Foreign investment in India is governed by FEMA and RBI reporting frameworks. Even when the investment is fully compliant from a sector and pricing perspective, missing or delayed reporting can create real business issues such as bank account restrictions, challenges in future fund raises, and compounding exposure.
A clean FEMA reporting process requires coordination between the company, investor, authorised dealer bank, and advisors, with accurate documentation and timely filings on the RBI FIRMS portal.
What FEMA Reporting Covers
For most companies receiving or transferring foreign investment, the key reporting obligations include:
- Entity master and business user setup on FIRMS
- FC GPR for issue of capital instruments to non residents
- FC TRS for transfer of capital instruments between resident and non resident
- FLA return for annual foreign liabilities and assets reporting
Depending on the structure, additional reporting may apply for downstream investment, LLP contributions, convertible notes, and ESOPs.
FC GPR Reporting Practical Guide
FC GPR is filed for issue or allotment of capital instruments such as equity shares, CCPS, CCD, and other permitted instruments to non residents.
When FC GPR is triggered
Common triggers:
- Share allotment against inward remittance
- Conversion of CCPS or CCD into equity
- Issue of shares against share swap or merger consideration where permitted
Typical documents required
- Board resolution and allotment details
- Valuation certificate as per pricing guidelines
- FIRC and KYC report from bank
- CS certificate where applicable
- Shareholding pattern and investor details
- PAS 3 acknowledgement and ROC filings
Practical controls
- Ensure allotment is within Companies Act timelines
- Ensure pricing is supported by valuation
- Ensure investor name and address match across documents n
FC TRS Reporting Practical Guide
FC TRS is filed for transfer of capital instruments between resident and non resident.
Common scenarios
- Existing shareholder sells shares to foreign investor
- Foreign shareholder exits to resident buyer
- Inter se transfer between non residents where reporting is required
Typical documents required
- Share purchase agreement
- Valuation certificate and pricing justification
- Consent letters and declarations
- KYC of remitter where consideration is remitted
- Board resolution for transfer registration
- Updated shareholding and register extracts
Practical controls
- Confirm whether the transaction is resident to non resident or non resident to resident
- Confirm pricing compliance and mode of payment
- Track timelines and AD bank approval flow
FLA Return Practical Guide
FLA return is an annual reporting of foreign liabilities and assets.
Who needs to file
Companies and LLPs that have:
- FDI received or outstanding
- Overseas direct investment or overseas assets
Key data points
- Foreign equity and debt outstanding
- Reinvested earnings
- Trade credits and other liabilities
- Overseas investments and assets
Practical tip: Align FLA data with audited financials and shareholding records to avoid inconsistencies.
Timelines and Compliance Calendar
A practical calendar approach:
1 At investment receipt obtain FIRC and KYC report immediately 2 At allotment completion compile FC GPR pack and initiate AD bank review 3 For transfers prepare FC TRS pack at signing and track consideration flow 4 Maintain an annual FLA working paper aligned to audited financials
Common Errors That Cause Rejections or Delays
- Entity master not approved or wrong business user mapping
- Mismatch in investor details across FIRC KYC and filings
- Incorrect instrument selection or conversion details
- Valuation not aligned to pricing guidelines
- Incorrect shareholding pattern or pre and post cap table
- Missing ROC filing references such as PAS 3
- Consideration mismatch with SPA and bank remittance n
Practical FEMA Reporting Checklist
1 Confirm sectoral cap and entry route compliance 2 Maintain updated cap table and foreign investment register 3 Obtain valuation certificate before allotment or transfer 4 Obtain FIRC and KYC report from bank and validate investor details 5 File PAS 3 and maintain allotment and share certificate records 6 File FC GPR or FC TRS on FIRMS within timelines and track UIN 7 Maintain annual FLA working paper and file after audit finalisation 8 Maintain a FEMA compliance folder with acknowledgements and UINs
How Perfect Accounting Can Help
Perfect Accounting and Shared Services supports foreign investment compliance:
- FEMA applicability review and transaction structuring support
- Coordination with AD bank and FIRMS portal filings
- Documentation pack preparation for FC GPR and FC TRS
- FLA return preparation and reconciliation with audited financials
- Compounding support and remediation for delayed filings