EEFC Account for Foreign Owned Companies and Exporters in India (2026)

Written by Nihal Srivastava, Krystal7 Consultants. Last updated 2 October 2026.

An EEFC (Exchange Earners' Foreign Currency) account is a foreign currency current account that a person resident in India holds with an Indian bank. Exporters and foreign owned Indian companies can credit 100 percent of their foreign exchange earnings under FEMA 10(R)/2015-RB. It pays no interest. RBI directions require each calendar month's credits, net of use, to be converted into rupees by the last day of the next month.

This page explains who can open the account, what goes in and out, and the monthly conversion rule most guides leave out. It also covers how the account sits with export realisation, FIRC and eBRC, GST refunds and income tax under the Income Tax Act, 2025.

What is an EEFC account?

An EEFC account is a foreign currency account in India for people and companies that earn foreign exchange. Regulation 4(A) of FEMA 10(R)/2015-RB lets a person resident in India open it with an authorised dealer (AD) bank. The account holds US dollars, pounds, euros or other currencies without converting them to rupees on arrival.

The full name is Exchange Earners' Foreign Currency account. The legal base sits in three places:

1. The Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015. RBI notified them as FEMA 10(R)/2015-RB on 21 Jan 2016. Schedule I holds the EEFC scheme.
2. The RBI Master Direction on Deposits and Accounts (Master Direction No. 14/2015-16, RBI/FED/2015-16/9), updated as on 2 Sep 2026. Paragraph 3.1 covers EEFC.
3. The RBI Master Direction on Export of Goods and Services (Master Direction No. 16/2015-16), updated as on 17 Jul 2026. Paragraph A.6 covers EEFC.

The benefit is simple. You avoid converting dollars to rupees and back again when you have foreign currency bills to pay. Each round trip costs you the bank's buy and sell spread twice. An EEFC account lets you receive in dollars and pay in dollars.

RBI's EEFC FAQ says the account "can be held only in the form of a current account". Paragraph 4(ii) of Schedule I allows a separate series of cheques for the account.

The main EEFC rules at a glance

Rule	What it says	Where it comes from
Who can open	Any person resident in India with foreign exchange earnings	Regulation 4(A), FEMA 10(R)/2015-RB
Credit limit	100% of eligible foreign exchange earnings	Schedule I, paragraph 1(1)
Account type	Non interest bearing current account	Master Direction 16/2015-16, A.6(iii)
Interest	None	Master Direction 14/2015-16, paragraph 3.1; RBI FAQ Q3
Conversion	Each month's accruals, net of use or forward cover, converted by the last day of the next month	Master Direction 14/2015-16, paragraph 3.1; Master Direction 16/2015-16, A.6(iv); RBI FAQ Q4
Loans against balance	Not allowed, fund based or non fund based	Master Direction 14/2015-16, paragraph 3.1
Rupee withdrawal	Allowed, but cannot be credited back	Schedule I, paragraph 4(i)
Hedging	Allowed; balances sold forward stay earmarked	RBI FAQ Q11
SEZ units	Cannot open EEFC; they use a separate foreign currency account	RBI FAQ Q5; regulation 4(D), FEMA 10(R)/2015-RB; Master Direction 14/2015-16, paragraph 3.10

Who can open an EEFC account?

Any person resident in India who earns foreign exchange can open an EEFC account. RBI's FAQ lists "individuals, companies, etc.". That includes a foreign owned Indian subsidiary and an Indian start up. It also includes exporters of goods or services and professionals paid from abroad. A unit in a Special Economic Zone cannot.

The test is residence, not ownership. Section 2(v)(ii) of the Foreign Exchange Management Act, 1999 (FEMA) covers a body corporate registered or incorporated in India. It is a person resident in India. So a wholly owned Indian subsidiary of a US, UK or Singapore parent is resident. It can open an EEFC account on the same terms as an Indian owned exporter.

Section 2(v)(iii) of FEMA also treats an office, branch or agency in India owned by a person resident outside India as resident. A branch office that earns foreign exchange can therefore open one. A liaison office cannot earn income in India, so it has no earnings to credit.

Type of entity	Can it open an EEFC account?	Notes
Foreign owned Indian Private Limited company	Yes	Resident under section 2(v)(ii) of FEMA; credits only eligible earnings, not share capital
Indian owned exporter of goods	Yes	Bank may ask for the Importer Exporter Code
Exporter of services or software	Yes	Common for IT, design and consulting subsidiaries
Indian start up with an overseas subsidiary	Yes	Can also credit receipts from sales made by the overseas subsidiary
Branch office of a foreign company	Yes, if it earns foreign exchange	Resident under section 2(v)(iii) of FEMA
Liaison office of a foreign company	No practical use	It cannot earn income in India
Unit in a Special Economic Zone	No	Uses the SEZ foreign currency account under paragraph 3.10 of Master Direction 14
Resident individual professional	Yes	Can add a resident relative as joint holder on a former or survivor basis

The SEZ point surprises people. RBI's FAQ (Q5), last updated on 5 Jul 2016, says "SEZ Units cannot open EEFC Accounts". Regulation 4(D) of FEMA 10(R)/2015-RB gives an SEZ unit its own foreign currency account instead. Paragraph 3.10 of Master Direction 14 repeats that permission.

The unit can credit all foreign exchange funds it receives into that account. A Domestic Tariff Area unit may supply goods to an SEZ unit for foreign exchange. It can credit that payment to its EEFC account under clause (b) of paragraph 1(1).

If you are still setting up the Indian company, open the EEFC account with the same AD bank that receives your foreign direct investment. One bank then sees all your foreign exchange flows. Our FEMA compliance service handles that bank mandate along with FC-GPR.

How much of export proceeds can be credited?

You can credit 100 percent of eligible foreign exchange earnings to an EEFC account. Paragraph 1(1) of Schedule I to FEMA 10(R)/2015-RB says so in terms. There is no cap on the amount. The limit is on the type of money: loans and investment received from abroad do not qualify.

Paragraph 1(1) lists six kinds of eligible earnings:

1. Inward remittance through banking channels. This excludes money received under an undertaking to RBI, a foreign currency loan, investment received from outside India, and money received to meet specific obligations.
2. Foreign exchange received by a 100 percent Export Oriented Unit for supplies to similar units or the Domestic Tariff Area. The same applies to units in an Export Processing Zone, Software Technology Park or Electronic Hardware Technology Park. It also covers a Domestic Tariff Area unit paid in foreign exchange for goods supplied to an SEZ unit.
3. Payments to an exporter from a counter trade account approved under the export regulations.
4. Advance remittance received by an exporter towards export of goods or services.
5. Payments for exports out of funds representing repayment of State Credit in US dollars held for the Bank for Foreign Economic Affairs, Moscow.
6. Professional earnings of an individual, such as director's fees, consultancy fees, lecture fees and honorarium.

Paragraph 1(2) adds that a payment through an international credit card, reimbursed in foreign exchange, counts as a remittance through banking channels.

Paragraph 2 then lists the permitted credits:

Permitted credit	Source in Schedule I	Example for a foreign owned company
Eligible earnings under paragraph 1	Paragraph 2(i)	Service fee from the foreign parent under the intercompany agreement
Interest earned on funds in the account	Paragraph 2(ii)	No practical use, because the account is non interest bearing
Unused foreign currency withdrawn earlier	Paragraph 2(iii)	Unspent travel currency drawn from the account
Repayment of a trade loan by your importer customer	Paragraph 2(iv)	Overseas customer repays a trade advance you made from the account
ADR or GDR proceeds on conversion of shares under the DR Scheme, 2014	Paragraph 2(v)	Resident shareholder converting shares into depository receipts
Receipts of an Indian start up from sales by it or its overseas subsidiary	Master Direction 14/2015-16, paragraph 3.1	Start up collecting revenue booked through its foreign subsidiary

What a foreign owned company cannot put into its EEFC account

Share capital from the parent cannot go into the EEFC account. Clause (a) of paragraph 1(1) excludes "investment received from outside India". It also excludes a foreign currency loan, which covers an external commercial borrowing (ECB) from the parent.

The rules give separate homes for these funds:

• FDI money. Paragraph 3.11 of Master Direction 14 covers an Indian company that receives FDI and has impending foreign currency expenditure. It may open a separate foreign currency account. The account must close once the need is met or within six months of opening, whichever is earlier.
• ECB money. RBI amended the Borrowing and Lending regulations through FEMA 3(R)(5)/2026-RB of 9 Feb 2026. ECB proceeds meant for permitted foreign currency spending may be credited to a foreign currency account in India with the designated AD Category I bank. A foreign currency account outside India is the other option. Our guide to an ECB loan from a foreign parent covers the 2026 framework.

We see banks reject this mistake at the counter. Finance teams sometimes ask the bank to "park the capital in the EEFC account until we pay the US vendor". The bank should refuse, because the money is investment, not earnings.

What can you pay from an EEFC account?

You can pay for any current account transaction outside India and any permitted capital account transaction from an EEFC account. Paragraph 3 of Schedule I lists five debits in all. The other three are customs duty, goods bought from export oriented units and trade advances to importer customers. Payments in foreign currency to Indian residents for goods or services also qualify.

Permitted debit	Source	Example	Other filings
Payment outside India for a current account transaction	Paragraph 3(i), Schedule I	Paying the parent's invoice for software licences or shared services	TDS, Form 145 and Form 146 where they apply
Payment outside India for a permitted capital account transaction	Paragraph 3(i), Schedule I	Repaying ECB principal to the parent	ECB 2 return to RBI
Foreign exchange for goods bought from a 100 percent EOU or an EPZ, STP or EHTP unit	Paragraph 3(ii)	Buying hardware from an STP unit priced in dollars	GST invoice from the supplier
Customs duty under the Export Import Policy	Paragraph 3(iii)	Duty on imported inputs where payment in foreign exchange is allowed	Bill of entry
Trade loans or advances to your importer customer abroad	Paragraph 3(iv)	A short credit to an overseas buyer	Must follow the Borrowing and Lending regulations
Foreign exchange payment to a person resident in India for goods or services	Paragraph 3(v)	Paying an Indian travel agent for air fare, or a hotel bill, in dollars	None specific to FEMA

Paragraph 3(i) is wide. Any outward payment that FEMA permits can come from the EEFC account. For a foreign owned subsidiary the common debits are:

1. Payments to the parent for management fees, software licences, cost recharges and royalties.
2. Dividends to the parent. Our dividend guide covers the company law and tax side.
3. Interest and principal on an ECB from the parent.
4. Subscriptions to foreign software and cloud services.
5. Fees to overseas consultants, lawyers and contractors.
6. Salary of staff working abroad, where the Indian company employs them.

The source of funds does not change the tax filings. A payment from an EEFC account to a non resident still needs tax withheld under section 393 of the Income Tax Act, 2025. Payments to non residents fall under section 393(2), serial 17. It still needs Form 145 and, where required, the chartered accountant's Form 146. Our guides on TDS on payments to non residents and Forms 15CA and 15CB explain both.

You can also withdraw the balance in rupees at any time. Paragraph 4(i) of Schedule I puts no limit on that. The catch is that rupees withdrawn cannot be credited back to the EEFC account.

Does an EEFC account earn interest?

No. An EEFC account earns no interest. Paragraph 3.1 of Master Direction 14 says the account is non interest bearing. Paragraph A.6(iii) of Master Direction 16 says it is held only as a non interest bearing current account. RBI's FAQ Q3 says no interest is payable.

Paragraph 2(ii) of Schedule I still lists interest earned on funds in the account as a permitted credit. Master Direction 14 repeats that line in its list of credits. Both Master Directions then tell banks to run the account as non interest bearing. So the credit line has no practical effect today. Do not plan your treasury around interest on EEFC balances.

Three practical results follow:

1. Idle dollar balances cost you money in real terms. A rupee deposit earns interest; an EEFC balance does not.
2. You cannot use the balance as security. Paragraph 3.1 of Master Direction 14 bars banks from granting fund based or non fund based credit against EEFC balances. So no overdraft, bank guarantee or letter of credit backed by the balance.
3. You can hedge the balance. RBI's FAQ Q11 allows a forward sale. The amount sold forward stays earmarked for delivery.

There is one specific exception on loans. Paragraph A.6(vii) of Master Direction 16 lets exporters repay packing credit advances from EEFC balances, to the extent exports have taken place.

When must balances be converted to rupees?

The sum of a calendar month's credits must be converted into rupees by the last day of the next calendar month. You first deduct what you used for approved payments and what you committed under forward contracts. Paragraph 3.1 of Master Direction 14, paragraph A.6(iv) of Master Direction 16 and RBI's FAQ Q4 all state this condition.

Both Master Directions use the same words. The sum total of a month's accruals "should be converted into Rupees on or before the last day of the succeeding calendar month". That is "after adjusting for utilization of the balances for approved purposes or forward commitments".

Master Direction 16 gives the reason. The scheme lets exchange earners "save on conversion/transaction costs". It is not meant as a way to hold assets in foreign currency.

This rule is the least known part of the EEFC scheme. Many summaries say you can hold EEFC balances "indefinitely". The Master Directions say otherwise. The rule appears in both Master Directions and in RBI's FAQ. Your bank applies it, so ask how your bank monitors it.

How the conversion clock runs

Month of credit	Last date to use, commit forward or convert	What counts as use
October 2026	30 Nov 2026	Payments under paragraph 3, forward contracts booked against the balance
November 2026	31 Dec 2026	Same
December 2026	31 Jan 2027	Same
January 2027	28 Feb 2027	Same
February 2027	31 Mar 2027	Same
March 2027	30 Apr 2027	Same

We read the rule as a cap on idle balances, not a ban on holding dollars. A company with steady foreign currency bills can match receipts against payments each month. It can also book forward contracts against expected payments, which counts as a forward commitment. A company that never pays in foreign currency gains little from the account. It has to convert each month's credits by the end of the next month anyway.

The overseas account option for exporters

Exporters now have a second foreign currency option outside India. FEMA 10(R)(5)/2025-RB of 14 Jan 2025 inserted regulation 5(CA) into FEMA 10(R)/2015-RB. It lets an exporter hold a foreign currency account with a bank outside India. It can receive the full export value and advance remittances there.

The money in that account must be used to pay for imports into India or brought home within a fixed time. FEMA 10(R)(7)/2025-RB of 6 Oct 2025 substituted regulation 5(CA). The period now runs to the end of three months for accounts with banks in an International Financial Services Centre (IFSC). For all other banks abroad it runs to the end of the next month. Both periods count from the date of receipt, after adjusting for forward commitments.

Paragraph 4.10 of Master Direction 14 carries the same text. The export realisation rules still apply to the money.

Feature	EEFC account in India	Exporter's foreign currency account abroad
Legal basis	Regulation 4(A) and Schedule I, FEMA 10(R)/2015-RB	Regulation 5(CA), FEMA 10(R)/2015-RB, as substituted on 6 Oct 2025
Where held	AD bank in India	Bank outside India, including in an IFSC
What can be credited	100% of eligible earnings, advances, other listed credits	Full export value and advance remittances
How long funds can stay	Each month's net credits converted by the end of the next month	Used for imports or brought to India by the end of the next month (three months for IFSC banks) from receipt
Interest	None	Depends on the overseas bank
Main use	Paying foreign currency bills from India	Receiving from buyers who prefer to pay locally, and paying imports

EEFC vs a normal current account for a foreign owned company

A rupee current account converts every dollar on arrival at the bank's buying rate. An EEFC account keeps the dollars until you choose to convert or spend them, within the monthly conversion rule. A foreign owned subsidiary with both foreign currency income and foreign currency bills usually benefits from running both accounts side by side.

Point	EEFC account	Rupee current account
Currency	Foreign currency (USD, GBP, EUR and others the bank offers)	Indian rupees
Who can open	Residents with foreign exchange earnings	Any resident
Interest	None	None on a current account
What can be credited	Only eligible foreign exchange earnings and listed credits	Any lawful receipt, including converted FDI and ECB proceeds
Conversion cost on receipt	None until you convert	Bank's buying spread on every receipt
Conversion cost on payment abroad	None if paid from the balance	Bank's selling spread on every payment
Holding limit	Net monthly credits converted by the end of the next month	No limit
Overdraft or loans against balance	Not allowed	Allowed under normal credit terms
Domestic payments	Only in foreign currency to residents under paragraph 3(v), or after conversion	Any rupee payment
FEMA risk	Wrong credits or idle balances can breach FEMA	Low

For a typical foreign owned service company, the pattern we set up is simple. The parent's service fee lands in the EEFC account. Foreign currency bills go out of it. The balance needed for rupee salaries, GST and rent gets converted each month. A shared CFO or bookkeeping team can run this as a monthly routine.

The other side is cost. If you never pay anything in foreign currency, an EEFC account adds a second bank reconciliation and a conversion deadline for no saving. In that case a rupee current account plus a forward contract policy may serve you better.

How does an EEFC account affect export realisation and GST refunds?

Crediting export proceeds to an EEFC account does not delay realisation. The money is received in India through an AD bank in foreign currency, which is what FEMA and GST look for. The bank still reports the inward remittance to the Export Data Processing and Monitoring System (EDPMS) and issues the FIRC. GST refund evidence stays the same.

Export realisation under FEMA from 1 Oct 2026

RBI notified the Export and Import of Goods and Services Regulations, 2026 as FEMA 23(R)/2026-RB on 13 Jan 2026. They came into force on 1 Oct 2026. Regulation 5(1)(a), as amended by FEMA 23(R)/(1)/2026-RB of 22 Sep 2026, sets the realisation period. It is nine months from shipment for goods and from the invoice date for services. It is twelve months where the export is invoiced or settled in rupees. The AD bank may extend it.

Realisation can include set off. Regulation 7 lets the AD bank allow set off of export receivables against import payables. The other side must be the same overseas buyer or supplier, or their group or associate companies. Regulation 10 requires an exporter to route an advance and the later realisation through the same AD bank. So keep your EEFC account with the bank that handles your export documents.

Services exporters now file the Export Declaration Form (EDF) instead of SOFTEX. Under regulation 3(2), the EDF for services is due within 30 days from the end of the invoice month. Our EDF guide explains the form. Paragraph A.6(viii) of Master Direction 16 gives the bank's certificate wording where part of the realisation goes to the EEFC account.

The 2026 regulations do not mention the EEFC account. The scheme stays in FEMA 10(R)/2015-RB and Master Direction 14. Master Direction 16, as last updated on 17 Jul 2026, still cites the 2015 export regulations. Check RBI's Master Directions page for a later update before you quote its paragraph numbers.

FIRC and eBRC

Your bank issues a Foreign Inward Remittance Certificate (FIRC) for each inward remittance, whether it lands in the EEFC account or a rupee account. Master Direction 16 requires AD banks to report the electronic FIRC to EDPMS. The eBRC for services builds on that data. Our companion guide on FIRC and eBRC for export of services covers how to get both.

Make sure the inward remittance carries the right purpose code. The code tells the bank whether the money is export earnings (eligible for EEFC) or investment (not eligible). Our guide to purpose codes for foreign remittances lists the codes service exporters use.

GST on export of services and refunds

Section 2(6) of the IGST Act, 2017 sets five conditions for an export of services. Clause (iv) is the payment condition. CBIC Circular No. 161/17/2021-GST of 20 Sep 2021 reproduces the clause. The supplier must have received payment "in convertible foreign exchange". A dollar receipt credited to an EEFC account meets that condition. Converting it later does not change that.

If a customer pays in rupees, read the current text of clause (iv) in the Act before you treat the supply as an export.

Exporters under a Letter of Undertaking can claim a refund of unused input tax credit. For services, rule 89(2)(c) of the CGST Rules, 2017 asks for a statement of invoices with the relevant BRCs or FIRCs. Rule 89(4) measures the turnover of zero rated services by payments received during the period, adjusted for advances. So the date the dollars reached your EEFC account is the date that counts for the refund formula, not the date you converted them. Our guide to GST on export of services covers the rest of the refund process.

Income tax on EEFC balances

Foreign exchange gains and losses on EEFC balances are taxable. Section 43 of the Income Tax Act, 2025 (old section 43AA of the 1961 Act) treats them as income or loss. It computes them under the income computation and disclosure standards notified under section 276(2) (old section 145(2)). Section 43(2)(a) covers monetary items and non monetary items. An EEFC balance is a monetary item. Under the 1961 Act the relevant standard was ICDS VI on changes in foreign exchange rates.

Old to new references under the Income Tax Act, 2025

Topic	Income Tax Act, 1961 or old rule	Income Tax Act, 2025 or Rules, 2026
Foreign exchange fluctuation	Section 43AA	Section 43
Computation standards (ICDS)	Section 145(2)	Section 276(2)
TDS on payments to non residents	Section 195	Section 393(2), serial 17
Information for remittance to a non resident	Form 15CA	Form 145
Accountant's certificate for remittance	Form 15CB	Form 146
Quarterly TDS statement for non residents	Form 27Q	Form 144
TDS certificate other than salary	Form 16A	Form 131
Treaty claim information from the payee	Form 10F	Form 41
Transfer pricing report	Form 3CEB	Form 48
TDS deposit date	Rule 30	Rule 218(2): by the 7th of the next month, 30 April for March

The form numbers come from the Income Tax Department's forms guidance page. Money remitted from 1 Apr 2026 uses Forms 145 and 146.

Intercompany receipts that land in the EEFC account are also international transactions for transfer pricing. The parent's service fee must be at arm's length and reported in Form 48 where it applies.

Which documents does the bank ask for?

Banks open an EEFC account on their own forms, so the list varies. A company usually gives its incorporation documents, PAN and a board resolution. It adds KYC of signatories and beneficial owners, and proof of foreign exchange earnings. A foreign owned company should also expect questions on its FDI reporting.

RBI does not prescribe an EEFC opening form. The bank applies its own KYC policy and FEMA checks. In our experience the following set clears most AD banks:

Document	Why the bank asks	Notes for a foreign owned company
Certificate of incorporation, MOA and AOA	Identity of the company	Use the latest versions after any name or object change
PAN of the company	KYC and tax reporting	Mandatory
Board resolution to open the EEFC account and name signatories	Authority	Name the currencies you want (USD, GBP, EUR)
KYC of directors and authorised signatories	Bank KYC rules	Foreign directors give passport and address proof
Beneficial ownership declaration	Bank KYC rules	Name the parent and the individuals behind it above the bank's threshold
GST registration certificate	Evidence of business	Also shows whether you export under LUT
Proof of foreign exchange earnings	Eligibility for EEFC	Intercompany service agreement, export contract or first invoices
Importer Exporter Code	Exports of goods	Banks often ask goods exporters for it
FC-GPR acknowledgement or FIRMS reference	Shows the FDI was reported	Some banks ask before they allow outward remittances
Existing rupee current account details	Linking for conversion	Usually at the same bank

We ask the bank to link the EEFC account to the rupee current account at the same branch. That makes the monthly conversion a simple internal transfer.

Which currencies can an EEFC account hold?

An EEFC account can be held in any foreign currency that your AD bank offers. FEMA 10(R)/2015-RB does not limit the currency list. In practice banks offer the major currencies such as US dollars, pounds sterling and euros. Ask your bank for its full list before you send account details to payers.

Ask for a separate EEFC account per currency if you earn in more than one. Converting euros into dollars inside India costs a spread, and a separate euro account avoids that. The monthly conversion rule applies to each account's accruals.

What happens if you breach the EEFC rules?

A breach of an EEFC rule is a contravention of FEMA. Section 13(1) of the Foreign Exchange Management Act, 1999 allows a penalty up to three times the sum involved where it is quantifiable. Where it is not quantifiable, the cap is INR 2,00,000. A continuing contravention adds up to INR 5,000 a day after the first day.

Breach	Likely result	How to fix it
Crediting FDI or ECB money to the EEFC account	Contravention of Schedule I, paragraph 1(1)(a); penalty under section 13 of FEMA	Ask the bank to reverse the credit; consider compounding
Holding net monthly credits beyond the end of the next month	Breach of RBI's EEFC directions; bank may force conversion	Convert, or document the use and forward cover
Paying a non resident without TDS or Forms 145 and 146	Tax default under section 393 and related penalties	Deposit the tax with interest and file the forms
Taking an overdraft or guarantee against the balance	Breach of paragraph 3.1 of Master Direction 14	Close the facility; restructure security
Crediting rupees withdrawn earlier back into the account	Breach of Schedule I, paragraph 4(i)	Reverse the credit
Missing the export realisation period	Breach of regulation 5 of FEMA 23(R)/2026-RB; EDPMS shows the bill as outstanding	Seek an extension from the AD bank before the period ends

Section 15(1) of FEMA lets you apply to compound a contravention. The compounding authority must dispose of the application within 180 days of receiving it. The application goes to RBI with the facts, the delay and the amount involved.

What changed in 2026

We found no 2026 amendment to the EEFC scheme in Schedule I on RBI's website as on 2 Oct 2026. Master Direction 14, updated as on 2 Sep 2026, still describes the scheme in the same terms. The rules around it have moved, though. Export realisation, the overseas account option, ECB proceeds and the income tax forms all changed between January 2025 and October 2026.

Area	Old rule	New rule	Date	Instrument
Exporter's foreign currency account abroad	No general permission to hold export proceeds abroad	Account abroad allowed; funds used for imports or brought home by the end of the next month	14 Jan 2025	FEMA 10(R)(5)/2025-RB
Repatriation from an IFSC account	End of the next month	End of three months for IFSC banks; end of next month elsewhere	6 Oct 2025	FEMA 10(R)(7)/2025-RB
ECB proceeds held in foreign currency	Older ECB framework	ECB proceeds meant for foreign currency spending may go to a foreign currency account with the designated AD bank in India, or to one abroad	9 Feb 2026	FEMA 3(R)(5)/2026-RB
Forms for remittances to non residents	Forms 15CA and 15CB	Forms 145 and 146	1 Apr 2026	Income Tax Rules, 2026
Foreign exchange gains section	Section 43AA, Income Tax Act, 1961	Section 43, Income Tax Act, 2025	1 Apr 2026	Income Tax Act, 2025
Export regulations	FEMA 23(R)/2015-RB	FEMA 23(R)/2026-RB	1 Oct 2026	Notified 13 Jan 2026
Realisation period	Nine months under the 2015 regulations (after FEMA 23(R)/(8)/2026-RB of 5 Jun 2026)	Nine months (goods from shipment, services from invoice); twelve months if invoiced or settled in rupees	1 Oct 2026	FEMA 23(R)/(1)/2026-RB of 22 Sep 2026
Software and services export declaration	SOFTEX form	Export Declaration Form within 30 days from the end of the invoice month	1 Oct 2026	FEMA 23(R)/2026-RB, regulation 3(2)
Set off of export receivables	Set off of export receivables against import payables under Master Direction 16	Set off against import payables with the same party or its group or associate companies	1 Oct 2026	FEMA 23(R)/2026-RB, regulation 7

The realisation period moved twice before the new regulations started. FEMA 23(R)/(7)/2025-RB of 13 Nov 2025 raised it to fifteen months under the 2015 regulations. FEMA 23(R)/(8)/2026-RB of 5 Jun 2026 cut it back to nine.

The 2026 regulations as first notified said fifteen and eighteen months. FEMA 23(R)/(1)/2026-RB cut those to nine and twelve before 1 Oct 2026. So the fifteen month period never applied under the 2026 regulations. Articles that still quote fifteen months are out of date.

One more change touches exporters who collect through payment platforms. RBI issued its Payment Aggregator Directions, 2025 on 15 Sep 2025. They allow settlement in a currency other than rupees only for Indian exporters that the cross border aggregator has onboarded directly. If you collect through such a platform, ask whether it can settle in foreign currency into your EEFC account.

Worked example

These examples use assumed exchange rates for the arithmetic. They are not RBI reference rates.

The monthly conversion rule for a service subsidiary

A US parent owns an Indian software subsidiary. The subsidiary bills the parent monthly on a cost plus basis. It also has a UK customer. It runs a USD EEFC account linked to a rupee current account.

October 2026 credits to the EEFC account:

Date	Credit	Amount (USD)
6 Oct 2026	Service fee from the US parent for September	60,000
20 Oct 2026	Fee from a UK customer, paid in USD	15,000
	Total accruals for October	75,000

Uses and commitments before 30 Nov 2026:

Date	Use	Amount (USD)
12 Nov 2026	Payment to the parent for software licences, after TDS and Forms 145 and 146	18,000
14 Nov 2026	Forward contract booked to sell USD on 15 Dec 2026 for December salaries	20,000
	Total adjusted	38,000

The subsidiary must convert the rest by 30 Nov 2026:

Step	Amount
Accruals less uses and commitments (USD)	75,000 minus 38,000 = 37,000
Assumed rate (INR per USD)	88.20
Rupee credit on conversion (INR)	37,000 × 88.20 = 32,63,400

Now compare the cost of converting the whole USD 75,000 on arrival and buying USD 18,000 back for the licence payment. Assume a spread of INR 0.40 per USD on each side.

The extra cost of the round trip on USD 18,000 is 18,000 × 0.40 × 2 = INR 14,400. With an EEFC account, the subsidiary avoids that cost on this one payment.

The saving grows with the volume of foreign currency payments. A subsidiary with no foreign currency bills saves nothing.

A year end foreign exchange gain on an EEFC balance

On 31 Mar 2027 the same subsidiary holds USD 40,000 in its EEFC account. Its books carry the balance at INR 87.50 per USD, the rate on the dates of credit. The closing rate is assumed at INR 88.40.

Item	USD	Rate (INR per USD)	INR
Book value of the EEFC balance	40,000	87.50	35,00,000
Value at the closing rate	40,000	88.40	35,36,000
Foreign exchange gain			36,000

The INR 36,000 gain is income under section 43 of the Income Tax Act, 2025 for tax year 2026-27. A fall in the rupee value would produce a deductible loss under the same section. The gain is unrealised. It is still taxed where the computation standards restate monetary items at the closing rate, as ICDS VI did under the 1961 Act.

Common mistakes

1. Crediting the parent's share capital to the EEFC account. Clause (a) of paragraph 1(1) of Schedule I excludes investment and foreign currency loans. Fix: route FDI to the rupee account, or to a foreign currency account under paragraph 3.11 of Master Direction 14. Report it in FC-GPR.
2. Treating the EEFC account as a dollar savings account. It pays no interest. Each month's net credits must be converted by the end of the next month. Fix: hold only what you need for foreign currency bills, and book forward contracts against expected payments.
3. Skipping TDS because the payment comes from dollars already held. Section 393 of the Income Tax Act, 2025 applies whatever the source of funds. Fix: deduct tax, file Form 145 and get Form 146 where needed before the bank remits.
4. Opening the EEFC account at one bank and handling export documents at another. Regulation 10 of FEMA 23(R)/2026-RB requires one AD bank for an advance and its later realisation. Fix: keep exports, EDPMS entries and the EEFC account at one bank.
5. Asking for an overdraft secured on the EEFC balance. Master Direction 14 bars credit facilities against EEFC balances. Fix: secure working capital on other assets, or convert part of the balance.
6. Forgetting the year end revaluation. EEFC balances are monetary items under section 43 of the Income Tax Act, 2025. Fix: revalue at the closing rate and include the gain or loss in the tax computation.
7. Using the wrong purpose code on inward remittances. The bank may then treat earnings as investment, or the reverse. Fix: tell the payer the correct code before the first invoice.
8. Opening an EEFC account for an SEZ unit. SEZ units cannot hold EEFC accounts. Fix: open the SEZ foreign currency account under paragraph 3.10 of Master Direction 14.

Has your EEFC account already taken an ineligible credit? Send the bank statement through our contact page and we will map the fix.

Checklist for opening and running an EEFC account

1. Confirm that the company is a person resident in India and not an SEZ unit.
2. List your expected foreign currency receipts and payments for the next twelve months.
3. Decide whether the monthly payments justify an EEFC account, using the cost comparison in the worked example.
4. Pass a board resolution naming the bank, currencies and signatories.
5. Submit the bank's EEFC form with the documents in the table above.
6. Link the EEFC account to your rupee current account at the same AD bank.
7. Tell overseas customers and the parent the EEFC account details and the purpose code to use.
8. Check each inward credit against the list of eligible earnings in Schedule I.
9. Route any share capital or ECB money away from the EEFC account.
10. Withhold tax and file Forms 145 and 146 before each outward payment to a non resident.
11. Track each month's accruals, uses and forward contracts on a simple register.
12. Convert the net balance for each month by the last day of the next month.
13. File the EDF for services within 30 days from the end of the invoice month.
14. Match FIRCs and eBRCs to invoices before you file a GST refund claim.
15. Revalue EEFC balances at the closing rate on 31 March and book the gain or loss.

Frequently Asked Questions

What is the full form of EEFC?+

EEFC stands for Exchange Earners' Foreign Currency account. It is a foreign currency current account that a person resident in India opens with an authorised dealer bank in India. Regulation 4(A) of FEMA 10(R)/2015-RB permits it, and Schedule I to those regulations sets out the scheme. It lets exporters and other foreign exchange earners keep earnings in foreign currency instead of converting them on arrival.

Can a 100 percent foreign owned Indian subsidiary open an EEFC account?+

Yes. A company registered in India is a person resident in India under section 2(v)(ii) of FEMA, whoever owns it. A wholly owned subsidiary of a foreign parent can open one. It can credit eligible earnings, such as service fees from the parent. It cannot credit the parent's share capital or loans, which clause (a) of paragraph 1(1) of Schedule I excludes.

Can I receive FDI share capital in an EEFC account?+

No. Paragraph 1(1)(a) of Schedule I to FEMA 10(R)/2015-RB excludes "investment received from outside India" from eligible credits. Receive the capital in the rupee account. If you have impending foreign currency spending, paragraph 3.11 of Master Direction 14 allows a separate foreign currency account. That account must close within six months of opening or once the need is met.

Is there a limit on how much I can hold in an EEFC account?+

There is no amount cap. You can credit 100 percent of eligible earnings under paragraph 1(1) of Schedule I. The limit is time based. Paragraph 3.1 of Master Direction 14 sets the rule. Each month's accruals, after use and forward commitments, go into rupees by the last day of the next month.

Do I have to convert EEFC balances into rupees?+

Yes, for any amount you do not use or commit. RBI's FAQ Q4 and paragraph 3.1 of Master Direction 14 set the deadline. A month's accruals must be converted by the last day of the next month. You first deduct payments for approved purposes and amounts covered by forward contracts. You may also withdraw rupees at any time under paragraph 4(i) of Schedule I.

What interest rate does an EEFC account pay?+

None. Paragraph 3.1 of Master Direction 14 says the account is non interest bearing. Paragraph A.6(iii) of Master Direction 16 says it can be held only as a non interest bearing current account. RBI's FAQ Q3 confirms that no interest is payable. Plan your treasury on the basis that EEFC balances earn nothing.

Can I take a loan or overdraft against my EEFC balance?+

No. Paragraph 3.1 of Master Direction 14 says fund based and non fund based credit facilities should not be granted against EEFC balances. That rules out an overdraft, bank guarantee or letter of credit secured on the balance. Exporters may still repay packing credit from EEFC balances, to the extent of actual exports. Paragraph A.6(vii) of Master Direction 16 allows this.

Can I pay Indian vendors from an EEFC account?+

Yes, in foreign currency, for goods or services. Paragraph 3(v) of Schedule I allows foreign currency payments to Indian residents for goods or services. It names air fare and hotel bills as examples. You can also pay rupee bills after withdrawing rupees, but those rupees cannot be credited back to the EEFC account.

Can I pay a dividend to the foreign parent from the EEFC account?+

Yes. A dividend is a current account transaction, and paragraph 3(i) of Schedule I lets you pay current account transactions outside India from the account. The usual company law steps, tax withholding under the Income Tax Act, 2025 and Forms 145 and 146 still apply. The AD bank will check these before it remits.

Do Forms 145 and 146 apply to payments from an EEFC account?+

Yes. Forms 145 and 146 replaced Forms 15CA and 15CB for money remitted from 1 Apr 2026. They apply to payments to non residents whatever account the money comes from. Rule 218(2) sets the deposit date for tax withheld under section 393. It is the 7th of the next month, or 30 April for March.

Can an SEZ unit open an EEFC account?+

No. RBI's EEFC FAQ (Q5) says SEZ units cannot open EEFC accounts. An SEZ unit instead holds a foreign currency account under regulation 4(D) of FEMA 10(R)/2015-RB. It can credit all foreign exchange it receives there. Funds in that account cannot be lent to residents outside SEZs. A Domestic Tariff Area unit paid in foreign exchange by an SEZ unit can use its own EEFC account.

Does crediting export proceeds to an EEFC account count as realisation?+

Yes, in our reading. Regulation 5 of FEMA 23(R)/2026-RB requires the export value to reach India through an AD bank. The period is nine months, or twelve if invoiced in rupees. Money credited to your EEFC account has reached an AD bank in India. The bank reports it to EDPMS and issues the FIRC as for any other receipt.

Will an EEFC credit affect my GST export refund?+

No, if the money came in foreign currency. Section 2(6)(iv) of the IGST Act, 2017 asks for payment in convertible foreign exchange, which an EEFC credit is. Rule 89(4) of the CGST Rules counts payments received in the period, so the credit date matters, not the conversion date. Keep the FIRC or BRC for each invoice under rule 89(2)(c).

How are EEFC exchange gains taxed under the Income Tax Act, 2025?+

Section 43 of the Income Tax Act, 2025 replaces section 43AA of the 1961 Act. It treats gains or losses from exchange rate changes on foreign currency transactions as income or loss. They are computed under the standards notified under section 276(2). EEFC balances are monetary items under section 43(2)(a), so you revalue them at year end and tax the difference.

Can an exporter keep export proceeds in a bank account abroad instead?+

Yes. RBI allowed it by a notification dated 14 Jan 2025. Regulation 5(CA) of FEMA 10(R)/2015-RB lets an exporter hold a foreign currency account abroad for export value and advances. Funds must be used for imports into India or brought home. IFSC accounts get until the end of three months from receipt. Accounts elsewhere get until the end of the next month.

Can a resident individual freelancer open an EEFC account?+

Yes. RBI's FAQ Q2 says individuals who are resident in India may open EEFC accounts. Paragraph 1(1)(f) of Schedule I covers professional earnings such as consultancy fees, lecture fees and director's fees. A resident relative can be added as a joint holder on a former or survivor basis. That relative cannot operate the account during the holder's lifetime.

What is the penalty for misusing an EEFC account?+

A misuse breaches FEMA. Section 13(1) of FEMA allows a penalty up to three times the sum involved. Where the sum is not quantifiable, the cap is INR 2,00,000. A continuing breach adds up to INR 5,000 a day. You can apply to compound the breach under section 15. The authority must decide within 180 days of receiving the application.

Sources

• Reserve Bank of India, Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015, Notification No. FEMA 10(R)/2015-RB, 21 Jan 2016, https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10261&Mode=0
• Reserve Bank of India, Master Direction No. 14/2015-16 on Deposits and Accounts, updated as on 2 Sep 2026, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10198
• Reserve Bank of India, Master Direction No. 16/2015-16 on Export of Goods and Services, updated as on 17 Jul 2026, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10395
• Reserve Bank of India, FAQs on Exchange Earners Foreign Currency (EEFC) Account, updated 5 Jul 2016, https://www.rbi.org.in/Commonman/English/Scripts/FAQs.aspx?Id=11
• Reserve Bank of India, Notification No. FEMA 10(R)(5)/2025-RB (Fifth Amendment), 14 Jan 2025, https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12767
• Reserve Bank of India, Notification No. FEMA 10(R)(7)/2025-RB (Seventh Amendment), 6 Oct 2025, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12916&Mode=0
• Reserve Bank of India, Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification No. FEMA 23(R)/2026-RB, 13 Jan 2026, amended up to 22 Sep 2026, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13277&Mode=0
• Reserve Bank of India, Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026, Notification No. FEMA 3(R)(5)/2026-RB, 9 Feb 2026, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13306&Mode=0
• Reserve Bank of India, Reserve Bank of India (Regulation of Payment Aggregators) Directions, 2025, 15 Sep 2025, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12896
• Government of India, Foreign Exchange Management Act, 1999 (sections 2(v), 13 and 15), India Code, https://www.indiacode.nic.in/bitstream/123456789/1988/1/a199942.pdf
• Income Tax Department, Income Tax Act, 2025, section 43 (Taxation of foreign exchange fluctuation), https://www.incometaxindia.gov.in/w/section-43-163
• Income Tax Department, Income Tax Act, 2025, section 393, https://www.incometaxindia.gov.in/w/section-393-5
• Income Tax Department, Income Tax Rules, 2026, rule 218, https://www.incometaxindia.gov.in/w/rule-218-1
• Income Tax Department, FAQs and Guidance Notes on Forms as per Income Tax Rules, 2026, https://www.incometaxindia.gov.in/faqs-and-guidance-notes-on-forms-as-per-income-tax-rules-2026
• Central Board of Indirect Taxes and Customs, CGST Rules, 2017, rule 89, https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/rules/cgst_rules/active/chapter10/rule89_v1.00.html
• Central Board of Indirect Taxes and Customs, Circular No. 161/17/2021-GST, 20 Sep 2021, https://cbic-gst.gov.in/pdf/Circular-No-161-14-2021-GST.pdf