The Foreign Liabilities and Assets (FLA) Return is an important annual reporting requirement for eligible Indian companies having outstanding foreign liabilities or assets arising from foreign direct investment (FDI) or overseas direct investment (ODI). The Reserve Bank of India (RBI) collects this information to monitor India's international investment position and maintain accurate foreign investment records.

Although the return is submitted online through the RBI's FLAIR portal, companies may face difficulties while collecting financial information, calculating foreign investment figures, and entering the required details. Even small mistakes can result in incorrect reporting, revision requirements, or additional compliance work.

Understanding common errors before submission helps businesses maintain accurate records and complete FLA Return Filing for Indian Companies more efficiently.

1. Incorrect Financial Information

One of the most common mistakes is entering incorrect financial figures in the return. Companies may accidentally report incorrect values for paid-up share capital, reserves, total assets, liabilities, or foreign investment amounts.

These errors often occur when the finance team uses outdated accounting records or does not reconcile figures with financial statements.

How to avoid this mistake: Use the relevant financial information for the reporting year and verify the figures against the company's balance sheet and supporting schedules before submission.

2. Incorrect Foreign Shareholding Details

Foreign shareholding information is an important part of FLA reporting. Companies sometimes enter incorrect ownership percentages or investor details.

Common mistakes include:

• Reporting an incorrect foreign ownership percentage.

• Entering incomplete investor information.

• Confusing resident and non-resident shareholders.

• Ignoring changes in shareholding during the year.

• Reporting incorrect equity investment amounts.

How to avoid this mistake: Maintain an updated shareholding pattern as of 31 March and reconcile it with statutory records and foreign investment documents.

3. Missing the FLA Return Filing Deadline

The normal due date for submitting the annual FLA Return is 15 July.

Some companies miss this deadline because they are unaware of the reporting requirement or wait until their audited financial statements are finalised.

Delayed filing may require additional compliance steps under the applicable RBI procedure.

How to avoid this mistake: Add the filing deadline to the company's annual compliance calendar and start collecting the required information well in advance.

4. Assuming No Fresh Foreign Investment Means No Filing

Another common misunderstanding is that a company does not need to submit an FLA Return if it has not received new foreign investment during the current financial year.

However, an eligible company may still have a reporting obligation if foreign liabilities or assets from earlier years remain outstanding as of 31 March.

How to avoid this mistake: Review the company's complete foreign investment position rather than checking only transactions completed during the current financial year.

5. Incorrect Reporting of Overseas Direct Investment

Indian companies making investments in foreign subsidiaries or other overseas entities may need to report relevant foreign assets.

Errors can occur when companies omit overseas investment details, report incorrect investment values, use outdated financial information, or confuse ODI with FDI.

How to avoid this mistake: Maintain separate records for overseas investments and reconcile them with accounting records and ODI documentation.

6. Selecting the Wrong Financial Year

Selecting an incorrect reporting year can create inconsistencies in historical compliance records. Companies may accidentally enter current-year figures in a return relating to the previous financial year.

How to avoid this mistake: Confirm the reporting year before beginning the return and verify that all information relates to the correct position as of 31 March.

7. Not Reconciling the Return With Financial Statements

The figures reported in the return should be supported by the company's financial and investment records. If the return contains information that differs from the audited financial statements, the company may need to investigate and explain the discrepancies.

How to avoid this mistake: Complete a reconciliation exercise before filing. Review the balance sheet, investment schedules, shareholder records, and other supporting documents.

8. Entering Incomplete Investor Information

Companies may overlook important details about foreign investors while preparing the return. This can include incomplete identification details, incorrect country information, or inaccurate investment classifications.

How to avoid this mistake: Maintain an updated foreign investor database containing relevant identification, ownership, and investment information.

9. Waiting for Audited Financial Statements Without Checking RBI Instructions

Companies sometimes delay filing because their audited financial statements are not ready before the deadline.

However, RBI instructions generally provide for submission using provisional or unaudited financial figures when audited statements are unavailable by the due date, subject to applicable requirements and revision procedures.

How to avoid this mistake: Check the latest RBI instructions and prepare provisional figures where permitted. Follow the prescribed procedure if a subsequent revision is required.

10. Confusing FLA Return With Other RBI Reporting Forms

FLA Return is different from other FEMA reporting requirements. Companies sometimes assume that submitting FC-GPR or FC-TRS automatically completes their annual FLA reporting obligation.

How to avoid this mistake: Maintain a separate compliance checklist for each applicable FEMA and RBI reporting requirement.

11. Failing to Maintain Filing Acknowledgements

After submitting an FLA Return, companies should preserve the acknowledgement and supporting records.

Some businesses fail to maintain these documents, making it difficult to verify previous submissions during audits or regulatory reviews.

How to avoid this mistake: Save the submission acknowledgement, filed return, financial working papers, and relevant correspondence in a centralised compliance folder.

12. Not Reviewing the Return Before Final Submission

Submitting the return without checking the information is another avoidable mistake. Incorrect figures, missing details, and typing errors may remain unnoticed if the company does not conduct a final review.

How to avoid this mistake: Introduce a two-level review process in which one employee prepares the return and another authorised person verifies the information before submission.

13. Ignoring Previous Years' Pending FLA Returns

Some companies focus only on the current year's filing and overlook earlier reporting obligations. This may happen when the company changes its finance team, compliance consultant, or accounting system.

How to avoid this mistake: Review previous FLA acknowledgements and identify pending reporting years. Address outstanding filings through the applicable RBI procedure.

14. Not Taking Professional Assistance for Complex Reporting

FLA reporting can become complicated when a company has multiple foreign investors, overseas subsidiaries, historical investment transactions, or inconsistent financial records.

Attempting to prepare the return without adequate knowledge may increase the possibility of reporting errors.

How to avoid this mistake: Seek professional assistance when the company's foreign investment structure or reporting history requires detailed review.

Documents to Check Before Submitting an FLA Return

Before completing the online submission, companies should organise the following information:

The documents required may vary depending on the company's investment structure and reporting position.

How to Ensure Accurate FLA Return Filing

Companies can improve their reporting process by following these practical measures:

1. Review filing applicability at the end of every financial year.

2. Maintain updated foreign investment records.

3. Reconcile financial information before preparing the return.

4. Verify foreign shareholder details and ownership percentages.

5. Check the latest RBI instructions.

6. Assign responsibility to an experienced finance or compliance professional.

7. Review the complete return before submission.

8. Save the filing acknowledgement and supporting documents.

9. Monitor the annual due date of 15 July.

Following these practices makes FLA Return Filing for Indian Companies more organised and reduces the likelihood of avoidable errors.

How Professional Consultants Help With FLA Return Filing

Professional assistance can help businesses manage their RBI reporting responsibilities more effectively.

A consultant can support companies with:

• Reviewing FLA applicability.

• Checking foreign investment and overseas asset details.

• Collecting and verifying financial information.

• Reconciling investment records with financial statements.

• Preparing FLA Return information.

• Assisting with online submission through the FLAIR portal.

• Reviewing previous years' pending returns.

• Supporting applicable correction and revision procedures.

• Maintaining compliance records and acknowledgements.

This support is particularly useful for companies with complex foreign investment structures or multiple years of pending compliance.

Conclusion

Avoiding common mistakes during FLA reporting is essential for maintaining accurate FEMA compliance records. Incorrect financial figures, outdated shareholding information, missed deadlines, and confusion between different RBI reporting forms can create unnecessary compliance difficulties.

Businesses should maintain proper documentation, review their foreign investment position, reconcile financial statements, and verify all information before submission.

Companiesnext provides professional assistance with FLA Return Filing for Indian Companies, including applicability assessment, financial reconciliation, documentation, online filing support, and assistance with pending reporting requirements. Contact Companiesnext to manage your FLA compliance responsibilities accurately and efficiently.