COMPREHENSIVE GUIDE TO FILING FORM FC-TRS
1. Introduction to Form FC-TRS:
Form FC-TRS, or Foreign Currency-Transfer of Shares, is a vital document under the Foreign Exchange Management Act (FEMA) in India. It is used for reporting share transfer transactions involving non-residents. This guide will take you through a step-by-step procedure, covering all aspects of filing Form FC-TRS.
2. Determining the Requirement:
Before initiating the filing process, it's crucial to determine whether Form FC-TRS is required based on the type of share transfer. Refer to the provided scenarios to understand the applicability.
3. Types of Capital Instruments Covered:
Identify the specific type of capital instrument involved in the transaction, such as equity shares, compulsorily and mandatorily convertible preference shares (CMCPS), or debentures.
4. Parties Liable to File Form FC-TRS:
4.1 Resident Involvement:
- If a resident is part of the share transfer as a transferor or transferee, they are responsible for filing Form FC-TRS.
4.2 Non-Resident on Non-Repatriable Basis:
- In transactions without resident involvement, the responsibility falls on the non-resident holding capital instruments on a non-repatriable basis.
5. Time Limit for Filing:
The Authorized Dealer (AD) bank must receive Form FC-TRS within 60 days from the earlier of the date of transfer of capital instruments or the date of receipt/remittance of funds.
6. Procedure for Filing Form FC-TRS:
6.1 Registration for Business User (BU):
6.1.1 Visit FIRMS Website:
- Go to https://firms.rbi.org.in to register as a Business User.
6.1.2 New Business User Registration:
- Click on "Registration for New Business Users."
- Fill in required details, ensuring a unique username.
- Include Investee Company details during Business User profile creation.
6.1.3 Submission and Approval:
- Submit the form for approval.
- AD Bank Branch will confirm or reject the proposal through email.
6.2 Logging into FIRMS:
6.2.1 Login Process:
- Visit https://firms.rbi.org.in.
- Use the provided username and default password sent via email.
- Set a new password.
6.2.2 Accessing Workspace:
- Log in to FIRMS to access the Business User's workspace.
6.3 Form FC-TRS Filing:
6.3.1 Selecting Form FC-TRS:
- Under "File Return," choose "Form FC-TRS" and click "Add New Return."
6.3.2 Common Investment Details:
- Provide details such as CIN, Company Name, PAN Number.
- Select the Entry Route of received FDI and the Applicable Sectoral Cap/Statutory Ceiling.
6.3.3 Common Details:
- Specify transfer details like the type of transfer, transfer from/to, and date of transfer.
- Indicate whether the change in the shareholding pattern has been accounted for.
6.3.4 Particulars of Transfer:
- Include details about the type of capital instrument, number of instruments, conversion ratio, and transfer price.
- Specify the nature of the transfer.
6.3.5 Remittance Details:
- Enter details about the mode of payment, AD bank, amount remitted, and tranche number.
- Declare indemnity arrangements if applicable.
6.3.6 Shareholding Pattern:
- Submit pre-transaction and post-transaction shareholding details.
6.3.7 Declaration and Submission:
- Confirm that all details are accurate.
- Submit the form and make the necessary declaration.
7. Documents to be Attached:
7.1 For Transfer by Gift:
- Regulatory Approvals.
- Consent Letter.
- Non-Resident Declaration.
7.2 For Transfer by Sale:
- Transfer Agreement.
- Valuation Certificate.
- Non-Resident Declaration.
- Acknowledgement of FC-TRS (for non-resident sellers).
- FIRC/Outward Remittance Certificate.
- KYC Documents.
8. Importance of Accurate Information:
Ensuring accuracy in the information provided is critical. Any discrepancies can lead to compliance issues, requiring corrections and potentially causing delays.
Form FC-TRS is an integral part of the regulatory framework for cross-border share transfers. Adhering to the procedural guidelines and submitting accurate information within the stipulated timeframe is essential for a smooth and compliant transaction process.
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