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ANNUAL PERFORMANCE REPORT for foreign entities



The Foreign Exchange Management Act (FEMA) is the critical piece of legislation in India, regulating foreign exchange transactions, investments, and payments. It encompasses various aspects of international financial dealings, including the requirement for companies to submit a mandatory Annual Performance Report (APR). It was introduced in 1999 to replace the previous Foreign Exchange Regulation Act (FERA) and is aimed at facilitating external trade and payments and promoting orderly development and maintenance of the foreign exchange market in India. Here, we will explore the importance of the APR report, frequency, due date, Penalties, its relation to audited financial statements, and recent amendments that impact this requirement.

Understanding the Annual Performance Report (APR)

The Annual Performance Report (APR) is a crucial document required under FEMA for monitoring and regulating foreign investments and ensuring compliance with FEMA regulations. It is essentially a comprehensive report that provides details on the financial and operational performance of the company to its foreign investors.

Key aspects of the Annual Performance Report:

  1. Reporting Requirement:

    It is mandatory for investment made outside India by resident Individual, and resident non Individual (both) for Investment in Joint ventures (JV), Wholly owned subsidiary(WOS) both outside India.

  2. Frequency and Due Date:

    The APR must be submitted annually. The due date for filing the APR is December 31st each year.
    Non filling of APR up to December 31st every year be treated as violation under FEMA and late submission fees (LSF) as per overseas Direct Investment Regulations shall apply.

  3. Contents of APR:

    The Annual Performance Report contains various financial and operational details, including:

  • Audited Financial Statements: This includes the balance sheet, profit and loss account, and cash flow statement, all prepared in accordance with Indian Accounting Standards (Ind AS) or Generally Accepted Accounting Principles (GAAP) in India.
  • Details of Foreign Investments: Information on the inflow and outflow of foreign funds, sector-wise allocation of FDI, details of foreign subsidiaries or joint ventures, and any repatriation of funds.
  • Compliance with FEMA Regulations: Confirmation of compliance with FEMA provisions and regulations concerning foreign investments, sectoral caps, and investment routes.
  1. Submission Process:

    The APR must be submitted offline. The reporting entity is responsible for ensuring the accuracy and completeness of the information provided.

  2. Penalties for Non-Compliance:

    Non-compliance with the submission of the APR or providing inaccurate information can result in penalties and enforcement actions by the RBI or the Directorate of Enforcement. The Late submission fees for filing of ODI Part-II/APR is 7,500 INR.

Audited Financial Statement of Foreign Entity

The amendment in the Foreign Exchange Management (Overseas Investment) Regulations, 2022 has made it mandatory for the Indian investors to submit an APR based on the audited financial statements of the foreign entity, where they have control and equity holding of 10% or more.

This is a significant change from the previous requirement, where the APR could be based on the unaudited financial statements certified by the statutory auditor of the Indian entity or by the chartered accountant. It is important to note that audit shall be required where Indian resident has control even if the host country does not mandate it.

The amendment aims to ensure that the overseas investment activities are reported accurately and transparently, and that there is no violation or misuse of foreign exchange by the Indian investors.

Top 16 Frequently Asked Questions on Annual Performance Report

After a thorough discussion of all the crucial points concerning APR, here are the most commonly asked questions directed toward our experts in this field. These questions offer clear and precise guidance for moving forward.

Q1. What is the full form of APR under FEMA?

Ans. APR stands for Annual Performance Report.

Q2. What is the Annual performance report (APR)?

Ans. Annual Performance Report (APR) is a mandatory compliance specified under the FEMA Act, 1999, for residents of India who have made investments outside the country.

Q3. Who is eligible to file APR?

Ans. It is submitted for the investment made outside India by a resident individual and resident non-individual (both) in joint ventures (JV) and wholly owned subsidiaries (WOS) outside India.

Q4. What is the reporting period for APR?

Ans. The due date for filing APR with Authorized Dealer Bank is December 31 every year.

Q5. Is the audit of the financial statements of foreign entities mandatory?

Ans. The APR shall be based on the Audited Financial Statement of the Foreign Entity. Relaxation is provided from audited financial statements if an Indian person does not have control & local laws of a foreign entity do not require mandatory audit. Thus, it is important to note that an audit shall be required where Indian residents have control, even if the host country does not mandate it.

Q6. Which person is responsible for filing APR in case of more than one person making an ODI?

Ans. If more than one Indian resident has made an ODI, the person holding a higher stake in a foreign entity must submit an APR. In cases where the holdings are equal, APR may be filed jointly by such persons.

Q7. What documents are required to be submitted at the time of filing the APR?

Ans. i) Latest Audited financial statement for holding Company

ii) Latest Audit report for holding Company

iii) APR form duly filed and signed

iv) Request Letter

v) Any other documents as requested by AD Bank.

Q8. What is the mode of submission of APR?

Ans. APR (with all supporting documents) shall be submitted physically to AD Bank.

Q9. What is the penalty for non-filing of APR by IP and RI?

Ans. i) Non-filing of APR (up to December 31st) be treated as a violation under FEMA, 1999.

ii) The maximum penalty of up to 300% will be levied (exceptionally) on investments made in JV /WOS.

iii) The Maximum penalty will be levied (generally) based on the computed amount referred to under the Foreign Exchange (Compounding Proceedings) Rules, 2000.

Q10. What are the requirements for signing and stamping of APR by Individual Residents (IP)?

Ans. i) APR must be signed by an authorized person + be a Statutory Auditor (both) for IP.

ii) Each page for APR be signed + stamped (both) by an authorized person for IP.

iii) APR is to be printed on a standard A4 sheet by IP; therefore, it should not be printed on letterhead.

Q11. Does APR filing mandatory every year?

Ans. Yes, the due date for filing APR is 31 December every year.

Q12. What if anyone has not filed APR till the due date?

Ans. The APR shall be submitted to AD Bank after the due date, and late submission fees should be levied by the RBI.

Q13.  What is the Late Submission Fee (LSF) in case of delayed filing of APR?

Ans. The Late submission fee is Rs.7500 (seven thousand five hundred) in case of delayed filing of APR.

Q14. When the APR filing is mandatory, in case of investment in a Joint venture or wholly owned subsidiary?

Ans. It is mandatory in both cases whether an investment is in a joint venture or a wholly owned subsidiary located outside India.

Q15. What is UIN (Unique Identification Number) in Form APR?

Ans. It was already allotted by RBI at the time of initial ODI Part I approval. The UIN number should be 13-digit alphanumerical and already allotted by RBI.

Q16. What is the meaning of signing, stamping, and printing by IP and RI in APR?

Ans.   (i)  The APR must be signed by an authorized person + by a Statutory auditor (both) for IP or RI.

(ii) Each page for APR be signed + and stamped (both) by an authorized person for IP or RI

(iii) The last page for APR must be signed + and stamped (both) by an authorized person for IP or RI + by Statutory Auditors (both) for IP or RI.

(iv) APR Should be printed on a standard A4 sheet by IP + RI (both); therefore, it should not be printed on letterhead


The Foreign Management Act and the Annual Performance Report work hand in hand to create a balanced and transparent environment for foreign investments. By regulating foreign investments and annually assessing their performance, countries can attract investments that promote economic growth while safeguarding national interests. The APR is an essential tool for monitoring foreign investments and making informed decisions about future policies and regulatory adjustments, ensuring that foreign investments benefit the host country in a meaningful way. In an era of increased scrutiny and the demand for accountability, the APR serves as a beacon of transparency and openness.

Written By – Bharti Sharma

At Mercurius, we assist our clients with various income tax compliances, including income tax assessments, ITR filings, tax advisory, TDS matters other related services by providing them adequate support and guidance from our end. If you have any questions or wish to know more about ANNUAL PERFORMANCE REPORT for foreign entities, kindly contact us.


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