, generates the Single Master Form (SMF) ID, and submits to RBI. Acknowledgement comes back in 7-14 working days.
FEMA filings owned by your consultant
FastLegal's FEMA specialist runs every FC-GPR, FC-TRS, FLA, and Form 15CA / 15CB for your subsidiary through the year. The calendar is maintained centrally; nothing falls through the cracks. Your CFO sees one quarterly FEMA compliance summary.
FLA Return — the annual one that catches people out
The Foreign Liabilities and Assets (FLA) Return is an annual filing to RBI capturing your subsidiary's outstanding foreign investment, foreign liabilities, foreign assets and key financial metrics as of 31 March each year. Filed by 15 July.
It's where many foreign-owned subsidiaries get caught — the form is comprehensive (foreign equity, ECBs, foreign currency receivables / payables, intercompany positions) and isn't filed by the AD bank. The company files directly on the FLAIR portal. Missing the FLA carries a late-fee that escalates the longer it's overdue.
Intercompany flows — RCM / TDS / Form 15CA-15CB stack
Every cross-border payment from your Indian subsidiary to a non-resident triggers a compliance stack:
- TDS — withhold at the lower of domestic rate or DTAA rate. File via Challan 281 monthly.
- Form 15CA — online declaration of the remittance before payment.
- Form 15CB — CA certificate confirming the nature of payment and TDS rate (above ₹5L per recipient per year).
- GST RCM — if it's an import of services from the foreign parent, self-invoice and pay IGST under RCM, claim ITC in the same return.
- FIRC retention — bank-issued certificate of every inward remittance; permanent retention required.
- Annual TDS return (24Q / 27Q) — reports all the non-resident TDS to the IT department.
Share transfer reporting — FC-TRS
Any transfer of shares between a non-resident and a resident (in either direction) requires Form FC-TRS filing within 60 days of the transfer. Triggers include:
- Foreign parent selling shares to an Indian resident.
- Indian resident selling shares to a non-resident.
- Secondary sale during a fundraise where a non-resident buys from a resident.
Valuation compliance applies: the transfer price must be within the FEMA pricing guidelines. Discount transfers from non-resident to resident or premium transfers from resident to non-resident may need RBI approval.
What auditors and acquirers look at
At your subsidiary's annual statutory audit and at any future acquisition due diligence, the FEMA file is one of the first things reviewed. Auditors / acquirers will want to see:
- Every FC-GPR acknowledgement from inception, in date order.
- Every FIRC for every inward remittance.
- Every FLA filing acknowledgement.
- Every Form 15CA / 15CB for non-resident payments.
- ECB returns if any borrowings exist.
- Valuation certificates for every share issuance.
A clean FEMA file is a competitive advantage at acquisition. A messy one is a deal-blocker.
Frequently asked questions
What if we missed an FC-GPR filing from 3 years ago?+
File a compounding application to RBI. Penalty is calibrated to the delay and value. Typical late FC-GPR compounding: ₹50,000-2L. Better to compound than to leave the violation open.
Do we need a separate FEMA consultant in addition to our CA?+
Many Indian CAs handle FEMA filings. Specialist FEMA consultants make sense for complex transactions (cross-border mergers, ESOP-FEMA interplay, large ECBs). For routine WOS operations, your payroll + tax provider should cover it.
Is FLA Return mandatory even if no new foreign investment came in?+
Yes — FLA is annual regardless of new transactions, as long as foreign investment exists on the books. Skipping creates compounding exposure.
Can we file FEMA forms in INR or do they need to be in USD?+
FLA in INR with USD equivalents at the year-end RBI reference rate. FC-GPR in INR with the FIRC in foreign currency for cross-reference. Mostly INR with some FX disclosures.
Stop reading circulars. Start running clean payroll.
Every FastLegal plan ships with a dedicated payroll consultant — a real human who runs your PF, ESI, PT, TDS and Form 16 issuance, configured to your salary structure, your state, and your hiring plan. You sign off. We do the rest.