When is the APR due for an overseas investment?

By 31 December every year for each foreign entity held as overseas direct investment. Where the foreign entity's accounting year ends on 31 December, the APR for that year is due by 31 December of the following year.

Does the APR need audited accounts?

Yes, unless the Indian investor does not have control of the foreign entity and the host country does not require an audit. In that case unaudited accounts certified by the Indian entity's statutory auditor or a chartered accountant may be used.

Can an Indian chartered accountant audit my foreign company for the APR?

Not unless they are also qualified to audit under the host country's laws. The RBI clarified to banks on 2 July 2026 that the audit must be carried out by an auditor qualified under the host country's auditing norms and laws.

Insights · FEMA

APR for Your Dubai Company or US LLC: RBI’s 2026 Rule on Who Must Audit the Accounts

Q: What happens if the APR is filed late?

The delay can be regularised by paying a late submission fee of Rs 7,500 per return within three years of the due date; older delays need compounding. Until it is regularised, no further financial commitment can be made to that foreign entity.

Who must file an Annual Performance Report, when it needs audited accounts, and what the RBI's July 2026 clarification on host-country auditors means for Indian owners of foreign companies and LLCs.

By Vijay Dhawan, Managing Partner, LexVerge LLPUpdated 7 October 20265 min read

If you own a Dubai company, a US LLC or any other foreign entity as an overseas direct investment, its Annual Performance Report is due to your bank by 31 December, and it must usually be based on audited accounts. What changed in 2026 is who can do that audit. In a communication to authorised dealer banks dated 2 July 2026, the Reserve Bank of India clarified that the audit must be carried out by an auditor qualified under the auditing laws of the country where the foreign entity is incorporated. An audit signed by an Indian chartered accountant who is not qualified in that country will not support the APR. For owners of small foreign companies that have never had a local audit, this needs planning now.

Key points

The APR is due by 31 December every year for each foreign entity held as overseas direct investment (ODI)
It must be based on the foreign entity’s audited financial statements, unless you do not control the entity and the host country does not require an audit
RBI’s communication to banks of 2 July 2026: the audit must be done by an auditor qualified in the host country
The same applies to any overseas investment filing that relies on audited accounts, such as disinvestment
A late APR costs a late submission fee of Rs 7,500, and blocks further investment in that entity until it is regularised

Who has to file an APR

Under the Foreign Exchange Management (Overseas Investment) Regulations, 2022, a person resident in India who holds equity in a foreign entity that counts as ODI files an APR for that entity every year. That includes Indian companies and LLPs with foreign subsidiaries, and resident individuals who own a foreign company or LLC. No APR is needed where the resident holds less than 10% of the equity without control and has no other financial commitment, or where the foreign entity is in liquidation. Where several Indian residents invest in the same entity, the one with the largest stake files.

The APR is due by 31 December. Where the foreign entity’s accounting year ends on 31 December, the APR for that year is due by 31 December of the following year. It covers the entity’s financial results, the Indian investor’s stake, and any step-down subsidiaries set up, acquired, wound up or transferred during the year.

When the accounts must be audited

Your position	Host country requires an audit	Host country does not require an audit
You have control of the foreign entity	Audited accounts	Audited accounts
You do not have control	Audited accounts	Unaudited accounts may be used, certified by the Indian entity’s statutory auditor or a chartered accountant

“Control” under the Overseas Investment Rules is wide. It covers the right to appoint a majority of the directors or to control management or policy decisions, including through shareholding, management rights or agreements that give 10% or more of the voting rights. A founder who owns 100% of a Dubai company or a single-member US LLC has control, so the exception for unaudited accounts does not help, even where the host country itself never asks for an audit.

What the July 2026 clarification adds

The rules always required “audited financial statements of the foreign entity” but never said who could audit them. Some banks accepted audits signed by Indian chartered accountants applying Indian standards. The RBI’s communication to banks of 2 July 2026 settles the point: where the overseas investment framework requires audited financial statements of a foreign entity, the audit must be done by an auditor qualified to conduct it under the auditing norms and laws of the host country. The communication went to authorised dealer banks rather than being issued as a public circular, so ask your bank how it is applying it before you appoint an auditor.

What this means in the usual host countries

Host country	Who can sign the audit	Practical point
UAE	An auditor registered to practise in the UAE, and approved by the free zone where the company is licensed there	Many free zones already require audited accounts for licence renewal, and UAE corporate tax requires them above AED 50 million of revenue and for every Qualifying Free Zone Person
United States	A licensed CPA firm	Most small LLCs and corporations have never been audited; this is the biggest new cost for Indian owners
United Kingdom	A registered auditor	Small companies are usually exempt from audit under UK law, but an Indian owner with control still needs one for the APR
Singapore	A public accountant registered with ACRA	The small-company audit exemption does not remove the APR requirement where you have control

If the APR is late

A late APR can be regularised by paying a late submission fee of Rs 7,500 per return through the bank, if it is within three years of the due date; older delays need compounding. Until the delay is regularised, the Indian investor cannot make any further financial commitment to that foreign entity, so a missed APR can hold up the next capital injection or loan. Our late submission fee calculator and our guide to FEMA compounding and late submission fees explain the routes.

What to do before 31 December 2026

List every foreign entity you hold as ODI, including dormant ones; the APR is due even with no revenue.
Check control and the host-country audit rule for each, using the table above.
Ask your bank how it is applying the July 2026 communication, and what it will accept.
Appoint a host-country auditor now. An audit of a small US LLC or UK company can take six to ten weeks from engagement.
Reconcile the accounts with the Indian side: the capital remitted, any loans, and the figures in your Indian return’s Schedule FA.
If the structure no longer earns its cost, consider winding it up properly, with the disinvestment reported, rather than carrying an annual audit.

For owners of US LLCs, the full picture is in US LLC for Indian residents; for UAE companies, see ODI vs LRS for a UAE company.

Our FEMA and RBI team prepares APRs, coordinates host-country audits in the UAE and the US, and regularises late filings.

Written by Vijay Dhawan, Managing Partner, LexVerge LLP. This article is general information, not tax or legal advice. Rates, thresholds and form numbers change; confirm the current position for your facts before acting.