REPORTING IN SINGLE MASTER FORM (new reporting structure- FDI)

REPORTING IN SINGLE MASTER FORM (new reporting structure- FDI) The Reserve bank of India has announced the new reporting structure for FDI related transactions in which they have combined different reporting into a single combined form i.e. the Single Master Form (the SMF)which subsumed all the existing reporting in different forms such as ARF, FCGPR, FCTRS etc. Also, by the implementation of this new structure, a new reporting online portal (FIRMS) has been introduced in place of EBIZ. FIRMS is an online reporting platform for reporting of foreign investment in India in SMF. It provides one online platform, 24*7 reporting facility for the users. Relevant source of reading available on RBI site in this reference:

1. First Bi-monthly Monetary Policy Review dated April 5, 2018;
2. A. P. Dir. Series Circular No. 30 dated June 07, 2018;
3. User manual for Entity Master;
4. User manual for SMF FIRMS Application

IMPLEMENTATION OF THIS NEW SYSTEM: Reserve Bank of India has introduced two phases for making required reporting under the new system. 1. IN THE FIRST PHASE :Entity Master Form (the "EMF"), was made available. Under this, the Indian entities (Companies, LLPs or startup) which have received the foreign investment in the past are required to register them by filing this form. The window to enter the information in the EMF was initially opened from 28/06/2018 to 20/07/2018 but the RBI again reopened the window from 01/09/2018, for those Indian entities, which were unable to upload their details under the EMF by submitting the reason for delay along with authority letter (prescribed by RBI). The entity will authorize one person by issuing authority letter in his/her favour and who will be eligible to add/update the foreign investment details of an Entity in the Entity Master and would be entirely responsible for the data entered.

2. IN THE SECOND PHASE : RBI has introduced SMF on 01/09/2018 and merged 9 reporting forms into a single form, RBI also released a user manual (the "SMF Manual") which clearly prescribed the procedure for filing a single master form (the "SMF"). REPORTING IN SMF (provide one platform for making a different kind of reporting) The SMF form has merged 9 forms and will be filed through SMF only.

CONCLUSION: RBI introduced this new system for smoothening the reporting system for transactions which are FDI related. All forms which used for making required reporting to RBI has been combined in one form so that user can access one common platform for all reporting but unfortunately, this new system also brought some difficulties which make this system complicated for users. Manual for SMF FIRMS application specified some instructions to AD(s) for handling the reporting but still users face lots of difficulties while making the reporting such as asking for additional documents, no resubmission is allowed due to which user needs to file fresh form every time resulting into chances of late fees, etc. Frequently Asked Questions (areas of discussion for clear understanding): 1. First step for making the required reporting under the new structure Registration as Entity user is the initial step in the new reporting system, if you are registered as Entity user then you can file the Entity Master for providing the details of Foreign Direct Investment including indirect foreign investment. Submission of Entity master does not mean that you have done regulatory filings under FEMA 20(R). You firstly need to go onhttps://firms.rbi.org.in/firms/ and select Registration Form for Entity User. 2. What does mean Entity and Entity user

• A company within the meaning of section 1(4) of the Companies Act, 2013;
• A Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008;
• A startup which complies with the conditions laid down in Notification No. G.S.R 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India

They need to authorize one person who would be solely authorized to add/update the foreign investment details of an Entity in the Entity Master and would be entirely responsible for the data entered, this person is known as Entity User. 3. Can Entity user be changed Yes, if the entity wishes to change the Entity user, it may contact RBI helpdesk, the details of which are available under Contact Us onhttps://firms.rbi.org.in/firms/. Also, the Entity may send a request [email protected] for updating the registered email id and resetting the password. 4. Documents required to register the entity for Entity master form

• A signed copy of authorization letter in the prescribed format which is available in user manual for Entity Master;
• A copy of pan card of authorized person;
• A copy of pan card of the entity.

Maximum attachment size is 1 MB for all attachments. 5. How will the Entity get the registration for filling the Master Entity Form Authority Letter submitted by the entity user will be verified by RBI and after RBIs approval, the user will receive the password on their registered email ID from RBI email ID [email protected]. (Note: If the user does not receive the mail notification for approval/rejection of the registration within the next 48 hrs. he/she may contact [email protected]). 6. How to rectify the wrong data filled in Entity Master For any correction in the entity master details, the request can be made [email protected] [email protected] in the following format:

• User ID:
• CIN/LLP Number:
• Registered Email Id:
• Issue description (Reasons for the change):
• What are the changes need to be done :

Sr. No.	Data field to be updated	Oldvalue (existing)	New Value (to be updated)
xxx	xxxx	xxxx	xxx
xxx	xxxx	xxxx	xxx
xxx	xxxx	xxxx	xxx

In case of rejection of registration, use another User Name for fresh registration (other than the one given earlier). 7. What to do if registration is canceled by RBIAlso, a signed request letter is required from the Director/MD/authorized signatory of Company or Designated partner of LLP for confirming such change. 8. How to proceed for the second step for completing mandatory reporting of FDI related transactions After getting the Entity user registration, the entity required to get the business user registration as well. For this, you need to go on https://firms.rbi.org.in/firms/ and select Registration Form for Business User and fill the necessary details and attach the authorization letter (the format of this letter is given in user manual for SMF). Please note that this registration can also be availed by the individual in a case where the resident individual is required to report. 9. During filing a form in SMF, the pre transactions values in the shareholding pattern are not correct The pre-transaction values in the Shareholding pattern are carried from the details entered in the Entity Master. Please check the same and if the entries filled in entity Master are wrong then you can apply for rectification. Please see pt.no. 6. 10. After filing the form in SMF, how we can get the update on the filing AD process such filing, contact your AD bank to whom the reporting was made (as per the IFSC chosen or branch at the time of Business User registration). 11. Maximum time provided to AD for processing the form All forms filed in the SMF shall be processed within 3 working days of receiving the same. 12. Who will process the filed form and the pattern of processing of form A set of the checklist as applicable to that particular return is being provided to the AD bank along with the filed form. AD bank is required to check only those details and if found to be in order, approve the return. In case the Business user has not provided the details, AD Bank shall reject the form. It may be noted that there is no provision for resending or resubmission or attaching any clarification once the form is submitted. Therefore, AD may take due caution while approving or rejecting the same. In exceptional cases where for the specific reasons the AD needs to refer the form to RBI. RBI would provide the advice on whether the form be approved or rejected to the AD bank. 13. Whether ARF is required to be filed in SMF With the introduction of SMF, ARF has been discontinued effect from September 01, 2018. Now, the user is required to make a report of FDI received in the section under FCGPR only. 14. What happens in case of delay in reporting User needs to attach the reason for the delay and AD may be forwarded to the respective Regional office for advice on Late Submission Fee (LSF) as may be decided by the Reserve Bank, in consultation with the Central Government, for any delays in reporting. 15. Whether compounding option is available for reporting delays The payment of LSF is an additional facility for regularising reporting delays without undergoing the compounding procedure. However, this does not mean that the applicant cannot apply for compounding. Both options are available to the applicant for the transactions undertaken on or after November 7, 2017. a). Amount of LSF prescribed by RBI for delay reporting

Amount involved in reporting (in Rs.)	Late Submission Fee (LSF) as % of amount involved *	Maximum amount of LSF applicable
Up to 10 million	0.05 percent	Rs.1 million or 300% of the amount involved, whichever is lower
More than 10 million	0.15 percent	Rs.10 million or 300% of the amount involved, whichever is lower
* The % of LSF will be doubled every twelve months;The floor (minimum applicable amount) for LSF will be Rs. 100

The amount involved X time rounded off to the next higher month X 0.05 % or 0.15 % as the case may be. For the purpose of calculation, months shall include Sundays/ Holidays;16. Some checks for LSF for delay reporting

• In case the reporting form (whether in physical or electronic form) is incomplete then the delay will continue till such time the form is received complete in all respects. Hence, you need to be assured that all the mandatory information and documents are filed with the AD. Incomplete form will result into rejection of your form and you need to submit the fresh form.
• The late submission fee is for reporting delays only. Contravention for non-issue/ late issue of capital instruments or non-transfer/ late transfer of capital instruments and other contraventions of the provisions FEMA 20(R) will be proceeded against as per the procedure laid down in sections 13 and 15 of FEMA, 1999.
• The LSF may be paid by way of a demand draft drawn in favour of Reserve Bank of India and payable at the Regional Office concerned.

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