FEMA, RBI COMPLIANCES AND FEMA AUDIT
Priya B & Co., Chartered Accountants provide total solutions for foreign exchange transactions involving foreign direct investments, external payments, overseas investments, ECB (ECB 2 returns) in conformance with RBI norms, assistance in filling of FC-GPR forms for submission with RBI, Form FC – TRS with RBI, Annual return on Foreign liabilities and assets return(FLA) with RBI, assist in filing of annual performance report (APR) for clients, filling of Single master forms (SMF), Advance reporting form (ARF), Form FC – GPR and Form ODI.
The main aim of FEMA is to facilitate external trade, balance payments, promote orderly development, and maintain the foreign exchange market in India.
The important compliance to be followed under FEMA
- Annual Return on Foreign Liabilities and Assets
- Annual Performance Report (APR)
- External Commercial Borrowings
- Single Master Form
- Advance Reporting Form (ARF)
- Form FC-GPR
- Form FC-TRS
- Form ODI
Annual Return on Foreign Liabilities and Assets
Annual return for Foreign Liabilities and assets i.e. FLA Return is required to be submitted mandatorily by all the India resident companies which have received FDI or made ODI in any of the previous year, including current year
If the Indian company does not have any outstanding investment in respect of FDI or ODI as at the end of the reporting year, the Company need not submit the FLA Return.
Similarly, if the Indian company has not received any fresh FDI or ODI in the latest year but the company has outstanding FDI and/or ODI, then that company is still required to submit the FLA Return every year by 15 July every year.
Priya B & Co., Chartered Accountants offer robust solutions for filing of GST Returns which can be monthly as well as annual returns.A GST Return is a document mentioning details of income a taxpayer is required to file with the concerned tax authority on the basis of which the tax liability will be determined. A registered entity needs to file GST returns entailing Purchases, Sales, Output GST (on sales) and Input tax credit (GST paid on purchases). The various kinds of GST returns filed by taxpayers are GSTR - 1, GSTR - 2, GSTR - 2A, etc.
Annual Performance Report (APR)
An Indian Party, Resident Individual which has made an Overseas Direct Investment (ODI) has to mandatorily submit an Annual Performance Report (APR) in Form ODI Part II to the AD bank in respect of each Joint Venture, Wholly Owned Subsidiaries (WOS) outside India on or before 31st December every year.
External Commercial Borrowings
Borrowers are required to report all ECB transactions to the RBI on a monthly basis through an AD Category – I Bank in the form of ‘ECB 2 Return’ on a monthly basis.
Single Master Form
Under the head Single Master form FC-GPR, FC-TRS, LLP-I, LLP-II, CN, ESOP, DI, DRR, InVi are to be filed and submitted. The Reserve Bank of India (the “RBI”), on September 1, 2018, released a user manual (the “SMF Manual”) to clearly set out the procedure for filing a single master form (the “SMF”), which it introduced on June 7, 2018, to integrate the existing reporting norms for foreign investment in India.
Advance Reporting Form (ARF)
An Indian company receiving investment from outside India for issue of shares or other eligible securities under the FDI Scheme has to report the details of the amount of consideration to the Regional Office concerned of the Reserve Bank through its AD Category I bank within 30 days from the date of issue of shares.
Form FC-GPR
When the company receives the foreign investment and against such investment the company allots shares to such foreign investor then it is the statutory obligation of the company to file details of such allotment of shares with The RBI, within 30 days and for that company has to use the form FC-GPR (Foreign Currency- Gross Provisional Return) for submitting details with RBI.
Form FC-TRS
Form FC-TRS is a form used by shareholder residents in India or outside, when they transfer their shares. The form FC-TRS along with the Form FC-GPR will be submitted to its authorised dealer bank, who will submit the same to the RBI.
Form ODI
An Indian and a Resident Individual making an overseas investment is required to submit form ODI. When they receive share certificates or any other documentary evidence of investment in the foreign JV / WOS as an evidence of investment and submit the same to the designated AD within 30 days.
Important FEMA Guidelines
The main objective of FEMA was to consolidate and amend the laws relating to the foreign exchange with the reason to facilitate the external trade and payments and for the maintenance of the foreign exchange market in India. Additionally, there were other important guidelines such as FEMA will not apply to Indian citizens who resided outside India. This criterion was checked by calculating the number of days a person resided in India during the previous financial year (182 days or more to be a resident). It was noted that even an office, a branch, or an agency could be a ‘person’ for the purpose of checking residency.
- FEMA authorized the central government to impose restrictions on and supervise three things – payments made to any person outside India or receipts from them, forex, and foreign security deals.
- It specifies the areas around acquisition/holding of forex that requires specific permission of the Reserve Bank of India (RBI) or the government.
- FEMA put foreign exchange transactions into two categories – capital account and current account. A capital account transaction altered the assets and liabilities outside India or inside India but of a person resident outside India. Thus, any transaction that changed overseas assets and liabilities for an Indian resident in a foreign country, or vice versa, was classified as a capital account transaction. Any other transaction fell into the current account category.
FEMA AUDIT
Priya B & Co, Chartered Accountants undertake FEMA Audit. Every capital account transactions such as Foreign Direct Investment(FDI), External Commercial Borrowings(ECB) and Overseas Direct Investment (ODI) creating specific charges require compliances under provisions of FEMA . We help in regularizing the FEMA compliances and mitigating the penal consequences for non compliance of FEMA provisions.