Understanding FC-GPR Filing: A Comprehensive Guide for Foreign Entities in India

Introduction

Foreign Entities registered in India looking to raise foreign capital from foreign investors should ensure to comply with a variety of regulatory frameworks as mandated by RBI and Companies Act. One of the most crucial aspect of raising funds from foreign investors is to file the Foreign Currency Gross Provisional Return (FC-GPR) to ensure that the company is compliant with FEMA Regulations.

Today, in this blog post, we will explore about about the FC-GPR, the filing process, various RBI compliance requirements as mandated by law, and the legal penalties / interest for non-compliance.

What is FC-GPR?

The FC-GPR form is a mandatory RBI reporting document that entities in India should ensure to submit to the Reserve Bank of India (RBI) after receiving foreign Investment or foreign direct investment (FDI) from an foreign investor. The purpose of submitting FC-GPR with the RBI is to provide as a declaration of the capital instruments offered to foreign investor, to maintain transparency and adhere  to the Foreign Exchange Management Act (FEMA) in India.

Importance of FC-GPR Filing

Filing the FC-GPR is essential for:

• Legal Compliance: It will ensures that company is compliances with RBI & FEMA rules and regulations.
• Avoiding Fines: Failure to file forms on time might lead to financial fines under the FEMA Act and various other legal act.
• Building Investor Confidence: Ensuring compliance promotes trust among foreign investors.

Who Needs to File FC-GPR?

It is mandated by FEMA Guidelines that when an Indian Entity (Private Limited Company, LLP, or Startup as defined by Startup India) receiving foreign direct investment from Foreign Investors, they should submit the FC-GPR form to the RBI. The Entity that issue equity shares, convertible preference shares, or convertible debentures to international or foreign investors.

The FC-GPR Filing Process : Filing the FC-GPR involves several steps as mentioned below:

• Register on the FIRMS Portal: Companies must register through the Foreign Investment Reporting and Management System (FIRMS) site.
  Preparing the Required Documents: The following documents are required for filing.
• Declaration in accordance with RBI requirements.
• The CS Certificate confirms legal acceptance.
• Valuation certificate from a registered valuer or merchant banker.
• Board Resolution for allotment of shares to foreign investor.
• FIRC and KYC paperwork for foreign investors who are investing in Indian Entity.
  

Submission of the FC-GPR: The completed form must be filed within 30 days of the allocation of shares.
The Authorized Dealer (AD) Bank has five working days to approve or reject the request.

Penalties for Non-Compliance

Failure to file the FC-GPR form on time can result in significant penalties, such as a fee of INR 5,000 or 1% of the investment amount for the first six months.

Added penalties for delays greater than six months, potentially double the initial fines.

Best Practices for FC-GPR Compliance

• Timely Filing: Make sure the FC-GPR is filed within the 30-day limit.
• Documentation: Keep all relevant documentation obtained and easily available and contact your tax advisor if you require any assistance.
• Consult a CA about FC-GPR compliance: Consider seeking expert guidance from compliance experts to manage difficult requirements.

Conclusion

Understanding and complying with FC-GPR reporting procedures is critical for companies receiving foreign investment in India. Company can avoid penalties and remain in compliance with regulatory standards by submitting documents on time and accurately.

FAQ

1. What is the FC-GPR?‍

FC-GPR stands for Foreign Currency Gross Provisional Returns. When an Indian Entity receive foreign direct investment (FDI), they should submit a reporting form to the Reserve Bank of India (RBI).

2. Who needs to file an FC-GPR?‍

Indian Entity that gets foreign direct investment (FDI) should ensure to submit the FC-GPR form to the RBI.

3. What are the penalties for failing to file FC-GPR on time?‍

Failure to file the FC-GPR form within 30 days after receiving FDI may result in penalties, including an INR 5,000 fee or 1% of the total investment amount for the first six months of delay. Delays of more than six months may result in penalties that double.

4. Which documents must be filed with the FC-GPR?

‍Important documents required for filing an FC-GPR include a declaration in accordance with RBI requirements, a certificate of valuation, a CS certificate attesting to compliance, a board resolution authorizing the allotment of shares, and documents such as the foreign investor's FIRC and KYC.

5. How can I submit an FC-GPR?‍

Companies must register on the FIRMS (Foreign Investment Reporting and Management System) online before they may submit an FC-GPR. The FC-GPR form must be completed within 30 days after the share allocation. Five working days are given to the Authorized Dealer (AD) Bank to accept or reject the submission.

If your company intends to accept foreign direct investment and requires assistance with FC-GPR filing, please contact us at akash@jordensky.com for expert guidance and support. Don't risk penalties—comply with FC-GPR!