Form FC-TRS Filing: Procedure, Document & Penalties

Introduction

Form FC-TRS is a vital compliance paperwork as per the FEMA (Foreign Exchange Management Act) for reporting the transfer of share or equity instruments between the resident and non-residents in India. This form helps to ensure that foreign transactions are regulated under the RBI guidelines and help to maintain transparency. No matter the transaction occurs as a gift or stock exchange, filing Form FC-TRS is mandatory within a particular timeframe which is 60 days from the transaction. Having a better understanding over the procedure is essential to avoid penalties and filing forms on time. In this article, we will get all the required information comprehensively which includes its meaning, purpose, document list, stepwise procedure and penalties.

What is FC-TRS?

Form FC-TRS is a statutory filing that is required to be submitted to the RBI (Reserve Bank of India) when shares or other equity of any Indian Company are transferred between resident and NR (Non-resident). FC-TRS is a mandatory compliances under the FEMA (Foreign Exchange Management Act), assure that the regulation of the foreign exchanges of India are complied with the cases of transfers of shares.

When FC-TRS Required?

The form FC-TRS (Foreign Currency Transfer of Share) is basically filing into two cases, these are as follow:

• Transfer of Shares from Resident to Non-Resident: Whenever an Indian resident transfers shares or other equity instruments of an Indian company to a non-resident, the FC-TRS form must be filed.
• Transfer of Shares from Non-Resident to Resident: A non-resident must also file the FC-TRS form when transferring shares or equity instruments to an Indian resident.

In both aforementioned cases, the form FC-TRS is mandatory to be submitted in a particular timeframe which is 60 days of the share transfer. The Foreign Exchange Management Act (FEMA) governs foreign exchange regulations. Cross-border transactions require this filing to track Foreign Direct Investments (FDI) and maintain regulatory transparency.

Required Documents for FC-TRS Filing

There are some required documents that have to be attached with the FC-TRS form as per the transfer type. The complete list is as mentioned below:

Stepwise Procedure for FC-TRS Filing

Here, is the stepwise procedure for FC-TRS filing given below:

Step 1: Creation of Entity user/Entity Master

For first time filings, New Entity Users login needs to be created for the company first. In the new entity user basic company details like CIN no , authorized person email etc along with authority letter attachments goes . It is approved by the AD bank in 1-2 days.

Once an Entity user is created, login id and password comes on authorized person email . After this entity user form is filed with issue details and other company basic details . It is approved by AD bank in 2-3 days.

Step 2: Registration of New business User

Once Entity master form is approved , new business user registration needs to be done .It is basically authorized person login to report the transactions for the entity that has authorized him during entity master registration.Further, at the time of registration, BU has to select the IFSC code of the bank which would approve the eKYC and the reporting would be made in SMF. In case the IFSC details are changed i.e BU wishes to submit the reporting to another branch or another bank, the entity being the same, he/she needs to repeat the registration process for Business users with the new IFSC code and obtain separate Login.

After BU submits the registration form, the same will have to be verified by the AD Bank Branch concerned. The approval/ rejection of the same would be communicated through email notification to the BU.Once approved login id and password comes through email .It generally takes 4-5 working days to get business user registration.

Step 3: Login into FIRMS Portal and Reset Password

Once a business user is created , login to the firm's portal using id and password and reset default password .

Step 4: Login SMF for form filing and submission

Single Master form ( SMF ) is a master form which provides for the reporting of 9 forms for foreign investment viz., FC-GPR, FC-TRS, LLP-I, LLP-II, CN, DRR, ESOP, DI, InVi. Before FC-TRS form filing, you have to login into the Single Master Form (SMF) section via the FIRMS Portal. Basically this section is for reporting foreign investment. Click on a dropdown menu tab of Return type. Click on it and then select Form FC-TRS. Next, go with Add New Return. Here, the FC-TRS form will open where you need to provide all the required and necessary information related to the foreign investment such as types of transaction and related information. These are common investment details to all forms.

Step 5: Complete the FC-TRS form

Here, You will get some tabs, fill all of them accordingly:

Tab 1: Common Details: In this tab some basic and general information have to fill regarding the transfer.

Tab 2: Transfer Details: Here, you need to input particular details of transfer including the type of transaction, parties involved and other transfer terms.

Tab 3: Remittance Details: In this tab, you need to give details of the remittance made in case of a sale. (For gifts, this tab is not required to fill).

Tab 4: Shareholding Pattern: The new shareholding structure should be updated or input after the shares have been transferred.

Step 6: Submit the form

At the end, when all these aforementioned tabs are done, you have to save and submit the form to the RBI or save as Draft if you want more time to review it for later. Click Reset if you wish to reset all the information and start afresh, or Back if you wish to return to the dashboard without saving.

Approval or resubmission will be communicated by RBI via mail . In case of any query , forms need to be resubmitted with documents asked . If approved , fee and bank details will be shared by RBI and needs to be paid within 7 days of approval. No other acknowledgement will be shared from the RBI end.

Fees for Form FC-TRS Filing

There are no government fees required for Form FC-TRS Filing, but the professional fees may vary as per their expertise. At Bizfoc, We provide this service at a minimum rate of Rs. 4,999 only, assuring the accurate compliance and effective reporting requirements.

Penalties in Delay Filing

If there is any delay to file FC-TRS (Foreign Currency-Transfer of Share) form, the company has to face penalties as per the FEMA guidelines. There is a penalty of Rs.7,500 + (0.025% × A × n) or late reporting.

As per the RBI’s circular, the maximum LSF amount cannot exceed the amount involved in the delayed reporting.

In case even Late submission fee is not paid within 3 years , Penal action under FEMA , 1999 will be taken.

Note:

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

b)   “A” is the amount involved in the delayed reporting.

Time taken in Form FC-TRS Filing

The time taken for Form FC-TRS filing basically depends upon the documentation and the transaction's complexities. If all the required documents are accurate and filled accurately, generally it will take 10 to 15 days. Furthermore, the timeframe may vary according to the specific situation and scenarios. Bizfoc ensures your filing process in just 15 days, that includes many steps that assure the accurate compliances such as documentation, preparation, verification and many more to complete the procedure more effortlessly.

How can Bizfoc help you?

Bizfoc provides a comprehensive professional guidance over FC-TRS filing that guarantees compliance with FEMA guidelines. Our service includes:

1)   Expert Guidance: Our professional team will provide expert and detailed advice over FC-TRS form filing accurately that covers each required information.

2)   Document Preparation: Our expert team helps you to collect and prepare all the necessary documents that make your procedure more fluent.

3)   Form Submission: We have a number of experienced team members who ensure timely and accurate filing that also avoids hefty penalties.

Connect with us and make your FC-TRS filing procedure easier and penalty free.

Conclusion

FDI Reporting (FC-TRS form filing) is vital for compliance with FEMA regulation. Bizfoc is here to make your FC-TRS process more seamless for you. Using our expert guidance, document preparation, and filing services, we ensure that your company avoids penalties and maintains a smooth relationship with regulators. Trust Bizfoc to manage your FC-TRS filing accurately, assuring you to focus on business growth while we take care of the compliance details.

Frequently Asked Questions