FEMA Compliance for Indian Companies
If your company has foreign shareholders, invests abroad or borrows from overseas, the Foreign Exchange Management Act, 1999 brings a set of RBI filings with fixed deadlines. We handle FDI reporting, ODI filings, ECB returns and the annual FLA return, due 15 July every year.
What it is
FEMA compliance is the approvals, pricing rules and RBI reports that apply when investment money crosses India’s border. For a company, there are three streams: foreign direct investment coming in (FDI), overseas direct investment going out (ODI) and external commercial borrowings (ECB) from foreign lenders.
FDI is governed by the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and the reporting regulations under them, with filings on the RBI’s FIRMS portal. ODI follows the Overseas Investment Rules and Regulations, 2022. ECB follows the Foreign Exchange Management (Borrowing and Lending) Regulations, revised in February 2026. Most filings go through your authorised dealer (AD) bank.
On top sits one annual return: the Foreign Liabilities and Assets (FLA) return, filed on the RBI’s FLAIR portal.
Who it applies to
You have a foreign shareholder
Any Indian company or LLP that has issued shares, CCPS or convertible notes to a non-resident (including an NRI on a repatriation basis), or whose shares moved between a resident and a non-resident.
You are investing abroad
Say a Gurugram IT company opens a Dubai subsidiary to bill Gulf clients. That is overseas direct investment, with filings before and after the money leaves.
You are borrowing from overseas
Companies and, since February 2026, LLPs that borrow from a foreign lender, foreign parent or overseas branch of an Indian bank under the ECB framework.
Why it matters
Meet the RBI’s 30- and 60-day clocks
Most FEMA forms are due in 30 or 60 days. Miss that and you pay a late submission fee; after three years, you need compounding.
Clear old gaps before the next deal
An unfiled FC-GPR makes the next share transfer or fundraise harder, and under the ODI rules a person in default cannot make further overseas investment until the delay is regularised.
Keep the penalty exposure at zero
Section 13 of FEMA allows a penalty up to three times the amount involved. On a large investment, that exposure is serious.
FEMA filings at a glance
| Event | Form | Deadline |
|---|---|---|
| Shares issued to a non-resident | FC-GPR (FIRMS) | 30 days from the date of issue |
| Shares transferred between a resident and a non-resident | FC-TRS (FIRMS) | 60 days from transfer or receipt/remittance of funds, whichever is earlier |
| Convertible note issued to a non-resident | Form CN | 30 days from issue |
| Downstream investment by a foreign-owned company | Form DI | 30 days from allotment |
| Foreign investment in an LLP | Form LLP(I) | 30 days from receipt of consideration |
| Overseas direct investment | Form FC (via AD bank) | Before the investment or remittance |
| ODI held at year end | Annual Performance Report (APR) | 31 December every year |
| Foreign loan (ECB) | Loan registration number (LRN) via AD bank | Before drawdown |
| ECB drawdown or repayment | ECB-2 | Within 7 calendar days from the end of the month of the event |
| Foreign assets and liabilities | FLA return (FLAIR) | 15 July every year |
Here is the catch: many small companies do not know they are covered. Picture a Faridabad engineering firm that issued 5% new shares in 2021 to a director’s cousin in Canada. Nobody filed FC-GPR or a single FLA return. Both are overdue, and both can still be fixed.
Documents required
For FDI reporting
- FIRC or bank certificate for the inward remittance
- KYC of the foreign investor from the remitting bank
- Board resolution and allotment details
- Fair-value valuation certificate
For ODI and ECB
- Board resolution for the investment or loan
- Foreign entity’s documents and audited accounts
- Loan agreement and lender details for ECB
- Auditor-certified APR data
For the FLA return
- Financials as on 31 March
- Shareholding of non-residents and its value
- FLAIR login of the entity
How it works
Map every foreign transaction
We read your share register, bank statements and loan papers, and list every foreign inflow, outflow and holding since incorporation.
Check the route and the price
For each investment we confirm the sector cap, the approval route and the fair-value price.
File the pending forms
We prepare each form with its supporting papers and submit it on FIRMS or through your AD bank.
Regularise the late ones
Where a form is late, we compute the late submission fee and file under the LSF route, or prepare a compounding application if three years have passed.
Run the annual calendar for you
We file the FLA return each July and the APR each December, alongside your annual ROC filings.
Timelines
File the FLA return by 15 July
Due 15 July each year for the position on 31 March. You may file on unaudited figures and file a revised return with audited figures by 30 September. For FY 2025-26, RBI extended the date to 31 July 2026.
Submit the APR by 31 December
An Indian company with ODI files the APR for each foreign entity by 31 December every year. Where the foreign entity’s year ends on 31 December, the APR is due by 31 December of the next year.
Report events within 30 or 60 days
FC-GPR in 30 days, FC-TRS in 60 days, and ECB-2 within 7 calendar days after the month of each drawdown or repayment.
What happens if you report late
You pay a late submission fee
For FC-GPR, FC-TRS, ECB and ECB-2, the fee is ₹7,500 plus 0.025% of the amount for each year of delay, capped at 100% of the amount. For FLA and the APR, it is a flat ₹7,500 per return. The LSF route is open for three years from the due date.
Older delays go to compounding
After three years, or where the breach goes beyond a reporting delay, the company applies to the RBI to compound it and pays a compounding amount.
Adjudication can bring a Section 13 penalty
Up to three times the sum involved where it is quantifiable, or up to ₹2 lakh where it is not, plus up to ₹5,000 a day for a continuing contravention.
Frequently asked questions
Who has to file the FLA return?
Every Indian company, LLP or other entity that holds FDI or overseas direct investment on 31 March. It is filed on the RBI’s FLAIR portal by 15 July. The obligation continues every year while the foreign holding remains, even if no new money came in. Put it in your July calendar and it never slips.
What if our accounts are not audited by 15 July?
File on unaudited figures by the due date. The RBI allows the FLA return to be submitted on provisional numbers and revised once the audit is done, by 30 September. Waiting for the audit and missing the date costs a ₹7,500 late submission fee. A provisional return filed on time, followed by a revision, keeps you fully compliant.
How is the late submission fee calculated?
For flow reports such as FC-GPR, FC-TRS and ECB-2, the fee is ₹7,500 plus 0.025% × A × n, where A is the amount involved and n is the delay in years, rounded up to the nearest month. The fee cannot exceed the amount involved. For stock returns like FLA and the APR, it is a flat ₹7,500. In practice, the LSF option is open for three years from the due date, so regularise quickly.
What is the deadline for FC-GPR?
FC-GPR must be filed within 30 days from the date of issue of shares to a non-resident. The shares themselves must be issued within 60 days of receiving the foreign money, or the money refunded within 15 days after that. It is filed on FIRMS with the remittance proof, investor KYC and valuation certificate. Filed on time, it is routine.
Do NRI shareholders count as foreign investment?
Yes, when they invest on a repatriation basis. An NRI’s investment from abroad or from an NRE or FCNR account is foreign investment that is reported in FC-GPR or FC-TRS. Investment on a non-repatriation basis is treated like a resident’s investment and falls outside FC-TRS reporting. If you are unsure how an old NRI investment came in, the bank records will show it.
What is ODI and what must be filed?
ODI is an Indian entity’s strategic investment in a foreign entity, such as a subsidiary or joint venture; a listed stake below 10% without control is portfolio investment instead. Before investing, you fill Form FC and route the remittance through your AD bank under the Overseas Investment Regulations, 2022. Each year an Annual Performance Report is due by 31 December. Disinvestment is reported within 30 days of receiving the proceeds. Planned this way, your foreign subsidiary stays fully compliant.
What changed in the ECB rules in 2026?
The RBI revised the ECB framework in February 2026. LLPs can now borrow, the limit is the higher of USD 1 billion outstanding or 300% of net worth, and minimum average maturity is a standard three years. Cost is market-based, at arm’s length for related parties. ECB-2 is now event-based, due within 7 calendar days from the end of the month of a drawdown or repayment. We check fit before you sign.
Can a delay older than three years still be fixed?
Yes, through compounding. After the three-year LSF window, the company applies to the RBI to compound the delay and pays the amount the RBI sets. The alternative is adjudication, where Section 13 penalties can be far higher. We prepare the application with the full transaction history, so the RBI has what it needs to close the case.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
If a filing is late, the RBI charges a late submission fee:
| Return | Late submission fee |
|---|---|
| FC-GPR, FC-TRS, LLP(I), ECB, ECB-2 | ₹7,500 + 0.025% × amount × years of delay, capped at 100% of the amount |
| FLA return, APR, other stock returns | ₹7,500 per return |
Ready to begin?
Send us your shareholding and foreign transactions, and we will list every FEMA filing you owe and clear the backlog.