RBI Revised a matrix of late submission fees / penalty under FEMA vide RBI/2022-23/122 A.P. (DIR Series) Circular No. 16 dated September 30, 2022

What is late submission fees (LSF) under FEMA as provided by the RBI?

LSF is simple process of paying a prescribed late fee to regularise reporting delays of various complianes applicable under the FEMA such as delay in reporting of Form ODI Part-II/ APR, FCGPR (B), FLA Returns, Form OPI, 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 which captures flows or returns which capture reporting of non-fund transactions or any other transactional reporting.

LSF payment is an additional facility for regularizing reporting delays without undergoing the lenghthy compounding procedure. LSF is voluntary and advisable. However, reporting party may still opt for compounding by not paying LSF.

What is the process to LSF?

Belated reporting or cmpliances received by the AD Bank are forwarded to the RBI. The RBI shall then condone the delay and issue a conditional acknowledgment subject to payment of LSF within a stipulated timeframe.

LSF is levied as per the computation matrix. Final acknowledgment of reporting shall be issued only upon payment of LSF by the reporting party.

LSF is not refundable.

LSF Matrix

Notes:

• “A” is the amount involved in the delayed reporting.

• “n” is the number of years of delay in submission rounded-upwards to the nearest month and expressed up to 2 decimal points.

• LSF amount is per return. However, for any number of Form ECB-2 returns, delayed submission for each LRN will be treated as one instance for the fixed component. Further, ‘A’ for any ECB-2 return will be the gross inflow or outflow (including interest and other charges), whichever is more.

• Maximum LSF amount will be limited to 100 per cent of ‘A’ and will be rounded upwards to the nearest hundred.

• Where an advice has been issued for payment of LSF and such LSF is not paid within 30 days, such advice shall be considered as null and void and any LSF received beyond this period shall not be accepted. If the applicant subsequently approaches for payment of LSF for the same delayed reporting, the date of receipt of such application shall be treated as the reference date for the purpose of calculation of “n”.

• The facility for opting for LSF shall be available up to three years from the due date of reporting/ submission. The option of LSF shall also be available for delayed reporting/submissions under the Notification No. FEMA 120/2004-RB and earlier corresponding regulations, up to three years from the date of notification of Foreign Exchange Management (Overseas Investment) Regulations, 2022.

• In case a person responsible for any submission or filing under the provisions of FEMA, neither makes such submission/filing within the specified time nor makes such submission/filing along with LSF, such person shall be liable for penal action under the provisions of FEMA, 1999.

Concluding Remarks:

LSF is business friendly approach which bypass the lenghthy process of compounding under the FEMA. This initiative can be viewed from the perspective of ease of doing business.