Purpose Code P0802 and RBI Purpose Codes for Foreign Remittances 2026

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

P0802 is the RBI purpose code for money received in India for software consultancy and implementation, other than software exports covered by a SOFTEX form. It sits in group 08 of the inward (P) code list. Off site software exports that went on SOFTEX use P0807. From 1 Oct 2026 every software export goes on the Export Declaration Form under FEMA 23(R)/2026-RB. RBI had not reworded either code by 2 Oct 2026.

This page explains how inward (P) and outward (S) purpose codes work for foreign owned companies in India. It lists the codes for service exports, foreign investment and payments to a foreign parent. It covers what goes wrong with a wrong code, and how to get the bank to correct it.

What is a purpose code?

A purpose code is a five character label that tells your Indian bank, and through it the RBI, why foreign exchange moved. Inward codes start with P and outward codes start with S. The bank reports every transaction to the RBI under one code through the Foreign Exchange Transactions Electronic Reporting System (FETERS).

The RBI built the current list on the IMF's sixth Balance of Payments Manual (BPM6). A.P. (DIR Series) Circular No. 84 of 29 Feb 2012 told AD Category I banks to report all transactions under the revised list from the first fortnight of April 2012. The same circular made codes compulsory for every transaction, including non export receipts below INR 5,00,000. You can read it on the RBI notification page.

Banks now report these returns twice a month. A.P. (DIR Series) Circular No. 25 of 20 Mar 2019 moved the R Returns to a fortnightly cycle (the 15th and the month end) from 1 Apr 2019. It also added a field for the country of the ultimate exporter or importer.

The code carries no tax and no fee. It is a classification. Still, the bank uses it to decide which papers to ask for, which register to update and which return the money lands in. That is why a wrong code causes trouble long after the money arrives.

How to read a purpose code

Part of the code	Example	What it tells you
First letter	P or S	P for money received in India, S for money paid out of India
Digits 1 and 2	08	The purpose group (08 is telecommunication, computer and information services)
Digits 3 and 4	02	The item within the group (02 is software consultancy and implementation)
Mirror code	P0802 and S0802	Most service codes have the same number on both sides

Most groups mirror each other. P1006 is a receipt for business and management consultancy, and S1006 is a payment for the same service. The capital account group (00) does not mirror neatly. P0006 is foreign direct investment coming in, while S0006 is that investment being repatriated.

Where the official list lives

This trips up many finance teams. The purpose code list RBI hosts at rbi.org.in from 2004 (the Annexures to A.P. (DIR Series) Circular No. 77 of 13 Mar 2004) is now marked "Withdrawn".

The BPM6 list that replaced it went to banks as the FETERS master. Circular No. 84 links it as a PDF annex ("attached guidelines") rather than printing it on the page. RBI's 2016 circular says the master files sit on its reporting portal for banks.

So the copy a company sees in practice is the one its AD bank publishes. RBI documents that are still public confirm parts of it:

• RBI's Master Circular on Miscellaneous Remittances from India (RBI/2013-14/6, 1 Jul 2013) reproduces the outward S list inside Form A2.
• The Master Direction on Import of Goods and Services (paragraph C.14.7) names P0108 and S0108 for merchanting trade.
• A.P. (DIR Series) Circular No. 50 of 11 Feb 2016 maps Liberalised Remittance Scheme (LRS) items to S codes.

We checked the wording of the codes on this page on 2 Oct 2026, RBI documents first:

• Outward codes S0006, S0012, S0014, S0801 to S0809, S0901, S0902, S1005, S1006, S1008, S1014, S1015, S1099, S1401, S1403, S1408, S1409, S1410 and S1502 match the Form A2 list in RBI's 2013 Master Circular.
• Inward codes P0802, P0806, P1006 and P1011 match RBI's 2004 list, where the wording carried over into the current list.
• For the other inward codes, P0807 and the capital account group among them, we rely on the 2012 list as AD banks publish it, read with the outward mirror in RBI's Form A2 list.
• Form A2 does not cover imports, so RBI's Form A2 list leaves out S0101 and S0102. Those two also rest on the list AD banks publish.

When your bank's list and a website disagree, the bank's list wins, because the bank files the FETERS return.

What does P0802 mean?

P0802 means "software consultancy / implementation (other than those covered in SOFTEX form)". It is the inward code for fees an Indian company earns from a foreign client for software consulting, implementation, configuration or integration work. Pure off site software development that used to go on SOFTEX belongs under P0807, "off site software exports".

The wording dates back to RBI's 2002 Technical Group on Statistics of International Trade in Services. That report first listed P0802 as "software implementation (other than those covered in SOFTEX form)". RBI's 2004 list added "consultancy", and the current list keeps it. RBI's Form A2 list gives the outward mirrors: S0802 is "software consultancy / implementation" and S0807 is "off site software imports". The inward wording for P0807 is the one AD banks publish from the 2012 list. The split mattered because a SOFTEX form had its own export number and its own matching in the bank's export system.

The rest of group 08

Inward code	Outward code	Description (as in the FETERS list)	Typical user in India
P0801	S0801	Hardware consultancy and implementation	IT infrastructure firms
P0802	S0802	Software consultancy and implementation (other than SOFTEX)	Implementation partners, consulting arms of software firms
P0803	S0803	Database and data processing charges	Data processing and back office units
P0804	S0804	Repair and maintenance of computers and software	Support and maintenance contracts
P0805	S0805	News agency services	Media firms
P0806	S0806	Other information services, such as subscriptions to newspapers and periodicals	Publishers and information services
P0807	S0807	Off site software exports (inward); off site software imports (outward)	Development centres and product companies billing abroad
P0808	S0808	Telecommunication services, including email and voice mail	Telecom service providers
P0809	S0809	Satellite services	Space and satellite firms

P0806 is not a consultancy code. Some guides list it as one. It covers information services such as newspaper and periodical subscriptions. A consulting firm that receives fees under P0806 has picked the wrong line.

P0802 or P0807 after SOFTEX ended

From 1 Oct 2026 the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (FEMA 23(R)/2026-RB of 13 Jan 2026) apply. Regulation 3(2) asks every service exporter to declare the full export value on an Export Declaration Form (EDF). The exporter files it within 30 days from the end of the month in which it raised the invoice. The regulations say "services" includes software. Our guide on SOFTEX being discontinued covers the switch.

So the SOFTEX test inside P0802's description no longer sorts anything for invoices from 1 Oct 2026. RBI has not published new wording for either code. We read RBI's 2026-27 index of A.P. (DIR Series) circulars on 2 Oct 2026. It ends at Circular No. 22 of 23 Sep 2026, and no circular in it changes or rewords a purpose code.

Banks take the purpose code master from RBI's reporting portal, so a change may reach your bank before you see a circular. Ask your AD bank whether its wording for P0802 and P0807 has changed since 1 Oct 2026.

Until RBI rewords the codes, our working rule is simple:

1. Use P0807 for software you build in India and deliver electronically to a client abroad, such as development under a cost plus contract with the parent.
2. Use P0802 for consulting, implementation, configuration and integration work billed as a service.
3. Write the code you expect on the invoice, and agree it with the AD bank before the first payment. If the money goes into an EEFC account, the bank reads the same code to confirm it is export earnings.

Which purpose codes do service exporters use?

Service exporters use the group 08 to 11 codes that describe the service on the invoice. Software firms use P0802 or P0807. Consultants use P1006. Accountants use P1005, lawyers P1004, engineers P1014 and research teams P1008. Anything that fits no line goes under P1099. The code should match the contract, the invoice and the EDF.

Common inward codes for service exports

Code	Description	Typical invoice
P0802	Software consultancy and implementation	ERP rollout for a client in Germany
P0807	Off site software exports	Monthly development fee to a US parent
P0803	Database and data processing charges	Data entry or data processing for a UK client
P0901	Franchise services	Franchise fee received by an Indian brand owner
P0902	Licensing of produced originals, patents, copyrights and trademarks	Royalty received for an Indian owned trademark
P1004	Legal services	Legal opinion for a foreign client
P1005	Accounting, auditing and bookkeeping services	Bookkeeping for a Singapore company
P1006	Business and management consultancy and public relations services	Market entry advice, management support
P1007	Advertising and trade fair services	Media buying for a foreign brand
P1008	Research and development services	Contract R&D centre billing its parent
P1009	Architectural services	Design drawings for a Dubai project
P1014	Engineering services	Engineering design and drafting
P1015	Tax consulting services	Transfer pricing or tax advice
P1016	Market research and public opinion polling	Survey work for a foreign client
P1022	Other technical services, including scientific and space services	Testing and lab services
P1099	Other services not included elsewhere	A service no other line describes
P1401	Compensation of employees	Salary received by a resident for work done for a foreign employer

Group 01 covers goods. P0101 to P0104 deal with export bills and advances, and P0108 covers the export leg of a merchanting trade under paragraph C.14.7 of the import Master Direction. RBI's 2004 list worded P0103 as "advance receipts against export contracts (export of goods only)". Before you use P0103 for an advance on a service invoice, ask your AD bank. Its current list may still limit the code to goods, and the bank may want the service code instead.

Matching the code to the paper trail

From 1 Oct 2026 the paper trail for a service export has four parts:

1. The contract and the invoice, which describe the service.
2. The EDF, filed with the AD bank within 30 days after the invoice month.
3. The inward remittance, which carries the purpose code.
4. The bank's advice or certificate for the receipt, which repeats the code.

Regulation 18(1) of the 2026 regulations covers bank reporting. The AD bank enters service export details in the Export Data Processing and Monitoring System (EDPMS) within five working days of receiving the EDF. The regulation also tells the bank to report every transaction in FETERS. The bank matches the receipt to the EDF entry. A service code makes that match easy. A capital code such as P0006 or a refund code does not.

The money must come home within nine months of the invoice date under regulation 5(1)(a), or twelve months for rupee invoices. FEMA 23(R)/(1)/2026-RB of 22 Sep 2026 set these periods before the regulations came into force. Our EDF guide covers the form itself.

Purpose codes and GST on export of services

The purpose code does not decide whether a supply is an export for GST. Section 2(6) of the IGST Act, 2017 does. It sets five conditions:

1. The supplier is located in India.
2. The recipient is located outside India.
3. The place of supply is outside India.
4. The supplier receives payment in convertible foreign exchange, or in rupees where RBI permits.
5. The supplier and the recipient are not merely establishments of one person.

The code still matters in the GST file. Rule 89(2)(c) of the CGST Rules, 2017 covers refunds of unused input tax credit on exported services. It asks for the invoices with the relevant bank realisation certificates or foreign inward remittance certificates. Our guide to FIRC and eBRC for export of services explains these documents.

An officer reads the code on the certificate. If it says P0006 (investment) against a service invoice, expect a query on whether the "export" was paid at all. Our page on GST on export of services explains the LUT and refund route.

Which purpose codes apply to foreign investment received (FDI)?

Equity investment from a foreign parent or investor comes in under P0006, "foreign direct investment in India by overseas investors in equity shares". P0007 covers FDI in debt instruments. Loans from abroad use P0012 when the original maturity exceeds one year and P0013 when it is one year or less. Portfolio money uses P0009 and P0010.

Capital account receipts a foreign owned company sees

Code	Description	When a foreign owned company uses it
P0006	FDI in India by overseas investors, in equity shares	Share subscription money from the parent or a foreign investor
P0007	FDI in India by overseas investors, in debt instruments	Debt from a direct investor, if the bank classes it as FDI
P0008	FDI in India by overseas investors, in real estate	Rare for operating companies
P0009	Foreign portfolio investment in India, equity	Listed company receipts from FPIs
P0012	Long and medium term loans (original maturity above one year) from non residents	ECB drawdown, including from a foreign parent
P0013	Short term loans (original maturity up to one year) from non residents	Short term trade credit or bridge loans
P0011	Repayment of loans extended to non residents	An Indian company receiving back a loan it gave abroad
P0016	Purchase of a foreign currency against another foreign currency	Currency conversions inside the bank
P0099	Other capital receipts not included elsewhere	Capital receipts no other line fits

Why P0006 matters for FC-GPR

Share subscription money starts two clocks under FEMA 395/2019-RB. The company must issue shares within 60 days of receipt, or refund within the next 15 days (regulation 3.1). It must then file Form FC-GPR within 30 days of the allotment (regulation 4(1)). The bank's foreign inward remittance certificate and KYC report go with the FC-GPR on the FIRMS portal.

When the remittance comes in under P0006, the certificate shows the money as foreign investment. When it comes in as P1006 or P0802, the certificate shows a service receipt. The bank then has a FETERS entry for an export with no EDF behind it, and an FC-GPR file with a certificate that contradicts it. We fix these before allotment, because a wrong certificate holds up the FC-GPR. Our FC-GPR filing guide covers the 30 day deadline.

Loans from a foreign parent

A loan from a foreign parent falls under the ECB framework in FEMA 3(R)(5)/2026-RB of 9 Feb 2026. The borrower needs a Loan Registration Number before drawdown and files an ECB 2 return within seven days after each month end. Banks usually report the drawdown under P0012 when the original maturity exceeds one year. Some banks ask whether a loan from a direct investor should go as FDI debt under P0007 instead. Settle the code with the bank before drawdown, because the LRN, the ECB 2 return and the FETERS entry all track the same money. Our guide to an ECB loan from a foreign parent covers the 2026 framework.

Liaison offices

A liaison office of a foreign company runs on money from its head office. The FETERS list has a separate inward code for this, P1011, "inward remittance for maintenance of offices in India". It is not an export receipt and should not go under a service code.

Which purpose codes apply to outward payments to a foreign parent?

Payments to a foreign parent use the S code for the service or income. A management or consultancy fee is S1006. A royalty for a trademark or patent licence is S0902. Software services are S0802 or S0807. Interest to the parent is S1410, dividends are S1409, and branch profit is S1408. Return of capital on a buy back or capital reduction is S0006.

Outward codes for payments to a foreign parent or group company

Code	Description (as in the FETERS list)	Typical payment to a parent
S1006	Business and management consultancy and public relations services	Management fee, shared services charge
S0802	Software consultancy and implementation	Group IT implementation charge
S0807	Off site software imports	Software developed abroad and delivered electronically
S0803	Database and data processing charges	Group data hosting or processing
S0901	Franchise services	Franchise fee
S0902	Payment for use, through licensing arrangements, of produced originals, patents, copyrights and trademarks	Brand or technology royalty
S1005	Accounting, auditing and bookkeeping services	Group finance shared service charge
S1008	Research and development services	R&D charge from the parent
S1014	Engineering services	Engineering support from the group
S1015	Tax consulting services	Group tax support
S1099	Other services not included elsewhere	Services no other line describes
S1401	Compensation of employees	Salary paid abroad for employees
S1403	Interest on loans from non residents	Interest on an ECB from a foreign lender
S1408	Remittance of profit by FDI enterprises in India (by branches of foreign companies, including bank branches)	Branch office profit to head office
S1409	Remittance of dividends by FDI enterprises in India (other than branches)	Dividend from an Indian subsidiary
S1410	Payment of interest by FDI enterprises in India to their parent company abroad	Interest on a loan from the parent
S0006	Repatriation of FDI made by overseas investors in India, in equity shares	Buy back or capital reduction proceeds
S0012	Repayment of long and medium term loans received from non residents	ECB principal repayment
S0101	Advance payment against imports	Advance for goods bought from the parent
S0102	Payment towards imports (settlement of invoice)	Goods bought from the parent

S1403 and S1410 can both describe interest on a parent loan. S1410 is the narrower code, written for interest an FDI enterprise pays its parent. Use the one your bank asks for and keep it the same every quarter.

S0014 is not a parent payment code

S0014 is "repatriation of non resident deposits (FCNR(B)/NR(E)RA etc.)". It is for a non resident moving money out of a bank deposit in India. A foreign owned company has no reason to use it for a fee, a dividend or a refund to its parent.

S1006 for management fees

S1006 is the code most subsidiaries use for management fees, support services and cross charges from the parent. The bank will also want Form 145 and, above INR 5,00,000 in the tax year, a Form 146 from a chartered accountant. A management fee usually needs a transfer pricing file as well. The code does not change the tax analysis. It only labels the payment.

Form A2 for every outward payment

For payments other than imports, the remitter fills Form A2 and ticks a purpose code. Paragraph 6.5 of the Master Direction on Other Remittance Facilities says AD banks shall obtain Form A2, physical or digital, for all cross border remittances, whatever the amount. That wording came from A.P. (DIR Series) Circular No. 12 of 3 Jul 2024. The bank keeps Form A2 with the related papers for one year.

The declaration matters legally. Section 10(5) of FEMA lets the bank ask for any declaration it needs to be satisfied the transaction breaks no rule. If the customer refuses or answers poorly, the bank must refuse in writing. Under section 10(6), money bought for a declared purpose and used for another is a contravention.

LRS remittances by directors and founders

Resident individuals, including Indian directors of a foreign owned company, can send up to USD 250,000 a financial year under the Liberalised Remittance Scheme (Master Direction on LRS, paragraph 1). Since A.P. (DIR Series) Circular No. 50 of 11 Feb 2016, banks report LRS items under the matching FETERS codes rather than one LRS code.

LRS item	FETERS purpose code
Opening a foreign currency account abroad with a bank	S0023
Purchase of immovable property	S0005
Investment in equity, debt, joint ventures, wholly owned subsidiaries, ESOPs, IDRs	S0001, S0002, S0003, S0004, S0021, S0022
Gift	S1302
Donations	S1303
Travel for business, pilgrimage, medical treatment, education, employment or personal visits	S0301, S0303, S0304, S0305, S0306
Maintenance of close relatives	S1301
Medical treatment	S1108
Studies abroad	S1107
Emigration	S1307
Others, such as a loan to a non resident close relative or health insurance	S0011, S0603

The same circular changed S0023 from "remittances under LRS" to "opening of foreign currency account abroad with a bank". An Indian founder subscribing to shares of the foreign parent sends money under S0001 or S0003, not S0023.

Do purpose codes affect Forms 145 and 146?

Yes. Form 145 asks for the RBI purpose code of each remittance, and rule 220(3) of the Income Tax Rules, 2026 excuses 33 listed codes from Forms 145 and 146. The exemption holds only when the sum is not chargeable to tax in India. A wrong code on Form 145 also means the form and the bank's Form A2 do not match.

Rule 220 replaced rule 37BB from 1 Apr 2026. The structure stays familiar:

• Part A of Form 145 applies when the payments in the tax year do not exceed INR 5,00,000 (rule 220(1)(a)).
• Part C applies above INR 5,00,000 with a Form 146 certificate from an accountant (rule 220(1)(c)).
• Part B applies above INR 5,00,000 where the company holds an order or certificate from the Assessing Officer.
• Part D applies to a sum not chargeable to tax.

The Form 145 guidance note and FAQs on incometaxindia.gov.in confirm the purpose code field. Our guide to Forms 15CA and 15CB under the new numbers covers each part.

The 33 codes listed in rule 220

Group	Purpose codes in rule 220(3)	What they cover
Indian investment abroad and loans	S0001, S0002, S0003, S0004, S0005, S0011	Equity, debt, branches and wholly owned subsidiaries, associates, real estate abroad, loans to non residents
Imports	S0101, S0102, S0103, S0104, S0190	Import advances and settlements, imports by diplomatic missions, intermediary trade, imports below INR 5,00,000
Shipping and airlines	S0202, S0208, S0212	Operating expenses abroad of Indian shipping and airline companies, airline passage bookings
Travel	S0301, S0302, S0303, S0304, S0305	Business travel, basic travel quota, pilgrimage, medical treatment, education
Postal	S0401	Postal services
Projects abroad	S0501	Construction of projects abroad by Indian companies
Insurance	S0602	Freight insurance on imports and exports
Offices and embassies	S1011, S1201, S1202	Maintenance of offices abroad, Indian embassies abroad, remittances by foreign embassies
Transfers	S1301, S1302, S1303, S1304, S1305	Family maintenance, gifts, donations, grants, contributions to international institutions
Taxes, refunds and bids	S1306, S1501, S1503	Payment or refund of taxes, export refunds or rebates, international bidding

Two of these codes, S0190 and S0302, come from RBI's 2004 list. S0302 is missing from the Form A2 list in RBI's 2013 Master Circular. That list leaves out import codes, so it cannot settle S0190 either way. The rule still names both. If a payment falls under one of them, check your bank's current list and tell the bank which code you are relying on for the Form 145 exemption.

None of the parent payment codes (S1006, S0902, S0802, S1409, S1410) is on the list. Those payments are usually taxable in India, so they need Form 145 and, above INR 5,00,000, a Form 146.

What happens if the wrong purpose code is used?

A wrong code does not usually block the money. It sends it to the wrong register. The bank may treat investment as export income, ask for documents you cannot give, refuse an outward payment, or report a FETERS entry that never matches. Later it shows up as an unmatched EDF, a stuck FC-GPR, a GST refund query or a Form 145 that contradicts Form A2.

Consequences by type of error

Wrong code used	What goes wrong	Who notices	Fix
Share money tagged P1006 or P0802 instead of P0006	Certificate shows a service receipt; FC-GPR evidence does not match	AD bank at FC-GPR review	Ask the bank to recode to P0006 before allotment
Export fee tagged P0006 instead of a service code	No match to the EDF in EDPMS; export stays open	AD bank, then RBI through EDPMS	Recode to the service code and give the EDF reference
Export fee tagged P1302 (personal gift) or P1301 (family maintenance)	Receipt looks like a personal transfer; no export evidence for GST	GST officer on a refund claim	Recode with the invoice and contract
Software fee under P0806	Recorded as an information service, not software	Rarely noticed until audit	Recode to P0802 or P0807
Management fee paid under S1099 when S1006 fits	Form 145 and Form A2 may not match the invoice	AD bank before release	Correct Form A2 before the payment goes
Dividend paid under S0006	Shows as return of capital, not income	FLA return reviewer, auditors	Ask the bank to recode to S1409
Taxable fee claimed under a rule 220 listed code to skip Form 145	Information not furnished as required	Income tax department	File Form 145 and Form 146; review section 462 exposure

Legal exposure

Under FEMA, a customer's main risk sits in the declaration on Form A2 and in using money for a purpose other than the one declared. Section 10(6) treats that as a contravention. Section 13(1) then allows a penalty of up to three times the sum involved. Where the sum is not quantifiable, the cap is INR 2,00,000. A continuing contravention adds up to INR 5,000 for each day after the first.

In our reading, an honest coding slip that the bank corrects quickly is a reporting fix rather than a contravention. The risk grows when the wrong code hides what the money was for, such as investment brought in as export income to avoid FDI reporting.

On the tax side, section 462 of the Income Tax Act, 2025 provides a penalty of INR 1,00,000. It applies when Forms 145 and 146 are not furnished or carry inaccurate information. A purpose code that misdescribes the payment can make the form inaccurate.

How do you correct a purpose code with the bank?

Write to the AD bank's trade or forex desk as soon as you spot the error, ideally the same week. Ask it to amend the purpose code in its records and in the FETERS report. Attach the invoice or agreement, the correct code, and the remittance reference. Ask for a fresh advice or certificate showing the new code.

There is no RBI form for this. Each bank runs its own process. In our experience a correction within the same reporting fortnight is simple. After that, the bank may have to reverse the entry and book it again.

Documents the bank asks for to correct a code

Document	Why the bank wants it	Inward or outward
Request letter on letterhead, signed by an authorised signatory	Authority to change the record	Both
Remittance reference (UTR or SWIFT message details)	Identifies the transaction	Both
Invoice and contract, or share subscription agreement	Proves what the money was for	Both
Board resolution for share allotment or loan	Supports a capital account code	Inward
EDF reference	Lets the bank match an export receipt in EDPMS	Inward exports
Corrected Form A2	Replaces the declaration with the wrong code	Outward
Fresh Form 145, and Form 146 where needed	Keeps tax forms in line with the bank's record	Outward
Confirmation from the foreign payer	Some banks want the sender's bank to confirm the purpose	Inward

Reversal codes

If the bank cannot amend the entry, it reverses it. The FETERS list has codes for this. RBI's Form A2 list words S1502 as "reversal of wrong entries, refunds of amount remitted for non exports". P1502 is the matching reversal and refund code on the inward side. The bank books the reversal and then reports the transaction again under the right code.

Correcting Form 145

Form 145 cannot be edited after submission. The Form 145 FAQs on incometaxindia.gov.in allow withdrawal within 7 days of submission. Withdrawing Part C also marks the linked Form 146 as withdrawn, so the accountant must issue a fresh certificate.

Neither the FAQs nor rule 220 sets out a way to correct the form after the 7 days. If you find the error later, ask two people. Ask the AD bank what it needs to bring its Form A2 and FETERS record in line with the right code. Ask your Assessing Officer how to place the correction on record. Keep both replies in writing with the remittance file.

Telling the payer the right code

Most inward errors start abroad. The foreign payer's bank sends a payment message with a purpose field, and the Indian bank reads it.

Put the code on every invoice, for example "RBI purpose code: P0807, off site software exports". Repeat it in the payment instructions you send the parent's treasury team.

Payment platforms that route money through an Indian AD bank also ask the customer for a purpose. Under A.P. (DIR Series) Circular No. 10 of 13 May 2026, the AD bank stays solely responsible for FEMA compliance and KYC on outward remittances it handles through non bank platforms.

What changed in 2026

Area	Old rule	New rule	Date	Instrument
Tax forms for payments abroad	Forms 15CA and 15CB under rule 37BB	Forms 145 and 146 under rule 220, with the purpose code field and 33 listed codes kept	1 Apr 2026	Income Tax Rules, 2026 (G.S.R. 198(E) of 20 Mar 2026)
Remittance platforms	RBI approval for non bank tie ups with AD banks	No prior approval; AD bank solely responsible for FEMA compliance and KYC	13 May 2026	A.P. (DIR Series) Circular No. 10
Authorised persons	Earlier authorisation framework	Foreign Exchange Management (Authorised Persons) Regulations, 2026; no change to purpose codes	6 May 2026	FEMA 401/2026-RB; A.P. (DIR Series) Circular No. 09
Software export declaration	SOFTEX form for off site software exports	One EDF for all services, software included, within 30 days after the invoice month	1 Oct 2026	FEMA 23(R)/2026-RB, regulation 3(2)
Export realisation	Nine months under the 2015 regulations (after a period at fifteen months)	Nine months from invoice; twelve months for rupee invoices	1 Oct 2026	FEMA 23(R)/2026-RB, regulation 5(1), as amended by FEMA 23(R)/(1)/2026-RB of 22 Sep 2026
Bank reporting of exports	EDPMS and FETERS under the 2015 regulations	AD bank enters EDF in EDPMS within five working days; reports all transactions in FETERS	1 Oct 2026	FEMA 23(R)/2026-RB, regulation 18(1)
Purpose code list	BPM6 list from April 2012	No change found in any 2026-27 A.P. (DIR Series) circular up to No. 22 of 23 Sep 2026	Checked 2 Oct 2026	RBI A.P. (DIR Series) circular index

The review circular of 8 Sep 2026 (A.P. (DIR Series) Circular No. 21) withdrew seven old circulars on ECB, rupee bonds and money transfers. It did not touch the circulars on FETERS or purpose codes.

An earlier review, Circular No. 18 of 24 Jun 2026, lists the circulars it withdrew in a separate annex. Whatever the status of the older FETERS circulars, regulation 18(1) of the 2026 regulations keeps FETERS reporting in place.

Old and new income tax references for remittances

Topic	Income Tax Act, 1961 and Rules, 1962	Income Tax Act, 2025 and Rules, 2026
TDS on payments to non residents	Section 195	Section 393(2), table serial 17
Information before remittance	Form 15CA	Form 145
Accountant's certificate	Form 15CB	Form 146
Rule on information and exempt list	Rule 37BB	Rule 220
Quarterly statement by the AD bank	Form 15CC	Form 147
Quarterly TDS statement for non residents	Form 27Q	Form 144
TDS certificate	Form 16A	Form 131
Treaty claim information from the payee	Form 10F	Form 41 (section 159(8))
Penalty for Forms 145 and 146	Section 271-I	Section 462 (INR 1,00,000)
Disallowance if tax not deducted	Section 40(a)(i)	Section 35(b)(ii)

The transition FAQs say money remitted from 1 Apr 2026 uses Forms 145 and 146.

Worked example

Both scenarios below are illustrations, not client cases. They assume INR 88 to USD 1 for the arithmetic only. Use the bank's actual rate on the day.

A US parent funds and buys from its Indian subsidiary

A US company owns an Indian Private Limited company that builds software for it. In the autumn of 2026 two payments arrive.

Payment 1 is a share subscription. The parent wires USD 500,000 on 10 Nov 2026 for new equity shares.

• INR value: 500,000 × 88 = INR 4,40,00,000.
• Purpose code: P0006, FDI in equity shares.
• Last date to allot shares: 9 Jan 2027 (60 days from receipt under regulation 3.1 of FEMA 395/2019-RB).
• If the Board allots on 15 Dec 2026, the FC-GPR is due by 14 Jan 2027 (30 days from allotment).

Payment 2 is the October development fee. The subsidiary invoices the parent USD 120,000 on 31 Oct 2026 on a cost plus basis.

• INR value: 120,000 × 88 = INR 1,05,60,000.
• Purpose code: P0807, off site software exports, because the team builds and delivers software electronically.
• EDF due: by 30 Nov 2026 (30 days from the end of October).
• Realisation due: by 31 Jul 2027 (nine months from the 31 Oct 2026 invoice date).
• GST: zero rated export of services under an LUT, if the section 2(6) conditions hold.

Item	Amount (USD)	Amount (INR at 88)	Purpose code	Key deadline
Share subscription	500,000	4,40,00,000	P0006	Allot by 9 Jan 2027; FC-GPR 30 days after allotment
October development fee	120,000	1,05,60,000	P0807	EDF by 30 Nov 2026; realise by 31 Jul 2027
Total received	620,000	5,45,60,000

Now suppose the parent's treasury team sends both wires with "software services" as the purpose. The bank books USD 620,000 as export receipts. The October EDF covers only USD 120,000. EDPMS now shows USD 500,000 of export money with no export behind it, and the FC-GPR has a certificate that calls the investment a fee. The fix is a letter to the bank within days, with the share subscription agreement and Board resolution, asking it to recode USD 500,000 to P0006.

Payments from the subsidiary to its US parent in tax year 2026-27

The same subsidiary later pays three amounts to the parent.

Payment	Purpose code	Amount (USD)	Amount (INR at 88)	Form 145 part	Tax withheld
Annual management fee	S1006	60,000	52,80,000	Part C with Form 146	Rate as certified in Form 146 after the treaty and transfer pricing review
Interest on a loan from the parent	S1410	30,000	26,40,000	Part C with Form 146	15% under the India US treaty: INR 3,96,000
Final dividend	S1409	Paid in INR	2,00,00,000	Part C with Form 146	15% under the India US treaty (where the parent qualifies): INR 30,00,000

The interest arithmetic: INR 26,40,000 × 15 percent = INR 3,96,000. The dividend arithmetic: INR 2,00,00,000 × 15 percent = INR 30,00,000. The US treaty allows 15 percent on dividends where the company receiving them holds at least 10 percent of the voting stock, and 25 percent otherwise. Our guide to a dividend to a foreign parent works through the full calculation.

Each payment passes INR 5,00,000 on its own, so each needs Part C and a Form 146. None of the three codes is on the rule 220 list. Form A2 for each payment must carry the same code as Form 145. The FLA return for the year then shows the dividend as income paid, not as a return of capital.

Common mistakes

1. Letting the foreign payer choose the code. The parent's bank fills a generic purpose and the Indian bank guesses. Fix: print the code on every invoice and in the payment instructions.
2. Using P0006 for export fees, or a service code for share money. The bank cannot match the receipt to the EDF or to the FC-GPR. Fix: agree the code for each type of receipt with the bank before the first transfer.
3. Treating P0806 as a consultancy code. It covers information services such as subscriptions. Fix: use P1006 for consultancy and P0802 for software consultancy.
4. Using S0014 for payments to the parent. S0014 is for repatriating non resident deposits. Fix: use the service or income code that matches the payment.
5. Assuming a rule 220 code means no Form 145. The exemption applies only when the sum is not taxable in India. Fix: decide chargeability first, then look at the code.
6. Mixing two purposes in one wire. A single payment for a fee and a cost reimbursement carries one code. Fix: invoice and pay them separately.
7. Quoting codes from an outdated list. Old codes such as S1406 and S1407 come from the withdrawn 2004 list. Fix: work from your AD bank's current FETERS list.
8. Ignoring the code on the bank advice. Errors surface months later in a GST refund or an audit. Fix: check the code on every advice in the month it arrives.
9. Letting Form A2 and Form 145 differ. The bank holds the payment until they match. Fix: prepare both from one schedule of payments.
10. Waiting to correct a wrong code. A late fix may need a reversal and a new entry. Fix: write to the bank in the same fortnight.

Checklist for choosing and fixing purpose codes

1. Download your AD bank's current FETERS purpose code list and keep it with your FEMA file.
2. List every type of receipt and payment the company expects, such as service fees, share money, loans, dividends and royalties.
3. Assign one purpose code to each type and confirm it in writing with the bank's forex desk.
4. Print the inward code on every export invoice and in payment instructions to the parent.
5. File the EDF for each month's service invoices within 30 days after the month ends.
6. Check the code on each bank advice or certificate in the week the money arrives.
7. Match share subscription receipts under P0006 to the allotment and the FC-GPR timeline.
8. Check whether an outward payment is taxable before relying on a rule 220 code.
9. Fill Form A2, Form 145 and, where needed, Form 146 with the same code and amount.
10. Write to the bank at once with the invoice and remittance reference if a code is wrong.
11. Withdraw and refile Form 145 within 7 days if the code on it is wrong.
12. Reconcile the year's receipts and payments by code before you file the FLA return.

For a second review of your codes before a large remittance, our FEMA compliance service checks the full paper trail.

Frequently Asked Questions

Is P0802 the same as P0807?+

No. P0802 is software consultancy and implementation, other than exports covered by a SOFTEX form. P0807 is off site software exports, the code that went with SOFTEX. SOFTEX ended for invoices from 1 Oct 2026 under FEMA 23(R)/2026-RB, and every software export now goes on an EDF. Use P0807 for software built and delivered electronically, and P0802 for consulting and implementation.

Who decides the purpose code on an inward remittance?+

The Indian AD bank reports the code in FETERS, but it relies on the purpose the payer gives. If the foreign payer's message is vague, the bank picks a code or asks you. Tell the payer the code before it pays and put it on the invoice. That keeps the bank's FETERS entry, its certificate and your EDF in line.

Is a purpose code needed for small receipts?+

Yes, every transaction needs one. A.P. (DIR Series) Circular No. 84 of 29 Feb 2012 told banks to give a purpose code for every foreign exchange transaction from April 2012. That includes non export receipts below INR 5,00,000, which banks used to report in a consolidated way. Every remittance, large or small, now carries its own code.

Does the purpose code decide whether GST applies to my export?+

No. Section 2(6) of the IGST Act, 2017 decides whether a supply is an export of services. One of its five conditions is payment in convertible foreign exchange, or in rupees where RBI permits. The code is evidence. A certificate that shows a capital or personal code against a service invoice invites a query on a GST refund under rule 89.

Which purpose code does share application money from a foreign parent use?+

P0006, foreign direct investment in India by overseas investors in equity shares. The company must then issue shares within 60 days of receipt under regulation 3.1 of FEMA 395/2019-RB and file FC-GPR within 30 days of allotment. A service code on this money creates a certificate that contradicts the FC-GPR.

Which purpose code applies to a loan from the foreign parent?+

Banks usually report a loan with original maturity above one year under P0012 and a loan of one year or less under P0013. Some banks treat debt from a direct investor as FDI debt under P0007. Agree the code before drawdown, because the ECB Loan Registration Number, the monthly ECB 2 return and the FETERS entry must describe the same loan.

What is the purpose code for paying a dividend to a foreign parent?+

S1409, "remittance of dividends by FDI enterprises in India (other than branches) on equity and investment fund shares". A branch of a foreign company sending profit home uses S1408. A buy back or capital reduction is a return of investment under S0006. Form 145 and Form A2 must carry the same code as the bank's record.

Which purpose code does S1006 cover?+

S1006 covers payments for business and management consultancy and public relations services. Indian subsidiaries use it for management fees, support charges and strategic services billed by a foreign parent. The payment is usually taxable in India, so it needs Form 145 and, above INR 5,00,000 in the tax year, a Form 146 under rule 220.

Are the 33 purpose codes in rule 220 tax free?+

No. Rule 220(3) of the Income Tax Rules, 2026 excuses those codes from Forms 145 and 146 only when the sum is not chargeable to tax in India. If a payment under a listed code is taxable, the company still deducts tax and files Form 145. The list itself grants no exemption from tax.

What code does the bank use to reverse a wrongly coded remittance?+

The FETERS list has P1502 on the inward side and S1502 on the outward side for reversals of wrong entries and refunds. A bank that cannot simply amend a code may reverse the original entry under one of these and report the transaction again under the right code. Ask the bank for a fresh advice or certificate afterwards.

Can I send one payment for two different purposes?+

A remittance carries one purpose code in FETERS. If the parent pays a service fee and a cost reimbursement together, the bank reports the whole amount under one code. Send separate invoices and ask for separate wires, each with its own code. It keeps the EDF, Form 145 and the bank's records simple.

Do LRS remittances by a director use different purpose codes?+

No. Since A.P. (DIR Series) Circular No. 50 of 11 Feb 2016, banks report LRS items under the regular FETERS codes. A gift is S1302, studies abroad S1107 and investment in shares abroad S0001 or S0003. S0023 now means opening a foreign currency account abroad. The LRS limit stays USD 250,000 a financial year.

Where can I find the official RBI purpose code list?+

RBI's 2004 list on rbi.org.in is marked withdrawn. The current BPM6 list went to banks as the FETERS master, so your AD bank's published list is the working copy. RBI's 2013 Master Circular on Miscellaneous Remittances reproduces the S codes in Form A2, and the import Master Direction confirms the merchanting codes P0108 and S0108.

Has RBI changed purpose codes because SOFTEX ended?+

Not as of 2 Oct 2026. The 2026 export regulations came into force on 1 Oct 2026 and replaced SOFTEX with the EDF. RBI's 2026-27 circular index ends at A.P. (DIR Series) Circular No. 22 of 23 Sep 2026, and none of its circulars revises the purpose code list. Watch that index, and ask your AD bank whether its wording for P0802 and P0807 has changed.

How long does the bank keep my Form A2?+

One year, with the related documents. Paragraph 6.4 of the Master Direction on Other Remittance Facilities says so. Paragraph 6.5 requires Form A2, physical or digital, for every cross border remittance regardless of amount, under A.P. (DIR Series) Circular No. 12 of 3 Jul 2024. Keep your own copy for the FLA return and audits.

Can a fintech platform choose the purpose code for my company's payments?+

It can collect the purpose, but the AD bank answers for it. A.P. (DIR Series) Circular No. 10 of 13 May 2026 says the AD bank remains solely responsible for FEMA compliance and KYC on outward remittances routed through non bank platforms. Check the code the platform submits against your invoice and Form 145.

Sources

• Reserve Bank of India, A.P. (DIR Series) Circular No. 84, Compilation of R Returns: Reporting under FETERS (revised purpose codes under BPM6), RBI/2011-12/413, 29 Feb 2012, https://rbi.org.in/Scripts/NotificationUser.aspx?Id=7026&Mode=0
• Reserve Bank of India, A.P. (DIR Series) Circular No. 50, Compilation of R Returns: Reporting under FETERS (LRS mapping and S0023), RBI/2015-16/317, 11 Feb 2016, https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10276&Mode=0
• Reserve Bank of India, A.P. (DIR Series) Circular No. 25, Compilation of R Returns: Reporting under FETERS (fortnightly reporting), RBI/2018-2019/145, 20 Mar 2019, https://www.rbi.org.in/scripts/FS_Notification.aspx?Id=11505
• Reserve Bank of India, A.P. (DIR Series) Circular No. 77, Guidelines for Compilation of R Returns, 13 Mar 2004, with Annexures II and III (now marked withdrawn), https://rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=1540 and https://www.rbi.org.in/upload/notification/pdfs/52220.pdf
• Reserve Bank of India, Report of the Technical Group on Statistics of International Trade in Services, 1 Mar 2002, https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?ID=292
• Reserve Bank of India, Master Circular on Miscellaneous Remittances from India, Facilities for Residents (Form A2 purpose codes), RBI/2013-14/6, 1 Jul 2013, https://www.rbi.org.in/commonman/Upload/English/Notification/PDFs/06FR290613FL.pdf
• Reserve Bank of India, Master Direction, Other Remittance Facilities, FED Master Direction No. 8/2015-16, updated 6 May 2026, https://www.rbi.org.in/scripts/BS_ViewMasDirections.aspx?id=10193
• Reserve Bank of India, A.P. (DIR Series) Circular No. 12, Online submission of Form A2: Removal of limits on amount of remittance, RBI/2024-25/46, 3 Jul 2024, https://m.rbi.org.in/Scripts/NotificationUser.aspx?Id=12697&Mode=0
• Reserve Bank of India, Master Direction, Import of Goods and Services (paragraph C.14.7, merchanting trade codes), updated 12 Jan 2026, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10201
• Reserve Bank of India, Master Direction, Liberalised Remittance Scheme, updated 6 Sep 2024, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10192
• Reserve Bank of India, Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, FEMA 23(R)/2026-RB, 13 Jan 2026, in force 1 Oct 2026, https://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=13277
• Reserve Bank of India, A.P. (DIR Series) Circulars index for 2026-27, read 2 Oct 2026, https://www.rbi.org.in/scripts/bs_apcircularsdisplay.aspx
• Reserve Bank of India, A.P. (DIR Series) Circular No. 10, Operating framework for outward remittance services by non bank entities, RBI/2026-27/82, 13 May 2026, https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13449&Mode=0
• Reserve Bank of India, A.P. (DIR Series) Circular No. 09, Foreign Exchange Management (Authorised Persons) Regulations, FEMA 401/2026-RB, 6 May 2026, https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13445&Mode=0
• Reserve Bank of India, A.P. (DIR Series) Circular No. 21, Review of Circulars issued under FEMA, RBI/2026-27/254, 8 Sep 2026, https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13696&Mode=0
• Reserve Bank of India, A.P. (DIR Series) Circular No. 18, Review of Circulars issued under FEMA, RBI/2026-27/175, 24 Jun 2026, https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13551&Mode=0
• Reserve Bank of India, Master Direction, Foreign Investment in India, updated 15 Jun 2026, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11200
• Government of India, Foreign Exchange Management Act, 1999 (sections 10(5), 10(6) and 13(1)), https://www.indiacode.nic.in/bitstream/123456789/1988/1/a199942.pdf
• Income Tax Department, Rule 220 of the Income Tax Rules, 2026, https://www.incometaxindia.gov.in/w/rule-220-1
• Income Tax Department, Guidance note on Form 145, https://www.incometaxindia.gov.in/documents/d/guest/fn-145
• Income Tax Department, Form 145 FAQs, https://www.incometaxindia.gov.in/documents/d/guest/form-145-faqs
• 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
• Income Tax Department, India US DTAA, https://www.incometaxindia.gov.in/w/usa-comprehensive-agreements-1
• Central Board of Indirect Taxes and Customs, GST Acts (IGST Act, 2017 section 2(6)) and CGST Rules, 2017 rule 89, https://cbic-gst.gov.in/gst-acts.html