FEMA Export in Delhi
Fema Experts
Did you set up a company abroad under ODI but missed filing the Annual Performance Report (APR) on time? You’re not alone — and yes, RBI notices this.
In this article, we break down:
✅ What is APR and why it matters
⚠️ What happens if APR is not filed on time
📄 Real compounding cases for late/non-filing
💡 How to rectify the situation and avoid penalties
📘 What Is APR?
APR (Annual Performance Report) is a mandatory filing under Foreign Exchange Management (Overseas Investment) Rules, 2022, for any Indian entity or individual who has made an Overseas Direct Investment (ODI).
It must be submitted annually by 31st December for the previous financial year via the FIRMS portal.
Even if the foreign entity is dormant or made a loss — APR must be filed.
⚠️ What Happens If You File APR Late?
1. 🛑 No Further ODI Allowed
- AD Banks will not allow any further remittance or investment in the foreign entity or elsewhere unless previous APRs are submitted.
2. 🏦 UIN Suspension or Deactivation
- RBI may deactivate or cancel the UIN (Unique Identification Number) of the foreign entity.
3. 📉 Non-compliance Flagged in RBI Audit
- Your bank could flag the account as FEMA non-compliant and may be required to report it to RBI/ED.
4. 🧾 Compounding Required
- Delays over a reasonable period (especially more than a year) can trigger the need for compounding under FEMA.
🧾 Real RBI Compounding Orders for Late APR Filing
📍 Case 1: Individual ODI in UK – Delay of 2 Years
- Facts: Individual investor failed to file APR for two years.
- Penalty Imposed: ₹10,000 per reporting year
- RBI Note: Accepted investor’s submission that the entity was dormant.
📍 Case 2: Indian Company – APR Not Filed for 5 Years
- Facts: Company invested in a wholly owned subsidiary in Singapore but never filed APR.
- Action: Remittances frozen by AD Bank.
- Compounding Fee: ₹75,000
- Outcome: Allowed further investment only after compounding and APRs were filed.
📍 Case 3: Dormant Subsidiary – APR Filed Late, No Income
- Facts: No activity in foreign entity; APRs delayed by 3 years
- Defense: Company unaware APR required even for dormant units
- Penalty: ₹30,000 consolidated
- RBI View: Ignorance not a valid reason but leniency given due to no fund misuse
🧮 Compounding Fees: How Much?
| Delay Period | Approximate Penalty* |
|---|---|
| < 1 year | ₹10,000–₹20,000 |
| 1–3 years | ₹25,000–₹50,000 |
| >3 years | ₹50,000–₹1,00,000+ |
*Based on actual RBI compounding orders — may vary by case & AD bank
💡 How to Fix It (If You Missed the Deadline)
- File the overdue APR immediately on FIRMS portal
- Write a letter of explanation to your AD bank
- Request for condonation of delay or initiate compounding proceedings
- If APRs of multiple years are pending, file them chronologically
- Ensure all foreign bank accounts and financials are available
✅ Best Practices to Avoid Penalty
- Maintain a calendar reminder for APR (due by 31st December every year)
- Keep foreign entity’s audited financials ready by September
- File even if entity is inactive or incurring loss
- Use a professional FEMA consultant for ODI monitoring
🧠 Final Thoughts
APR filing isn’t just a formality — it’s a key compliance indicator that RBI uses to track how you’re managing overseas investments. Missing the deadline once may be overlooked, but repeated non-compliance can:
- Freeze future investments
- Bring compounding penalties
- Trigger ED scrutiny (in worst-case scenarios)
💬 Need Help with Late APR Filing or Compounding?
We’ve helped dozens of clients file backdated APRs, liaise with banks, and even settle RBI compounding cases with minimal penalties.