Late Submission Fee (LSF) under FEMA

Foreign Exchange Management Act (FEMA) establishes a set of laws that govern foreign exchange in India. Introduced in 1999, FEMA replaced the Foreign Exchange Regulation Act (FERA) of 1973.

A Late Submission Fee (LSF) was introduced to report instances where there have been delays in transactions related to External Commercial Borrowings (ECBs), Foreign Investment (FI) and Overseas Investment with effect from 7 November 2017, 16 January 2019 and 22 August 2022 respectively.

It has extensively helped the Government to handle procedural lapses in a much quicker and efficient manner. It was decided that a certain uniformity shall be brought into the imposition of LSF across all functions.

How is LSF Calculated?

Whenever LSF needs to be calculated, the following table must be referred to:

S. No.	Type of Reporting Delays	LSF Amount (INR)
1	Form ODI Part-II/APR, FCGPR (B), FLA Returns, Form OPI, evidence of investment or any other return that does not capture flows or any other periodical reporting.	7500
2	FC-GPR, FCTRS, Form ESOP, Form LLP(I), Form LLP(II), Form CN, Form DI, Form InVI, Form ODI-Part I, Form ODI-Part III, Form FC, Form ECB, Form ECB-2, Revised Form ECB or any other return that captures flows or returns that capture reporting of non-fund transactions or any other transactional reporting.	[7500 + (0.025% x A x n)]

• ‘n’- number of years of delay in submission, which is rounded upwards to the nearest month and written up to two decimal points.
• ‘A’ – Amount concerned in delayed reporting.

The LSF amount is calculated per return. However, irrespective of the number of Form ECB-2 returns, the delayed submission for each Loan Registration Number (LRN) shall be treated as one incident for the fixed component.

Note: ‘A’ for any ECB-2 return shall be the gross inflow or outflow (whichever is more), and which includes the interest and other relevant charges.

The maximum LSF shall be limited to 100% of ‘A’ and rounded upwards to the closest hundred.

• Instances where some advice is issued to pay LSF and it has not been paid within 30 days, such advices shall be deemed null and void and no LSF payments shall be accepted after this period. If the individual wants to pay LSF for the same delayed reporting, the date of receipt of their application shall be considered as the reference date when calculating for ‘n’.

Applicants may avail of the facility to opt for LSF up to three years from the reporting/submission due date. For delayed reporting/submission, the option of LSF shall be available for up to three years from the date of notification by Foreign Exchange Management (Overseas Investment) Regulations, 2022.

• Anyone responsible for submission/filing under the provisions of FEMA, who does not submit/file within the time allotted and fails to make such submission/filing along with the calculated LSF, may face penal action under the provisions of FEMA, 1999.

Due Dates for RBI Reporting

FC-GPR (Form Foreign Currency-Gross Provisional Return)

An Indian company that issues equity instruments to individuals residing out of India and where such issue is reckoned as FDI, defined under the rules, shall report the issue in Form FC-GPR within 30-days from the date when securities were allotted.

FC-TRS (Foreign Currency-Transfer of Shares)

The FC-TRS must be filed within 60 days of equity instruments’ transfer or receipt/remittance of funds (whichever of them is earlier).

FLA – Annual return on Foreign Liabilities & Assets

15 July of every year.

ECB-2

Within 7 days from the month-end.

Form CN

Within 30 days from the date when convertible notes were issued.

Form LLP (I)

Any Limited Liability Partnership (LLP) that receives a consideration amount for capital contribution and acquisition of profit shares must file a Form LLP (I) within 30 days from the date they receive the consideration amount.

Form LLP (II)

The disinvestment/transfer of profit shares between a resident and non-resident may be filed in Form LLP (II) within 60 days from the date of receiving the funds. The resident transferor/transferee shall be the one responsible for reporting in such instances.

Form InVI

Form InVI must be filed within 30 days from the date of issuance of units in cases where investment vehicles have issued its units to an individual residing out of India.

Late Submission Fee: Payment Procedure

• Applicants may receive an email from the Reserve Bank of India under ‘Remarks’ to pay the late submission.
• The email shall specify the amount that needs to be paid as the late submission fee.
• This amount must be paid within 15 days through a Demand Draft in favor of the Reserve Bank of India.
• The Demand Draft and a covering letter must be delivered to the concerned regional office of the Reserve Bank of India either by speed post or personally by the applicant.
• Post doing this, a soft copy of the below mentioned documents must be sent through an email to the Reserve Bank of India while marking the AD Bank’s email address in the CC that is available on the FIRMS portal.
          Demand Draft’s soft copy
          Covering letter
          Speed post receipt
          LSF email received from RBI
• The Reserve Bank of India shall send a confirmation of receiving the Demand Draft through an email.

Conclusion

To reiterate, one may avail of LSF up to three years from the reporting/submission due date. And it should be noted that LSF is applicable only in instances where there is a delay in reporting.


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