Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
The FEMA pricing rule
When a non-resident subscribes to shares of an Indian company, FEMA requires the price to be not less than the fair value, certified by a merchant banker or chartered accountant. The logic is to make sure foreign exchange comes in at a proper value — you cannot issue cheap shares to a non-resident. Confirm the current pricing rules under the FEMA NDI Rules.
Reporting with FC-GPR
After allotment you must file Form FC-GPR with the RBI through the FIRMS portal, generally within 30 days, attaching the valuation certificate and KYC. Missing the window attracts late-submission fees. See foreign investor compliance.
A worked example
Take a startup raising from a US fund. Its merchant banker certifies a value of ₹200 per share, it issues at ₹200 or more (never below), and it files FC-GPR with the RBI within 30 days of allotment through the FIRMS portal. Angel tax no longer applies to the premium, but the FEMA valuation floor and the FC-GPR reporting very much still do — and a late FC-GPR attracts a late-submission fee calculated on the amount and the delay. The certificate must use an internationally accepted methodology (typically DCF), not just a book-value figure. Founders sometimes line up the investor and the money before the valuation, then scramble — it is cleaner to have the merchant-banker certificate ready before allotment. Confirm the current FEMA NDI pricing rules and reporting timelines. Our startup service manages the FEMA steps.