Foreign Exchange Management Act, 1999, herein referred to as FEMA, is the principal legislation governing foreign exchange transactions in India. To ensure compliance and transparency with the FEMA rules and regulations, the government has put in place certain FEMA compliances that a person should follow while dealing in foreign exchange transactions. Here’s a detailed FEMA compliance checklist that you shouldn’t miss while undertaking foreign exchange transactions.
FEMA Compliance Checklist
Following are the FEMA compliances as mentioned under the FEMA law, rules and regulations made thereunder:
Form FC-GPR: Also called Foreign Currency – Gross Provisional Return, it should be filed with the RBI when the company receives foreign investment. The company should report to the RBI by filing Form FC-GPR within 30 days from the date of issue of the securities.
Form FC-TRS: Also called Foreign Currency Transfer, it is a declaration to be filed in case of transfer of shares, debentures, compulsorily and mandatorily convertible preference shares (CMCPS) or other securities through sale either by a resident to non-resident or vice-versa. It should be submitted in quadruplicate to the designated AD branch within 60 days from the date of receipt of funds.
External Commercial Borrowings: The external commercial borrowing transactions shall be reported to the RBI by the borrowers by filing Form ECB. Further, monthly reporting to the RBI should be done in Form ECB-2.
Overseas Direct Investments: In case any resident individual or non-individual intends to make an ODI, whether under the Automatic Route or Approval Route, it should be reported to the RBI by filing Part-I of Form ODI.
Annual Performance Report: Annual Performance Report in Part-II of Form ODI shall be filed by the individual as well as non-individual residents undertaking investments in Joint Ventures or Wholly Owned Subsidiaries outside India. The due date for filing APR shall be 31st December following the end of the financial year.
FLA Return: Also known as Foreign Liabilities and Asset Return, it is an annual return that is mandatory for all the companies that have received foreign investments, including ECB or has made any ODI in the current or previous years. The details of outstanding assets and liabilities shall be reported to the RBI by Filing FLA Return on or before the 15th of July each year.
Reporting of Disinvestments: Any disinvestments in the joint ventures or wholly owned subsidiaries shall be reported to the RBI in Part-III of Form ODI within 30 days of remittance along with the proof of disinvestment, share valuation report, proof of remittance and any other documents as may be required.
Reporting of Any Changes: The Indian Party making overseas direct investments can engage in the diversification of activities, altering the shareholding pattern or setting up of step-down subsidiaries etc. Such decisions should be reported to the RBI within 30 days of approval of those decisions by the competent authority as per the local laws of the country of the joint venture or wholly owned subsidiary.
There are multiple compliances under FEMA and therefore, it is important to ensure timely compliances in order to avoid penal action. In case you have undertaken any FEMA-related transaction, then free feel to contact the ASC Group.
Original Source–https://ascgroup.hatenablog.com/entry/2022/08/13/160657?_ga=2.48760609.660254346.1660632853-332562475.1659014643
ASC Group 
Leave a comment