India Compliance Roundup: July — Key Deadlines, Filings & Regulatory Updates

Why July Is the Most Critical Month for Foreign-Owned Companies

While every month carries compliance obligations, July is uniquely consequential for foreign-owned companies. The FLA return — the annual Foreign Liabilities and Assets return filed with the Reserve Bank of India — is due on July 15 and applies exclusively to companies that have received foreign direct investment or made overseas investments. This single filing is the most commonly missed FEMA obligation according to RBI enforcement data.

Beyond the FLA return, July carries the Q1 TDS return deadline (covering April-June deductions), the income tax return filing deadline for non-audit taxpayers (July 31), and the regular suite of monthly GST, PF, and ESI obligations. For foreign-owned subsidiaries, the combination of FEMA, income tax, and GST deadlines in a single month demands coordinated action from the finance team, company secretary, statutory auditor, and FEMA advisor.

July 7: TDS/TCS Deposit for June 2026

All tax deducted at source and tax collected at source during June 2026 must be deposited with the government by July 7. This covers deductions under all sections — salary (Section 192), contractor payments (Section 194C), professional fees (Section 194J), rent (Section 194I), and payments to non-residents under Section 195.

Year-End TDS for FY 2026-27

Note that June is the last month of Q1 of FY 2026-27. However, some companies may still be processing residual FY 2025-26 payments (bonuses, arrears, incentives declared before March 31 but paid in April-June). Ensure TDS on such payments is categorized under the correct financial year and assessment year for return filing purposes.

Penalty for Late Deposit

Interest at 1.5% per month (or part thereof) from the date of deduction to the date of deposit. For cross-border payments, Form 15CA/15CB must be filed before remittance to claim DTAA treaty rates. The withholding tax rate under the applicable treaty typically ranges from 10-15% on royalties and technical service fees, compared to the domestic rate of 20% under Section 195.

July 11: GSTR-1 for June 2026

Monthly filers must submit GSTR-1 (outward supply details) for June 2026 by July 11. This is the last GSTR-1 of Q1 FY 2026-27, making it important for reconciliation purposes. Verify that cumulative Q1 outward supplies match your sales ledger before filing.

For companies under the QRMP scheme (turnover up to INR 5 crore), the quarterly GSTR-1 for Q1 (April-June) is also due by July 13. QRMP filers should ensure that all Invoice Furnishing Facility (IFF) uploads for April and May are consistent with the quarterly GSTR-1.

July 15: FLA Return to the Reserve Bank of India

This is the single most important deadline in July for foreign-owned companies. Every Indian entity that has received foreign direct investment or has made direct investment abroad must file the Foreign Liabilities and Assets (FLA) return with the RBI through the FLAIR (Foreign Liabilities and Assets Information Reporting) portal by July 15, 2026.

Who Must File

The FLA return is mandatory for:

• Indian companies that have received FDI (including through FC-GPR route)
• Indian companies with overseas direct investments (joint ventures, wholly-owned subsidiaries abroad)
• LLPs with foreign investment
• Any Indian entity with foreign liabilities or assets on its balance sheet as of March 31

What the FLA Return Captures

The FLA return reports the company's foreign liabilities (equity, preference shares, reinvested earnings, inter-company loans from foreign parents) and foreign assets (investments in overseas subsidiaries, deposits abroad) as of March 31, 2026. It also captures flow data — new inflows of FDI, outward investment transactions, and changes in foreign liabilities during the year.

Filing Based on Unaudited Accounts

Since most companies will not have completed their statutory audit by July 15, the FLA return can be filed based on unaudited (provisional) figures. If the audited figures differ materially from the unaudited submission, a revised FLA return must be filed by September 30 based on audited accounts.

Penalty for Non-Filing

The FLA return is a FEMA obligation. Non-filing can trigger penalties of up to three times the amount involved in the contravention, or INR 2,00,000 where the amount is not quantifiable, plus INR 5,000 per day of continuing default. More critically, the RBI may flag the company's FDI as non-compliant, which can block future share issuances, downstream investments, and exit transactions. The RBI has been increasingly strict about FLA compliance — in recent years, it has published lists of non-compliant entities on its website.

Common Mistakes in FLA Filing

• Using a MCA DSC instead of a Class 3 DSC: The FLAIR portal requires a specific Class 3 Digital Signature Certificate, which is different from the DSC used for MCA filings
• Omitting reinvested earnings: If the foreign parent did not repatriate dividends and the retained earnings include foreign shareholders' share, this must be reported as a foreign liability
• Ignoring inter-company loans: Loans from the foreign parent or fellow subsidiaries are foreign liabilities and must be separately reported, even if they are interest-free
• Missing the September 30 revision: If audited figures differ from the unaudited submission, failing to file the revised return is treated as a separate contravention

July 15: PF and ESI Deposits for June 2026

Employers must deposit Provident Fund (PF) contributions for June 2026 by July 15. The contribution rate is 12% of basic salary plus dearness allowance from both employer and employee. The employer's 12% is split: 3.67% to EPF and 8.33% to EPS (Employees' Pension Scheme, capped at INR 15,000 basic).

ESI contributions for June 2026 are also due by July 15. The employer contributes 3.25% and the employee contributes 0.75% of gross wages, applicable to establishments with 10 or more employees where employee wages do not exceed INR 21,000 per month.

July 20: GSTR-3B for June 2026

The summary return GSTR-3B for June 2026, along with tax payment, is due by July 20 for monthly filers. This is the last monthly GSTR-3B of Q1. For QRMP filers, the quarterly GSTR-3B for Q1 (April-June) is due by July 22 or July 24, depending on the state (states in Category A file by the 22nd, states in Category B file by the 24th).

Q1 Reconciliation Opportunity

With three months of GSTR-3B filings complete, July is the right time to reconcile Q1 input tax credit claims against GSTR-2B data (auto-populated from suppliers' GSTR-1). Any mismatches should be identified now — suppliers who have not filed their GSTR-1 will not generate ITC for you in GSTR-2B, requiring follow-up before the September cut-off.

Late Fee

Late filing attracts INR 50 per day (INR 25 CGST + INR 25 SGST) for returns with tax liability, and INR 20 per day for nil returns. Interest at 18% per annum applies on the net tax liability from the due date.

July 31: TDS/TCS Quarterly Returns for Q1 (April-June 2026)

Quarterly TDS returns for Q1 of FY 2026-27 (April-June 2026) must be filed by July 31. The returns are:

• Form 24Q: TDS on salary payments (Section 192)
• Form 26Q: TDS on non-salary payments to residents (Sections 194C, 194J, 194I, 194A, etc.)
• Form 27Q: TDS on payments to non-residents (Section 195, 196A, 196D)
• Form 27EQ: TCS return (Section 206C)

Form 27Q: Critical for Foreign-Owned Companies

Form 27Q deserves special attention for foreign-owned subsidiaries. Every payment to the foreign parent — management fees, royalties, technical service fees, interest on inter-company loans (ECBs), dividends — must be reported here. Common issues include:

• Incorrect PAN reporting for non-resident payees (use the foreign company's PAN if it has one; otherwise, report without PAN, which triggers 20% TDS rate)
• Mismatch between TDS rate applied and rate reported in the return
• Failure to claim DTAA benefits properly (lower treaty rate requires a Tax Residency Certificate from the parent company's jurisdiction)
• Not filing Form 27Q at all when the only non-resident payment is an inter-company dividend

Penalty for Late Filing

Late filing of TDS returns attracts a fee of INR 200 per day under Section 234E, capped at the total TDS amount for the quarter. Additionally, Section 271H provides for a penalty of INR 10,000 to INR 1,00,000 for failure to file TDS returns within one year of the due date. Importantly, until the TDS return is filed, the deductee (including your foreign parent) cannot access the TDS credit in their Form 26AS.

July 31: Income Tax Return Filing for Non-Audit Taxpayers

The due date for filing income tax returns for FY 2026-27 (AY 2026-27) is July 31 for taxpayers who are not subject to audit. This includes individuals, HUFs, and firms/companies that do not require a statutory audit or tax audit. The relevant forms are:

• ITR-1 (Sahaj): Resident individuals with income up to INR 50 lakh from salary, one house property, and other sources
• ITR-2: Individuals and HUFs not having income from business or profession
• ITR-4 (Sugam): Individuals, HUFs, and firms with income from business under presumptive taxation (Sections 44AD/44ADA/44AE)

Note: Most foreign-owned companies file ITR-6, which requires audit and has a due date of October 31 (or November 30 for transfer pricing cases). However, foreign directors and expatriate employees of the Indian subsidiary who are tax residents must file their personal returns by July 31.

Foreign Directors' Personal Tax Returns

Foreign directors of Indian companies who are tax residents in India (stayed 182+ days in the preceding financial year) must file ITR-2 by July 31. Directors who are non-residents but have Indian income (director sitting fees, salary from the Indian entity) must also file by July 31. Ensure that double taxation relief under the applicable DTAA is claimed in the return using Form 67.

July 31: GSTR-11 for UIN Holders

Entities with a Unique Identification Number (UIN) under GST — typically embassies, UN bodies, and specified multilateral organizations — must file GSTR-11 for Q1 (April-June) by July 31 to claim refund of GST paid on inward supplies.

Complete July 2026 Deadline Table

Regulatory Update: New Income Tax Act 2025 Implications for July Filings

The new Income Tax Act 2025, effective April 1, 2026, introduces changes that affect July compliance. Under the new Act, the term "Tax Year" replaces the dual "Financial Year" and "Assessment Year" terminology. For July 2026 filings, this means the Q1 TDS returns and ITR filings technically relate to Tax Year 2026-27 under the new nomenclature, though the transition is expected to be operationally seamless with existing forms updated to reflect the new terminology.

Another change relevant to July is the extended ITR filing deadline for non-audit taxpayers filing ITR-3 and ITR-4 — the due date moves from July 31 to August 31 starting from Tax Year 2026-27. However, for FY 2026-27 (AY 2026-27), the July 31 deadline still applies as the new Act governs from April 1, 2026 onward. Companies should also note that TCS rates have been simplified under the new Act, with many categories moving to a uniform 2% rate, which affects Q1 TCS return preparation.

FLA Return: A Step-by-Step Guide for Foreign-Owned Companies

Given the importance and complexity of the FLA return, here is a practical step-by-step guide:

Step 1: Gather Data (By June 30)

Collect the following from your unaudited financial statements as of March 31, 2026:

• Total equity held by foreign investors (share capital + share premium)
• Retained earnings attributable to foreign shareholders
• Inter-company loans from foreign parent or fellow subsidiaries
• Trade payables to foreign related parties
• Any overseas assets (bank deposits, investments in step-down subsidiaries)

Step 2: Register on FLAIR Portal (If Not Already Done)

The FLA return is filed through the FLAIR portal (https://flair.rbi.org.in). Registration requires a Class 3 Digital Signature Certificate (DSC) — this is different from the MCA DSC. If your authorized signatory does not have a Class 3 DSC, apply for one through a licensed Certifying Authority (processing takes 3-5 business days).

Step 3: Complete the FLA Form

The form captures equity capital, preference shares, reinvested earnings, inter-company debt, trade credit, and other foreign liabilities and assets. Ensure consistency with the FC-GPR filings made during the year — the equity capital reported in the FLA must match the cumulative FC-GPR submissions.

Step 4: Submit and Archive

Submit with the Class 3 DSC. Download the acknowledgement receipt. If audited figures differ materially, plan for a revised submission by September 30.

Action Plan for Foreign-Owned Companies

July requires parallel-tracking FEMA, income tax, and GST deadlines. Here is a prioritized action plan:

1. Week 1 (July 1-7): Deposit TDS/TCS for June. Begin FLA return preparation — gather unaudited balance sheet data and verify DSC validity on FLAIR portal.
2. Week 2 (July 8-15): File GSTR-1 for June. Submit FLA return on FLAIR portal. Deposit PF and ESI for June. Begin preparing Q1 TDS returns (Form 24Q, 26Q, 27Q).
3. Week 3 (July 16-22): File GSTR-3B for June. Review Form 27Q data — reconcile all cross-border payments with TDS deducted and Form 15CA/15CB filed.
4. Week 4 (July 23-31): File Q1 TDS returns. Remind foreign directors about personal ITR filing deadline (July 31). File GSTR-11 if applicable.

For ongoing compliance support, explore our annual compliance service for Indian subsidiaries. Companies needing specialized RBI reporting assistance can benefit from our FEMA and RBI compliance service. For a comprehensive overview of commonly missed deadlines, see our article on 12 compliance deadlines foreign companies miss most often.

Key Takeaways

• The FLA return (July 15) is the highest-stakes FEMA obligation for foreign-owned companies — non-filing can trigger penalties up to three times the investment amount and block future share issuances, making it the single most critical July deadline for any company with foreign investment.
• Form 27Q (TDS on non-resident payments) requires careful preparation — errors in reporting cross-border payments to the parent company (management fees, royalties, dividends) can trigger 20% default TDS rates, demand notices, and loss of treaty benefits for the foreign parent.
• The FLA return can be filed on unaudited accounts — but a revised return based on audited figures must be filed by September 30 if there are material differences, creating a follow-up obligation that must be tracked.
• Foreign directors must file personal ITR by July 31 — directors who are Indian tax residents (182+ days stay) or have Indian-source income must file ITR-2, with double taxation relief claimed via Form 67 under the applicable DTAA.
• Q1 GST reconciliation should be completed in July — with three months of data available, matching GSTR-2B credits against purchase records now gives you time to follow up with non-filing suppliers before the September ITC cut-off.