Question 1

When is FC-TRS filing mandatory and what is the deadline?

Accepted Answer

FC-TRS is mandatory whenever a person resident in India transfers shares or convertible debentures of an Indian company to a non-resident, or vice versa. Under Regulation 10 of the Foreign Exchange Management (Non-Debt Instruments) Rules 2019 read with RBI Master Direction on Reporting (updated October 2023), the FC-TRS must be filed on the RBI FIRMS portal within 60 days of the transfer of shares or receipt/remittance of funds, whichever is earlier.

Question 2

Who files FC-TRS — the buyer or the seller?

Accepted Answer

The reporting obligation under the NDI Rules 2019 falls on the Indian party to the transaction. If the seller is Indian resident, the seller files; if the buyer is Indian resident, the buyer files. Where both parties are Indian residents (one of whom is a returning NRI), both may have reporting obligations. The authorised dealer bank (AD bank) through which remittance flows must also certify compliance before filing on FIRMS.

Question 3

How is the transfer price validated for FEMA compliance?

Accepted Answer

Under Schedule I, Rule 21 of the NDI Rules 2019, the transfer price for unlisted shares must not be less than the fair value determined by a SEBI-registered merchant banker or a chartered accountant using a globally accepted method (DCF or NAV). For listed shares, price must be within the SEBI-prescribed pricing guidelines. A CA valuation certificate is mandatory for unlisted share transfers and must accompany the FC-TRS filing.

Question 4

What happens if FC-TRS is filed late or omitted?

Accepted Answer

Late or omitted FC-TRS attracts a penalty under Section 13 of FEMA 1999: up to three times the amount involved for knowing contraventions, or up to Rs 2 lakh for technical contraventions, plus a daily penalty of Rs 5,000 for continuing violations. Compounding under the RBI Compounding Guidelines (A.P. DIR Series Circular No. 3 of 2023) is available for most filing delays provided the underlying transaction was FDI-compliant.

Question 5

Does the FC-TRS filing trigger any income tax obligations for the transferor?

Accepted Answer

Yes. The transfer of shares is a taxable event under Section 45 of the Income Tax Act 1961 (Section 67 under ITA 2025, applicable from TY 2026-27). Capital gains are computed as sale consideration less cost of acquisition indexed where applicable. If the shares are unlisted, gains held over 24 months are long-term (20% with indexation under the old regime or 12.5% without indexation post-July 23, 2024 budget amendment). The transferor must report the gain in the relevant ITR and pay advance tax by the applicable due dates under Section 234C of the ITA 1961.

Fc Trs Filing

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