Regulation 10 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Regulation 10(4) requires a person resident in India who has ODI to submit an Annual Performance Report (APR) for each foreign entity every year by 31st December, with two exemptions and an Explanation on accounts, joint filing and what the report must show. Regulation 10(5) requires an Indian entity with ODI to submit an Annual Return on Foreign Liabilities and Assets to the Reserve Bank's Department of Statistics and Information Management. Paragraph 17(3) of the Master Direction adds on certification and joint filing.
As per the copy of the notification consulted (No. FEMA 400/2022-RB, as notified on 22 August 2022), the APR for each foreign entity is due every year by 31st December, and where the foreign entity's accounting year ends on 31st December, by 31st December of the next year. It is not required where the Indian party holds less than 10 per cent of equity without control and has no other financial commitment, or where the foreign entity is under liquidation. The FLA return goes to the Department of Statistics and Information Management within the time the Reserve Bank decides.
The text and its footing
The Regulations are made by the Reserve Bank under sub-section (1) and clause (a) of sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999; see sections 47 and 48 and section 6. The text is taken from a third-party copy of the notification as notified on 22 August 2022; later amendments are not shown. The Master Direction - Overseas Investment (FED Master Direction No.15/2024-25, July 24, 2024, "Updated as on April 01, 2026") is read beside it. Later amendments and circulars should be checked on the Reserve Bank and Gazette sites. The form for the APR is in the Master Direction on Reporting, which is not in the sources consulted; the form is named only. For help with an APR, our APR filing for ODI team prepares and files it.
Regulation 10(4): the APR
A person resident in India acquiring equity capital in a foreign entity which is reckoned as ODI shall submit an Annual Performance Report with respect to each foreign entity every year by 31st December. Where the accounting year of the foreign entity ends on 31st December, the APR shall be submitted by 31st December of the next year.
Who is exempt (the proviso)
No such reporting is required where:
- a person resident in India holds less than 10 per cent of the equity capital without control in the foreign entity, and there is no other financial commitment other than by way of equity capital; or
- the foreign entity is under liquidation.
Both limbs of clause (1) must be met: under 10 per cent, no control, and no financial commitment besides the equity. A loan or a guarantee to the foreign entity takes the investor out of the exemption.
The Explanation
- (a) Accounts. The APR is based on the audited financial statements of the foreign entity. Where the person resident in India does not have control and the laws of the host country or jurisdiction do not provide for mandatory audit, the APR may be based on unaudited financial statements certified as such by the statutory auditor of the Indian entity, or by a chartered accountant where statutory audit is not applicable.
- (b) Several investors. Where more than one person resident in India has made ODI in the same foreign entity, the person holding the highest stake submits the APR; where holdings are equal, the APR may be filed jointly.
- (c) What the APR must also report. Details regarding acquisition, setting up, winding up or transfer of a step down subsidiary, or alteration in the shareholding pattern of the foreign entity, during the reporting year.
Paragraph 17(3) of the Master Direction
The APR is certified by a chartered accountant where statutory audit is not applicable, including in the case of resident individuals. Where the APR is to be filed jointly, either one investor may be authorised by the others to file, or the investors may jointly file.
Regulation 10(5): the FLA return
An Indian entity which has made ODI shall submit an Annual Return on Foreign Liabilities and Assets "within such time as may be decided by the Reserve Bank from time to time", to the Department of Statistics and Information Management, Reserve Bank of India. The Regulations do not print a date; the Reserve Bank decides it. Our guides on the FLA return, its purpose and applicability and how to file it cover the practice. The Master Direction on the point lists the FLA Return among the returns for which a late submission fee of a fixed amount applies; see the article on regulations 11 and 12.
| Return | Who files | When | Where |
|---|---|---|---|
| APR | Person resident in India with ODI, for each foreign entity | By 31st December every year (next year's 31st December if the foreign entity's year ends on 31st December) | Through the designated AD bank (regulation 10(1)) |
| FLA return | Indian entity which has made ODI | Within such time as the Reserve Bank decides | Department of Statistics and Information Management, Reserve Bank of India |
Example
Ratnagiri Chemicals Ltd has ODI in two foreign entities: A, with a financial year ending 31 March, and B, with a financial year ending 31 December. For A, the APR is due by 31st December each year. For B, because its accounting year ends on 31st December, the APR is due by 31st December of the next year. Ratnagiri Chemicals holds 7 per cent of A without control, and has lent no money to A, so the proviso exempts it from the APR for A. For B, it holds 40 per cent and a loan, so the APR is required. If a second Indian company holds a larger stake in B, the person holding the highest stake submits the APR under Explanation (b). Ratnagiri Chemicals' APR for B must also mention the setting up of a step down subsidiary during the year, as Explanation (c) requires.
Common mistakes
- Missing the next-year rule for foreign entities with a 31st December year-end.
- Relying on the exemption when there is also a loan or guarantee.
- Using unaudited statements where the investor has control; the relaxation is only where there is no control and the host law does not require audit.
- Forgetting to report changes in step down subsidiaries or shareholding in the APR.
- Assuming the FLA return has a date in the Regulations; the date is decided by the Reserve Bank.
Need help with the APR?
An APR draws on audited accounts of the foreign entity, the shareholding pattern and the step down structure, and a missed date costs a late submission fee. Our APR filing for ODI team can collect the data and file it through your bank.
Key takeaways
- The APR is annual, per foreign entity, due by 31st December (or the next year's 31st December for a 31st December year-end).
- The exemption needs less than 10 per cent, no control and no other financial commitment; liquidation also exempts.
- Audited statements are the rule; unaudited certified statements only where there is no control and no mandatory audit abroad.
- The highest stake files; equal holders may file jointly.
- The FLA return goes to the Department of Statistics and Information Management at a time decided by the Reserve Bank.
Read next
- Reporting requirements: regulation 10(1) to (3)
- Late submission fee and bar on further commitment: regulations 11 and 12
- How to file the FLA return with RBI
- Overseas direct investment under the 2022 Rules: limits, Form FC and the APR
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.