FEMA Year-End Compliance: APR and FLA Filing Guide for Indian Companies with Overseas Investments

As FY 2025-26 ends on March 31, 2026, every Indian entity with overseas investments or foreign liabilities must start preparing for two critical FEMA filings: the Annual Performance Report (APR) and the Foreign Liabilities and Assets (FLA) Return. Both are mandatory under the Foreign Exchange Management Act, 1999, and non-compliance attracts penalties up to 300% of the amount involved.

This guide covers who must file, what data to collect before closing the books on March 31, filing deadlines, portal details, and the penalty framework. If your entity has received FDI, made an ODI, or holds any foreign assets or liabilities on its balance sheet, read on.

Part A: Annual Performance Report (APR)

What Is the APR?

The APR is a mandatory annual filing under the Foreign Exchange Management (Overseas Investment) Regulations, 2022. It reports the financial performance and status of each foreign entity in which an Indian resident holds Overseas Direct Investment (ODI), defined as equity capital of 10% or more in a foreign entity.

Who Must File?

• Indian companies, LLPs, or resident individuals who have made ODI in any foreign entity
• Entities that hold equity capital reckoned as ODI under FEMA (Overseas Investment) Rules, 2022
• Includes investments in wholly-owned subsidiaries, joint ventures, and step-down subsidiaries abroad

Filing Deadline

The APR for FY 2025-26 (financial year ending March 31, 2026) must be submitted by December 31, 2026 on the RBI’s FIRMS (Foreign Investment Reporting and Management System) portal.

What Data Do You Need?

The APR requires audited financial statements of the foreign entity. Start collecting the following before March 31:

• Audited balance sheet and profit/loss account of each overseas entity
• Details of any acquisitions, disposals, or changes in shareholding during the year
• Information on step-down subsidiaries (set up, wound up, or transferred)
• Dividend received or repatriation of capital during the year
• Any alteration in the foreign entity’s capital structure

Penalties for Non-Compliance

Non-filing or delayed filing of the APR is treated as a violation of FEMA. Under Regulation 11 of the Overseas Investment Regulations:

• Late Submission Fee (LSF): Rs 7,500 per APR filing
• Compounding by RBI: Persistent non-compliance may require compounding of the FEMA contravention
• Restrictions on future investments: AD Category-I banks may refuse to process new ODI transactions if prior APRs are pending

Part B: FLA Return (Foreign Liabilities and Assets)

What Is the FLA Return?

The FLA Return is an annual census conducted by the RBI to collect data on India’s international investment position. It captures both inward (FDI received) and outward (ODI made) investment positions of Indian entities.

Who Must File?

Every Indian company, LLP, or other entity that has:

• Received Foreign Direct Investment (FDI) at any time (current or previous years)
• Made Overseas Direct Investment (ODI) at any time
• Both FDI recipients and ODI holders must file, even if no new transactions occurred during the year

This is broader than the APR. If your company received FDI from a foreign investor five years ago and still holds those shares, you must file the FLA Return every year.

Filing Deadline

The FLA Return for FY 2025-26 must be filed by July 15, 2026 on the RBI’s FLAIR (Foreign Liabilities and Assets Information Reporting) portal. Note that in previous years, the RBI has extended this deadline to July 31; however, you should plan for the statutory July 15 date.

What Data Do You Need?

The FLA Return requires balance sheet data as of March 31, 2026. Prepare:

• Foreign equity and preference share capital on the balance sheet
• Foreign borrowings (ECBs, trade credits, inter-company loans from foreign entities)
• Foreign assets held abroad (equity in overseas subsidiaries, immovable property, bank deposits)
• Reinvested earnings attributable to foreign investors
• Details of foreign currency denominated liabilities

Penalties for Non-Compliance

The FLA Return carries significantly heavier penalties than the APR:

Violation	Penalty
Non-filing or late filing	Up to 300% of the amount involved under FEMA
Amount not quantifiable	Flat penalty of Rs 2,00,000
Continuing default (per day)	Rs 5,000 per day after initial violation
Late submission fee	Rs 7,500

Year-End Preparation Checklist (Before March 31)

Since both filings depend on year-end balance sheet data, the work starts now:

1. Identify all foreign investment positions: List every entity in which you hold ODI and every foreign shareholder holding equity in your company
2. Request audited financials from overseas entities: For APR, you need audited statements of foreign subsidiaries/JVs. Communicate the deadline to your overseas auditors now
3. Reconcile FDI records: Match your share register with RBI filings (Form FC-GPR, Form FC-TRS) to ensure consistency
4. Update FIRMS and FLAIR portal credentials: Ensure your entity’s registration on both RBI portals is active and the authorized signatories (CS, CFO, or Director) have login access
5. Clear pending APR or FLA filings from prior years: If you have unfiled APRs or FLA returns from earlier years, file them immediately. Outstanding past filings can block new ODI approvals
6. Review loan and borrowing positions: Capture all ECBs, trade credits, and inter-company loans for the FLA Return

Practical Implications

For CA Professionals

Send a year-end advisory to all clients with cross-border investment structures. Many clients are unaware that the FLA filing obligation persists even when no new FDI was received during the year. Create a tracker for each client’s APR and FLA due dates and start collecting overseas audited financials early.

For Founders and Startups

If you have raised funding from foreign VCs or angel investors, your company must file the FLA Return every year. If you have set up a foreign subsidiary (common for SaaS startups with US entities), the APR is mandatory. Missing these filings can create complications during your next funding round, as investor due diligence teams check FEMA compliance.

For MSME Owners

Export-oriented MSMEs with trade credit from foreign buyers, or those who have borrowed via ECBs, must file the FLA Return. Even small foreign borrowings trigger the filing obligation. Check with your bank’s authorized dealer if you are unsure about your FEMA reporting requirements.

Key Filing Dates for FY 2025-26

Filing	Portal	Deadline	Penalty Risk
FLA Return	RBI FLAIR	July 15, 2026	Up to 300% of amount involved
APR (each ODI entity)	RBI FIRMS	December 31, 2026	Rs 7,500 LSF + future ODI blocked

Need help with FEMA compliance, APR filing, or FLA return preparation? The cross-border advisory team at A S Banka Advisors Private Limited specializes in FEMA regulations, overseas investment structuring, and RBI compliance. Talk to an expert to ensure your filings are accurate and on time.

Disclaimer: This article is for informational purposes only and does not constitute legal or professional advice. FEMA regulations are complex and penalties are severe. Please consult a qualified Chartered Accountant or FEMA practitioner for advice specific to your cross-border investment structure. Information is current as of March 27, 2026.