Advance Remittance for Import Under FEMA, Limits and IDPMS (2026)

Written by CA Nandini Hasija, Krystal7 Consultants. Last updated 23 October 2026.

From 1 Oct 2026, RBI sets no fixed limit on advance remittance for imports. Under regulation 10(3) of the Export and Import Regulations, 2026, your AD bank may allow an advance once it is satisfied the need is genuine. Each bank may set its own threshold for a standby letter of credit or guarantee. Until 30 Sep 2026, the RBI limit was USD 200,000 for goods and USD 500,000 for services.

This page explains the advance payment rules for goods and services and the IDPMS follow up. It then covers payment time limits and imports that do not arrive. It ends with a worked example and a checklist for an Indian subsidiary that pays its foreign parent in advance.

What is the limit for advance remittance for imports in 2026?

There is no RBI limit from 1 Oct 2026. Regulation 10(3) of FEMA 23(R)/2026-RB lets the AD bank permit an advance after it checks the genuineness of the requirement. The bank "may consider specifying thresholds" above which it asks for a standby letter of credit or a guarantee. Your bank's policy now sets the number.

The change moves the decision from RBI to your bank. Until 30 Sep 2026, paragraph C.1.1 of the RBI Master Direction on Import of Goods and Services set fixed limits. The new Export and Import Regulations replaced them on 1 Oct 2026.

Item	Until 30 Sep 2026 (Master Direction, para C.1.1 and C.1.4)	From 1 Oct 2026 (FEMA 23(R)/2026-RB)
Advance for goods without guarantee	Up to USD 200,000	No RBI limit; AD bank threshold, if any
Waiver of guarantee for goods	Up to USD 5,000,000 for a non PSU importer with a good track record, under the bank's Board approved policy	Covered by the bank's own policy under regulation 19
PSU or government importer	Ministry of Finance waiver needed above USD 100,000	No separate RBI rule in the regulations
Advance for services without guarantee	Up to USD 500,000	No RBI limit; AD bank threshold, if any
Aircraft, helicopters and shipping vessels	Up to USD 50 million without guarantee (para C.1.3)	No separate RBI rule

The table shows the shift. RBI used to fix a number for every importer. Now each AD bank decides, case by case, under a written policy it must publish.

This page carries a publish date of 19 Feb 2026, when the old Master Direction still applied and the new regulations were already notified. We have updated it to the law on 23 Oct 2026.

Which rules govern advance payments for imports?

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 govern advance payments for imports from 1 Oct 2026. RBI notified them as FEMA 23(R)/2026-RB on 13 Jan 2026. A.P. (DIR Series) Circular No. 20 of 16 Jan 2026 superseded the old Master Directions on export and import from 1 Oct 2026.

Four instruments now make up the framework:

Instrument	Date	What it does for importers
FEMA 23(R)/2026-RB, Export and Import of Goods and Services Regulations, 2026	Notified 13 Jan 2026; Gazette 15 Jan 2026; in force 1 Oct 2026	Sets the rules on advances, payment periods, IDPMS and bank policies
FEMA 23(R)/(1)/2026-RB, amendment	22 Sep 2026; Gazette 24 Sep 2026	Changed export periods and inserted regulation 20 on older transactions
A.P. (DIR Series) Circular No. 20, RBI/2025-26/194	16 Jan 2026; effective 1 Oct 2026	Superseded the Master Directions on export and import and 167 circulars
Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023	2023	Sets how import payments are made, under regulation 4(1) of the 2026 rules

The circular of 16 Jan 2026 also tells AD banks to send references to RBI through the PRAVAAH portal. It asks them to report any doubtful transaction to the Directorate of Enforcement. Annex B lists the 71 import circulars it superseded.

The old Master Direction on Import (FED Master Direction No. 17/2016-17, updated to 12 Jan 2026) still matters for older transactions. Regulation 20 makes AD banks handle import transactions undertaken before 1 Oct 2026 that earlier needed RBI approval. It names the old Master Direction as the text that governs them.

When does an advance need a standby letter of credit or bank guarantee?

An advance needs a standby letter of credit (SBLC) or guarantee in two cases from 1 Oct 2026. First, when it exceeds a threshold your AD bank has set under regulation 10(3). Second, always, once the importer has failed to repatriate an earlier advance for an import that did not happen, under regulation 12(2).

The second case is a hard rule in the regulation. Any future advance then needs one of these:

• an unconditional, irrevocable standby letter of credit from an international bank of repute;
• a guarantee from an international bank of repute; or
• a guarantee from an AD bank in India, issued against a counter guarantee of an international bank of repute.

The first case depends on your bank. Regulation 19(1)(d) requires every AD bank to cover "advance receipts for exports and advance payments for imports" in its internal policy. Regulation 19(4) requires the bank to disclose the policy and the main features of its SOP on its website. Read your bank's published policy before you agree advance terms with a supplier.

In our experience, banks look at three things when they decide an advance without security. They are the importer's track record, the relationship with the supplier and the share of the contract paid in advance. A subsidiary paying its own parent usually fares well on the second.

How long does an importer have to bring in goods paid for in advance?

The importer must import within the period in the contract, or any extension the AD bank allows. Regulation 12(1) says an importer unable to import within that period must repatriate the advance. The 2026 regulations set no fixed number of months, so the contract terms and your bank's policy decide.

This makes the contract the key document. A purchase order that says "delivery as soon as possible" gives the bank nothing to test against. Write a delivery date or a period, such as "shipment within 120 days of advance".

Under the old Master Direction, the follow up ran on a fixed clock. If evidence of import did not come within three months of the remittance, paragraph C.10 applied. The bank had to follow up "rigorously" for three more months. At least one reminder had to be a registered letter. The new regulations leave the follow up to regulation 18(1)(f) and the bank's SOP.

Point in the advance cycle	Until 30 Sep 2026	From 1 Oct 2026
Who permits the advance	AD bank within RBI limits	AD bank after checking genuineness (regulation 10(3))
Evidence of import due	Bank follows up after three months, then for three more (para C.10)	Within the contract or extended period (regulation 12(1))
If goods never arrive	Repatriate the advance	Repatriate the advance (regulation 12(1))
If advance is not repatriated	Bank follow up under its policy	Every future advance needs SBLC or guarantee (regulation 12(2))

How is the bill of entry matched to the advance in IDPMS?

The AD bank creates an Outward Remittance Message (ORM) in IDPMS when it sends the advance. When the goods clear customs, the bill of entry data reaches IDPMS. The bank then matches the two. It marks off the entry under regulation 18(1)(h) once it is satisfied the import has been paid for.

Bill of entry data from EDI ports flows into IDPMS from customs. Regulation 18(1)(c) requires the bank to enter import details from non EDI ports within five working days of receiving the documents. Regulation 18(1)(e) requires it to enter every outward remittance for imports.

The importer's job is to give the bank the bill of entry number, port code and date. The old Master Direction (paragraph C.7.1) listed these items, and banks still ask for them. For goods held in an SEZ, a free trade warehousing zone or a customs bonded warehouse, give the ex bond bill of entry.

Small entries are easier. The proviso to regulation 4(2) covers a bill of entry or invoice of up to INR 10,00,000. The bank can close that entry on the importer's declaration that payment was made. The declaration can be given per transaction or quarterly in bulk.

IDPMS event	Who acts	Rule
Advance sent	AD bank records the ORM	Regulation 18(1)(e)
Goods cleared at an EDI port	Customs data reaches IDPMS	Bank monitors under regulation 18(1)(f)
Goods cleared at a non EDI port	Bank enters data within five working days of receiving documents	Regulation 18(1)(c)
Services received	Bank enters details declared by the importer within five working days	Regulation 18(1)(d)
Payment complete	Bank marks off the entry	Regulation 18(1)(h)
Entry up to INR 10,00,000	Bank may close on the importer's declaration	Proviso to regulation 4(2)
No import and refund impossible	Bank may close on a reasoned request	Regulation 18(1)(j)
Settled at a reduced value	Bank may close on request	Regulation 18(1)(k)

Open IDPMS entries are the usual cause of trouble with banks. Ask your bank for an IDPMS outstanding statement every quarter. Match it with your purchase ledger before the bank sends a follow up letter.

What is the time limit for paying for imports?

From 1 Oct 2026, the importer must pay within the period in the underlying contract, under regulation 9. The AD bank can extend that period on a reasoned request. Until 30 Sep 2026, paragraph B.5.1 of the Master Direction required payment within six months from the date of shipment.

Regulation 9 puts the duty on the bank. It must monitor its IDPMS entries and follow up with the importer for payment "within the period specified in the underlying contract". The proviso lets the bank allow more time if it is satisfied with the reasons for delay.

The old rule had more fixed parts:

• Payment within six months from shipment, except amounts withheld as a guarantee of performance (para B.5.1(i)).
• Interest on delayed payments only up to three years from shipment (para B.5.1(ii)).
• Deferred payment of up to three years for capital goods, and up to one year or the operating cycle for other goods, treated as trade credit (para B.5.2).
• Extensions of six months at a time, up to three years in total (para B.5.4).
• Extensions beyond one year from remittance needed the total outstanding to stay within USD 1 million or 10 percent of average import remittances over the preceding two financial years, whichever was lower (para B.5.4(ii)).

Interest on a delayed import payment has a ceiling. Regulation 10(4) caps it at the all in cost ceiling for trade credit. That ceiling sits in the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. The figure is in paragraph 14 of the Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations, updated as on 8 Sep 2026.

A long credit period needs more care.

The Borrowing and Lending (First Amendment) Regulations, 2026 (FEMA 3(R)(5)/2026-RB, 9 Feb 2026) define trade credit as credit from an overseas supplier or financial institution for permissible imports. Schedule I treats trade credit with an original maturity of up to three years as outside the ECB limits. The amendment does not restate the periods for goods. The Master Direction still says up to one year or the operating cycle, whichever is shorter, for non capital goods, and up to three years for capital goods. We read those periods as unchanged. If a supplier offers more than one year on non capital goods, ask your AD bank in writing how it will classify the credit before you sign.

Payment rule	Until 30 Sep 2026	From 1 Oct 2026
Normal payment period	Six months from shipment (para B.5.1)	Period in the underlying contract (regulation 9)
Extension	AD bank, six months at a time, up to three years (para B.5.4)	AD bank, on reasoned request, no fixed cap (regulation 9 proviso)
Interest on delay	Up to three years from shipment, at trade credit cost (para C.2)	Within the trade credit all in cost ceiling (regulation 10(4))
Books	No time limit (para B.5.3)	Period in the contract

Can an Indian subsidiary pay its foreign parent in advance for services?

Yes. Regulation 10(3) covers "advance remittance for import" without separating goods and services. The AD bank permits the advance after checking the need, under its policy. Until 30 Sep 2026, paragraph C.1.4 of the Master Direction required a guarantee for a services advance above USD 500,000.

The new rules bring services into IDPMS more firmly. Regulation 18(1)(d) requires the bank to enter imported services in IDPMS, as the importer declares them. It has five working days from receiving the documents. Keep the parent's invoice, the agreement and proof the service was delivered. The bank will close the entry against them.

A services advance to a parent has three tax steps that a goods advance usually lacks:

Step	Rule	What to do
Withholding tax	Section 393(2) of the Income Tax Act, 2025, where the payment is income of the parent in India	Deduct tax at the Act or treaty rate when you pay or credit, whichever is earlier
Remittance forms	Form 145 (old Form 15CA) and, where needed, Form 146 (old Form 15CB)	File before the bank sends the money
GST under reverse charge	Second proviso to section 13(3), CGST Act, for an associated enterprise supplier	Pay IGST on the earlier of the booking date and the payment date

Advance payment against imports (code S0101) is on the rule 220(3) list of payments that need no Form 145, where the sum is not chargeable to tax in India. So a goods advance usually skips this step. Services from a parent usually do not. Our guides on TDS for non residents, Forms 145 and 146 and GST reverse charge on parent services cover each step.

Transfer pricing also applies. An advance to a parent that sits unused for months looks like an interest free loan. Price it, or keep advances short and tied to milestones. Our transfer pricing guide for US parents covers the documentation.

What happens if the import never arrives?

The importer must repatriate the advance under regulation 12(1). Suppose the money does not come back within the contract or extended period, and the bank does not close the entry. Regulation 12(2) then makes every future advance need an SBLC or guarantee, with no end date.

Regulation 18(1)(j) is the exit route for genuine failures. The bank may close an import advance entry in IDPMS where no import took place and repatriation is not possible. It must be satisfied with the reasons. Typical reasons are the supplier's insolvency or a dispute where the money cannot be recovered.

Build a file for the bank before you ask. Include the contract, the advance proof, correspondence on the failure and any legal steps taken. The bank decides at its own level now. Regulation 19(2) requires an escalation process and an appeal to a higher internal level if the first answer is no.

Can the bank extend the time or close the entry at a lower value?

Yes, on both counts. Regulation 9 lets the AD bank extend the payment period on a reasoned request. Regulation 18(1)(k) lets it close an IDPMS entry where the import was settled at a reduced value. Regulation 19(1)(b) requires each bank's policy to set out how it handles these extensions.

Under the old Master Direction, value differences had a tighter rule. Paragraph C.8(x) allowed write off up to 5 percent of invoice value. It applied where the bill of entry amount differed from the remittance for operational reasons. Bigger gaps from quality claims, short shipment or destruction could be closed irrespective of amount, under paragraph C.8(xi).

The new text has no 5 percent figure. The bank closes reduced value entries "on the request of importer". Expect it to ask for the credit note, the supplier's confirmation and any customs record of short landing.

Which advance payments does RBI still restrict?

Regulation 11 bars any advance remittance for the import of gold or silver. Regulation 12(2) restricts importers who failed to repatriate an earlier advance. The 16 Jan 2026 circular tells banks to report doubtful transactions to the Directorate of Enforcement. The bank must also be satisfied the advance is genuine.

Other limits come from outside the import rules:

• Third party payments. Regulation 8 lets the bank permit a payment to someone other than the supplier. The bank must be satisfied with the bona fides. Paying a group treasury company for goods shipped by a sister factory needs this approval.
• Interest on delayed payments. Regulation 10(4) caps interest at the trade credit all in cost ceiling.
• Trade policy. The circular of 16 Jan 2026 requires banks to follow the Foreign Trade Policy as well as FEMA.

What should you ask your AD bank before paying in advance?

Ask for the bank's published policy on advance payments for imports under regulation 19. It must list documents, timelines and charges for each process. It must also explain how extensions, value adjustments and approvals work. Regulation 19(4) requires the bank to disclose the policy and SOP features on its website.

Five questions settle most cases:

1. What advance amount does your policy allow without an SBLC or guarantee for our company?
2. Which documents do you need before the advance, and which after import?
3. How long after the contract delivery date will you start follow up?
4. Who approves an extension, and how do we appeal a refusal under regulation 19(2)?
5. What do you charge for an extension or closure, and is it in the published schedule?

Regulation 19(3) protects you on charges. Bank charges must be reasonable and proportional to the service. The bank may not levy any charge or penalty for a regulatory delay or violation by the customer.

What happens if an importer breaks the FEMA import rules?

A breach of the import regulations is a contravention under section 13 of FEMA, 1999. The penalty can be up to three times the sum involved where that sum is quantifiable. Otherwise the cap is INR 2,00,000. A continuing contravention adds up to INR 5,000 for each day after the first.

The FEMA text on India Code sets these figures in section 13(1). Most import lapses never reach a penalty. The practical cost is larger. The bank may stop new advances, the IDPMS record follows the company, and regulation 12(2) can require an SBLC.

Where a contravention has happened, compounding with RBI is the usual route. RBI's Master Direction on compounding sets the process. Our FEMA compounding guide explains the application.

What changed in 2026

The Export and Import Regulations, 2026 replaced the fixed RBI limits for imports with AD bank policies from 1 Oct 2026. The six month payment rule, the USD 200,000 goods limit and the USD 500,000 services limit sat in the Master Direction that RBI superseded from 1 Oct 2026. Regulation 20 still names that Master Direction for transactions undertaken before 1 Oct 2026. The table maps each change to its instrument.

Rule	Old position (to 30 Sep 2026)	New position (from 1 Oct 2026)	Instrument
Advance for goods without guarantee	USD 200,000, or up to USD 5,000,000 on track record	AD bank permits after checking need; bank may set a threshold	Regulation 10(3), FEMA 23(R)/2026-RB
Advance for services without guarantee	USD 500,000	Same as goods	Regulation 10(3)
Import payment period	Six months from shipment	Period in the contract, extendable by the AD bank	Regulation 9
Import that does not happen	Repatriate; bank follow up	Repatriate; failure makes future advances need SBLC or guarantee	Regulation 12
Small entry closure	Declaration route for entries up to INR 10,00,000 (para C.17)	Declaration route for bills of entry or invoices up to INR 10,00,000	Proviso to regulation 4(2)
Value differences	Write off up to 5 percent for operational reasons (para C.8(x))	Closure on request where settled at reduced value	Regulation 18(1)(k)
Bank policy	Internal guidelines in places	Mandatory published policy, appeal route, no penalty charges	Regulation 19
Older transactions	Needed RBI approval in some cases	AD bank handles transactions undertaken before 1 Oct 2026	Regulation 20, inserted 22 Sep 2026
Master Direction on Import	In force, updated to 12 Jan 2026	Superseded	A.P. (DIR Series) Circular No. 20, 16 Jan 2026

What has happened since the publish date

This page first went out on 19 Feb 2026. At that date the old Master Direction applied, and the 2026 Regulations were notified but not yet in force. On 22 Sep 2026, RBI amended the regulations by FEMA 23(R)/(1)/2026-RB, published in the Gazette on 24 Sep 2026. The amendment changed the export periods and inserted regulation 20. The import rules above took effect on 1 Oct 2026 as notified.

On 8 Sep 2026, A.P. (DIR Series) Circular No. 21 withdrew seven older FEMA circulars. One was the 2013 ECB circular on import of services, technical know how and licence fees. None of the seven changed the import advance rules.

Worked example

Take a hypothetical Indian subsidiary that buys a machine from its German parent. The contract price is USD 900,000. Terms are 30 percent in advance, 60 percent on shipment and 10 percent after installation. Shipment is due within 150 days of the advance. We use an assumed rate of INR 88 to USD 1 for the arithmetic.

1. Advance. 30 percent of USD 900,000 is USD 270,000. In rupees that is INR 2,37,60,000 (270,000 × 88). The subsidiary routes it through its AD bank with purpose code S0101.
2. Security under the old rule. Under paragraph C.1.1, USD 270,000 was above USD 200,000. The bank needed an SBLC or guarantee, unless it waived it on track record up to USD 5,000,000.
3. Security under the new rule. Assume the bank's published policy sets a threshold of USD 250,000 for this subsidiary. That number is hypothetical. USD 270,000 is above it, so the bank asks the parent's bank for an SBLC of USD 270,000.
4. Partial shipment. The parent ships 80 percent of the machine within 150 days. The goods shipped are worth USD 720,000 (80 percent of 900,000). The parent cancels the last 20 percent, worth USD 180,000.
5. Shipment payment. On shipment, the subsidiary owes 60 percent of USD 720,000, or USD 432,000. It pays through the same AD bank, as regulation 10(2) requires.
6. Advance tied to the cancelled part. The advance was 30 percent of the whole price. The part linked to the cancelled goods is 30 percent of USD 180,000, or USD 54,000. Regulation 12(1) requires the subsidiary to get it back. Here the parties would instead agree in writing to set it against the retention. Ask the AD bank to accept that route before the final payment.
7. Installation retention. The retention is 10 percent of USD 720,000, or USD 72,000. If the bank accepts the set off, the parties apply the USD 54,000 against it, so the subsidiary pays USD 18,000 after installation.

Item	USD	INR at assumed 88
Contract price	900,000	7,92,00,000
Advance (30 percent of contract)	270,000	2,37,60,000
Value shipped (80 percent)	720,000	6,33,60,000
Payment on shipment (60 percent of value shipped)	432,000	3,80,16,000
Paid before installation (advance plus shipment payment)	702,000	6,17,76,000
Advance linked to cancelled goods (30 percent of 180,000)	54,000	47,52,000
Retention due (10 percent of value shipped)	72,000	63,36,000
Retention paid after adjusting the excess advance	18,000	15,84,000
Total paid for goods shipped	720,000	6,33,60,000

The check is simple. USD 702,000 plus USD 18,000 equals USD 720,000, the value of the goods shipped. The bank can close the entries once the bill of entry, the payments and the contract amendment agree.

Get the contract amendment for the cancellation signed before the final payment. Without it, the bank sees USD 54,000 of advance with no matching import.

Common mistakes

1. No delivery date in the contract. The bank cannot test the advance against any period. Fix: state a delivery period in the purchase order or agreement.
2. Paying the parent in advance out of habit. A long advance looks like an interest free loan for transfer pricing. Fix: tie advances to milestones and keep them short.
3. Using a different bank for the balance payment. Regulation 10(2) requires the same AD bank unless you tell both. Fix: send the change letter to both banks before you pay.
4. Ignoring the IDPMS statement. Open entries pile up until the bank refuses new advances. Fix: reconcile the IDPMS outstanding list with the purchase ledger every quarter.
5. Relying on the old USD 200,000 figure. That limit sat in the Master Direction that RBI superseded from 1 Oct 2026. Fix: read your bank's regulation 19 policy and plan to its threshold.
6. Leaving an unused advance with the supplier. Regulation 12(2) then makes every future advance need an SBLC or guarantee. Fix: repatriate it within the contract period, or agree any adjustment with your AD bank in writing.
7. Treating a services advance like a goods advance. Services to a parent usually need TDS, Forms 145 and 146 and reverse charge GST. Fix: run the tax steps before the bank remits.
8. Accepting a penalty charge for delay. Regulation 19(3) bars banks from charging a penalty for a customer's regulatory delay. Fix: ask the bank to cite its published schedule.

For help with an open IDPMS list or a bank's advance policy, write to Krystal7 through our FEMA compliance service.

Checklist for an Indian subsidiary paying its parent in advance

1. Agree a written contract with the price, the advance share and a delivery period.
2. Read your AD bank's published import policy under regulation 19.
3. Ask the bank whether the advance needs an SBLC or guarantee under its threshold.
4. Arrange the SBLC or guarantee from the parent's bank, if the bank asks for one.
5. Check the tax steps for a services advance: TDS, Forms 145 and 146 and reverse charge GST.
6. Remit through your AD bank with purpose code S0101 and keep the remittance advice.
7. Track the delivery date against the contract period.
8. Give the bank the bill of entry number, port code and date, or the service invoice, as soon as you have it.
9. Pay the balance through the same AD bank, or tell both banks before you switch.
10. Reconcile the IDPMS outstanding statement with your purchase ledger every quarter.
11. Repatriate any advance for goods or services that will not arrive, or agree an adjustment with your AD bank in writing.
12. Ask the bank in writing for an extension, with reasons, before the contract period ends.

Our guides on purpose codes, setting off export receivables against import payables and the EEFC account cover the related steps. A large advance may also need the company's LEI.

Frequently Asked Questions

What is the limit for advance remittance for import without a bank guarantee?+

From 1 Oct 2026, RBI sets no limit. Regulation 10(3) of FEMA 23(R)/2026-RB lets the AD bank permit an advance after it checks the genuineness of the need. The bank may set its own threshold for a standby letter of credit or guarantee. Until 30 Sep 2026, the RBI limit was USD 200,000 for goods.

Is the USD 200,000 advance import limit still in force?+

No. The USD 200,000 limit was in paragraph C.1.1 of the Master Direction on Import of Goods and Services. A.P. (DIR Series) Circular No. 20 of 16 Jan 2026 superseded that Master Direction from 1 Oct 2026. The Export and Import Regulations, 2026 replaced the fixed limit with each AD bank's own policy.

What is the time limit for import payments under FEMA?+

From 1 Oct 2026, the importer pays within the period in the underlying contract, under regulation 9 of FEMA 23(R)/2026-RB. The AD bank can extend it on a reasoned request. The old rule in paragraph B.5.1 of the Master Direction required payment within six months from shipment. RBI superseded that Master Direction from 1 Oct 2026.

What happens if goods paid for in advance are not imported?+

Regulation 12(1) requires the importer to repatriate the advance. If it is not repatriated within the contract or extended period, regulation 12(2) applies. Every future advance then needs security. That means an unconditional, irrevocable SBLC or guarantee from an international bank of repute, or an AD guarantee backed by one.

Can an AD bank close an advance entry without repatriation?+

Yes, in limited cases. Regulation 18(1)(j) lets the AD bank close an import advance entry in IDPMS where no import took place and repatriation is not possible. The importer must give reasons, and the bank must be satisfied they are genuine. Supplier insolvency or an unrecoverable dispute are the usual grounds.

Does advance remittance for import of services need a guarantee?+

Only if your AD bank's policy says so for that amount. From 1 Oct 2026, regulation 10(3) treats advances for goods and services alike. Until 30 Sep 2026, paragraph C.1.4 of the Master Direction required a guarantee for a services advance above USD 500,000. PSUs needed Ministry of Finance approval above USD 100,000.

What is IDPMS and why does it matter for import advances?+

IDPMS is the Import Data Processing and Monitoring System that AD banks use to match import payments with bills of entry and service invoices. Under regulation 18 of the 2026 Regulations, the bank records each advance and closes it when the import is evidenced. Open entries lead to follow up letters and refusals of new advances.

Can small import entries be closed without a bill of entry check?+

Yes. The proviso to regulation 4(2) covers a bill of entry or invoice of up to INR 10,00,000. The bank can close that IDPMS entry on the importer's declaration that payment was made. The importer may give the declaration for each transaction or quarterly for bulk closure.

Do I have to use the same bank for the advance and the balance payment?+

Yes, unless you tell both banks. Regulation 10(2) requires the importer to route the advance and later payments through the same AD bank. The importer may use another AD bank if it tells both banks about the change. Send the letter before the balance payment, so both IDPMS records stay in step.

Can an Indian company pay interest to a supplier on a delayed import payment?+

Yes, within a ceiling. Regulation 10(4) of the 2026 Regulations caps interest on delayed import payments. The cap is the all in cost ceiling for trade credit under the Borrowing and Lending Regulations, 2018. The old Master Direction also limited interest to the first three years from shipment.

Is advance remittance allowed for gold or silver imports?+

No. Regulation 11 of the Export and Import Regulations, 2026 says no AD bank shall permit advance remittance for the import of gold or silver. This applies from 1 Oct 2026, subject to any other applicable provisions. Gold and silver importers must pay on or after shipment.

Can an Indian subsidiary pay a group company that did not ship the goods?+

Only with the AD bank's approval. Regulation 8 lets the bank permit third party payments for imports if it is satisfied with the bona fides of the transaction. Paying a group treasury company for goods shipped by a sister factory is a common case. Give the bank the tripartite agreement and invoices.

Do I need Form 145 for an advance payment for imported goods?+

Usually not. Imports of goods are on the rule 220 list of payments that need no Form 145 (old Form 15CA) under the Income Tax Rules, 2026. An advance for services from a parent is different. It usually needs withholding tax under section 393 and Forms 145 and 146 before the bank remits.

Can my bank charge a penalty for a late bill of entry?+

No penalty for a regulatory delay. Regulation 19(3) of the 2026 Regulations bars an AD bank from levying any charge or penalty for the importer's own regulatory delay or violation. Its other charges must be reasonable, proportional to the service and set out in its published policy.

What rules apply to an advance sent before 1 Oct 2026?+

The advance was made under the old Master Direction on Import (FED Master Direction No. 17/2016-17, updated to 12 Jan 2026). Regulation 20, inserted by the amendment of 22 Sep 2026, makes AD banks handle transactions undertaken before 1 Oct 2026 that earlier needed RBI approval. It names that Master Direction as the text that governs them. The regulations do not say whether regulation 12 applies to an old advance. Ask your bank in writing which rule it will apply to your open IDPMS entry.

Sources

• Reserve Bank of India, Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, FEMA 23(R)/2026-RB, 13 Jan 2026, Gazette 15 Jan 2026, amended up to 22 Sep 2026 (regulations 4, 8 to 12, 18 to 20), https://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=13277
• Reserve Bank of India, Foreign Exchange Management (Export and Import of Goods and Services) (Amendment) Regulations, 2026, FEMA 23(R)/(1)/2026-RB, 22 Sep 2026, Gazette 24 Sep 2026, https://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=13714
• Reserve Bank of India, A.P. (DIR Series) Circular No. 20, RBI/2025-26/194, Export and Import of Goods and Services, 16 Jan 2026, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13278&Mode=0
• Reserve Bank of India, Master Direction on Import of Goods and Services, FED Master Direction No. 17/2016-17, updated as on 12 Jan 2026, superseded from 1 Oct 2026 (paras B.5, C.1.1, C.1.3, C.1.4, C.7, C.8, C.10), https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10201
• Reserve Bank of India, A.P. (DIR Series) Circular No. 21, RBI/2026-27/254, Review of Circulars issued under FEMA, 8 Sep 2026, https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13696&Mode=0
• Government of India, Foreign Exchange Management Act, 1999, section 13, India Code, https://www.indiacode.nic.in/bitstream/123456789/1988/1/a199942.pdf
• Reserve Bank of India, Master Direction on Compounding of Contraventions under FEMA, 1999, FED Master Direction No. 04/2025-26, 22 Apr 2025, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12839
• Reserve Bank of India, Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026, FEMA 3(R)(5)/2026-RB, 9 Feb 2026, https://www.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=13306
• Reserve Bank of India, Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations, FED Master Direction No. 5/2018-19, updated as on 8 Sep 2026 (paras 13, 14, 18), https://www.rbi.org.in/scripts/BS_ViewMasDirections.aspx?id=11510
• Income Tax Department, Income Tax Rules, 2026, rule 220 (information for remittances to non residents), https://www.incometaxindia.gov.in/w/rule-220-1
• Central Board of Indirect Taxes and Customs, Central Goods and Services Tax Act, 2017, section 13(3), https://cbic-gst.gov.in/pdf/CGST-Act-2017-amended-01012022.pdf