6 October 2022
RBI's Latest Circular on Late Submission Fee for Delayed FDI Reporting
 
The concept of Late Submission Fee (LSF) was first introduced by the Reserve Bank of India (RBI) in November 2017, for delayed Foreign Investment (FI) related reporting.

Later, the scope of LSF was expanded to account for delays in reporting related to External Commercial Borrowings (ECBs) and Overseas Investment between 2019 to 2022.

Since there was variance in the quantum of LSF while imposing it across functions, the RBI vide Circular No. 16, RBI/2022-23/122 dated 30 September 2022, has now decided to bring uniformity by introducing a matrix for LSF calculation.

This will be effective immediately and shall be applicable on the delayed filings made on or after the date of this circular.
 
Matrix to be followed for calculation of LSF:

Sr. No. Type of Reporting delays LSF Amount (INR)
1. Form ODI Part II/ APR, FC-GPR (B), FLA Returns, Form OPI , evidence of investment or any other return which does not capture flows or any other periodical reporting. 7,500
2. FC-GPR, FC-TRS, 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. [7,500 + (0.025% × A × n)]

Note:
  • “n” is the number of years of delay in submission rounded-upwards to the nearest month and expressed up to 2 decimal points.
  • “A” is the amount involved in the delayed reporting.
  • Maximum LSF amount will be limited to 100 % of ‘A’ and will be rounded upwards to the nearest hundred.

Further Clarifications made by RBI:
  • Where an advice has been issued for payment of LSF and if not paid within 30 days, such advice shall be considered as null and void and any LSF received beyond the period of 30 days shall not be accepted.
  • In case the applicant is subsequently approaching RBI 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 to opt for LSF shall be available for up to 3 years from the due date of reporting/ submission.
  • Any investments eligible to be reported under the FEMA Act, 1999 (Act), are prima facie not reported or there is default in compliance w.r.t to the orders of RBI to pay LSF, such companies or persons shall be liable for penal action under the Act.
Our Comments
  1. Prior to the circular, there was an ambiguity in the levy of LSF in different regional offices of RBI across the country, combined with the lack of uniformity on a confirmed base of calculation of a delay and penalty.
  2. Owing to this circular, the RBI has taken steps to standardize the LSF across the above-mentioned reporting(s).
  3. Additionally, the period for the LSF payment has been increased to 30 days from the date of receipt of order by RBI.

The circular link is given for your ready reference.
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