In order to promote ease of reporting under the Government of India’s e-Biz project, the Reserve Bank of India (RBI) has made e-filing mandatory in relation to Foreign Direct Investment (FDI), effective from 8 February 2016. Physical filing has been discontinued.
Crudely put, FDI is the flow of funds from a foreign entity into an Indian entity. The RBI directive impacts procedural aspects for all entities (start-ups or otherwise) seeking foreign capital through the sale of fresh or existing shares (or debentures). Interestingly, while the online platform was introduced almost a year ago, the online filing of FDI reports was made mandatory only this year.
What are these forms?
Given that it involves foreign currency, any FDI transaction must be reported to the RBI in the specified format. There are three basic reporting forms, as follows:
The information that needs to be shared in these forms includes (but is not limited to) the following:
Along with the relevant form, supporting documents in the nature of a valuation certificate from a chartered accountant, extracts of the transaction document, and copies of earlier approvals from the regulatory authorities would need to be submitted. The timeline for filing the FC-GPR is within 30 days from the date of issuing the shares or debentures, whereas the FC-TRS is to be filed within 60 days from the date of receipt or payment of the amount envisaged in the transaction.
What’s new since it went online?
These forms have been undergoing revisions since February 2014. First, the form FC-GPR was revised in order “to further capture the granular details of FDI as regards Brownfield/Greenfield investments and the date of incorporation of investee company”. Next, in July of the same year, due to a change in the industrial classification, the forms FC-GPR and FC-TRS provided a column for the company’s NIC code. Last year saw the introduction of the online facility for FDI reporting, although physical filing (offline) had not yet been discontinued.
With the focus turning towards technology through the Digital India initiative, various core services of the central and state governments – including obtaining necessary clearances, licenses and mandatory tax registrations – have moved online. Why the banks had initially shied away and procrastinated the online method of FDI filings could perhaps be blamed on technical glitches, but clearly there is no choice anymore.
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