FC-TRS Filing — Share Transfer to Non-Resident

Where equity instruments of an Indian company are transferred between a resident and a non-resident (in either direction) by way of sale, the transaction must be reported to the Reserve Bank of India through Form FC-TRS, as prescribed under the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 read with the erstwhile FEMA 20(R) reporting framework that the NDI Rules carried forward for transfer reporting.

Form FC-TRS must be filed within 60 days of the date of receipt or remittance of funds, whichever is earlier, or within 60 days of transfer of the equity instruments, through the transferor/transferee's Authorised Dealer (AD) Category-I bank on the RBI's Firms portal. The filing must be accompanied by a valuation certificate confirming the transfer price is in accordance with Rule 21 pricing guidelines under the NDI Rules — not less than fair value for a resident-to-non-resident transfer, and not more than fair value for a non-resident-to-resident transfer.

A missed or delayed FC-TRS filing is a reportable contravention under FEMA, 1999; regularisation is typically available through the late submission fee mechanism administered by AD banks, or, for older or higher-value delays, through compounding under Section 15 of FEMA before the Reserve Bank of India.

Our engagement covers valuation coordination for the transfer price, preparation and filing of Form FC-TRS within the 60-day statutory window through the designated AD bank, and regularisation of any past delayed filings.

FC-TRS is the form through which the transfer of shares in an Indian company between a resident and a non-resident — or between two non-residents — is reported to the RBI. The framework is the Foreign Exchange Management Act 1999 and the regulations on transfer of securities by persons resident outside India (VERIFY: the Foreign Exchange Management (Non-debt Instruments) Rules 2019 and the reporting framework under the RBI Master Direction on Foreign Investment in India govern the FC-TRS filing). The transfer must be priced according to the pricing guidelines, the payment must flow through banking channels, and the Form FC-TRS must be filed through the AD bank within the prescribed period.

The FC-TRS is where the ownership record of the Indian company meets the RBI's data. A transfer of shares to a non-resident that is never reported leaves the company's shareholding record and the RBI's foreign investment data out of sync — and the compliance burden falls on the company, which must file the form and maintain the records. The pricing is the frequent flashpoint: shares transferred to a non-resident below the floor price prescribed in the pricing guidelines are a FEMA contravention.

The cost of an unreported or mispriced transfer is a FEMA contravention with the penalty exposure of the FEMA framework, and the practical friction when the company next deals with the RBI, its bank or an investor who checks the foreign investment record. The transfer is also relevant to the tax position — the capital gains of the transferor under the Income Tax Act 1961, with TDS where the transferor is a non-resident.

This service is for companies and shareholders transferring shares between residents and non-residents. We confirm the pricing under the applicable guidelines, prepare and file Form FC-TRS through the AD bank within the prescribed period, manage the payment and documentation, and coordinate the tax position and TDS of the transferor.