{"id":30418,"date":"2021-05-15T15:30:34","date_gmt":"2021-05-15T10:00:34","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=30418"},"modified":"2021-06-21T11:24:07","modified_gmt":"2021-06-21T05:54:07","slug":"learn-everything-about-fdi-compliances-under-fema","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/learn-everything-about-fdi-compliances-under-fema\/","title":{"rendered":"Learn Everything about FDI Compliances under FEMA"},"content":{"rendered":"\n

For a nation where capital is not readily accessible, FDI has been an imperative source of funds for organizations. Under Foreign Direct Investment, overseas capital, either by an organization or a person, is invested in the Indian company. This article will focus on various FDI Compliances that come under FEMA.<\/p>\n\n\n\n

In our country, FDI policy is\ngoverned under the Foreign Exchange Management Act, 1999, controlled by the\nReserve Bank of India. As per the OECD, an investment threshold of 10% or more\nfrom foreign territory is considered as FDI. <\/p>\n\n\n\n

FEMA has been a pivotal source of growth for various sectors in India. The goal of this apex institution is to facilitate external trade, balance payments, advocate systematic development, & effectively manage the foreign exchange market in India.<\/p>\n\n\n\n

Listicles of FDI compliances under FEMA<\/h2>\n\n\n\n
\"Listicles<\/figure><\/div>\n\n\n\n

Annual Return on Foreign Liabilities &\nAssets<\/h3>\n\n\n\n

Annual return for Foreign\nLiabilities & asset (aka FLA Return) is required to be furnished compulsorily\nby all Indian-based entities which have received overseas investment or made\nthe same in any of the preceding years, including the current year.<\/p>\n\n\n\n

If the Indian firm is free from\nany outstanding investment w.r.t overseas investment at the end of the\nreporting year, the company is not required to submit an FLA return.<\/p>\n\n\n\n

Likewise, if the Indian firm\nhas not raised any FDI or ODI in the current year, but the firm possesses\noutstanding FDI and\/or ODI, then that firm is required to furnish every year by\n15 July every year.<\/p>\n\n\n\n

Annual return for Foreign Liabilities & assets is one of the essential FDI compliances that every concerned entity and individual should follow.<\/p>\n\n\n\n

Read our article<\/b>:Analysis on Foreign Liabilities and Assets: (FLA Return) under FEMA<\/a><\/mark><\/p>\n\n\n\n

Annual Performance Report (APR)<\/h3>\n\n\n\n

An Indian-based company, a\nlocal national which has made an ODI must furnish an Annual Performance Report\n(APR) in Form ODI Part II before AD bank w.r.t each joint venture, Wholly owned\nsubsidiaries (aka WOS) operating outside India on or before 31 December every\nyear.<\/p>\n\n\n\n

External Commercial Borrowings<\/h3>\n\n\n\n

Borrowers must share all ECB transactions to the Reserve Bank of India<\/strong><\/em>[1]<\/strong><\/em><\/a><\/sup> on a monthly basis via an AD category- I Bank in the Form of \u2018ECB 2 Return\u2019.<\/p>\n\n\n\n

Single Master Form <\/h3>\n\n\n\n

Under the head single master\nform, FC-TRS, FC-GPR, CN, LLP-I, LLP-II, DRR, ESOP, DI, InVi are to be filed\n& submitted. The RBI on 1 September 2018, rolled out a user manual by the\nname \u201cSMF Manual\u201d to clearly establish the procedure regarding the filing of a\nsingle master form (aka \u201cSMF\u201d), which is rolled out on 7 June 2018 to integrate\nthe prevailing reporting norms to overseas investment in India.<\/p>\n\n\n\n

Advance Reporting Form (ARF)<\/h3>\n\n\n\n

An Indian firm that received\nfunds from a foreign destination for issues of shares or other securities\ncovered under the FDI Scheme must report the details of the amount to the\nRegional office of RBI via its AD Category I bank within a month from the date\nof issuance of shares. The advance reporting form is an important part of the\nFDI compliances that seek due consideration.<\/p>\n\n\n\n

Form FC-GPR<\/h3>\n\n\n\n

Form FC-GPR refers to a form issued\nby the Reserve Bank under Foreign Exchange Management Act, 1999. When a firm\nreceives the overseas investment and then allots shares to the foreign investor\nagainst the same investment, then the company is obligated to file detail of\nsame with the Reserve Bank within 30 days via Form FC-GPR (Foreign\nCurrency- Gross Provisional Return).<\/p>\n\n\n\n

Form FC-TRS<\/h3>\n\n\n\n

The term FC-TRS stands for\nForeign Currency Transfer. It is a form for the Indian shareholder residing\noutside India or vice versa primarily used during the transaction of shares.\nSuch a form, along with the Form FC-GPR, will be submitted before its\nauthorized dealer bank. Further, the same bank will forward the Form to the\nReserve Bank of India.<\/p>\n\n\n\n

Form ODI<\/h3>\n\n\n\n

An Indian Party & a\nResident Individual making an overseas investment are required to submit Form\nODI when they receive share certificates or any documentary evidence of\ninvestment in the foreign Joint Venture \/ WOS as evidence of investment and\nsubmit the same to the designated AD within 30 days.<\/p>\n\n\n\n

An Overview on FEMA Guidelines &\nFeatures <\/h3>\n\n\n\n

Most significantly, FEMA<\/strong><\/a> acknowledged all forex-based crimes as civil offenses, whereas FERA considered them as criminal offenses. Furthermore, there were other essential guidelines such as:- <\/p>\n\n\n\n