Expert opinion · Banking

Form A1 or Form A2: which application does your bank need?

Every outward payment starts with an application to your AD bank. Picking the wrong one is one of the most common reasons a payment request comes back.

FxLayer compliance deskFEMA, RBI reporting and cross-border tax 5 min read Updated
Form A1Payments for imports of goods
  • Advance or invoice payments for goods
  • Purpose codes S0101 to S0104
  • Bill of Entry details or proforma invoice
  • No Form 145 or Form 146
Form A2All other outward remittances
  • Services, royalties, fees and similar
  • Merchanting trade import leg (S0108)
  • Invoice and agreement for the service
  • Form 145, and Form 146 for Part C
Form A1 compared with Form A2

Key points

  • Form A1 is used for payments for imports of goods into India.
  • Form A2 is used for other outward remittances, including services and the import leg of a merchanting trade.
  • Both carry the purpose code, the beneficiary and bank details, and the remitter's declarations.
  • Some banks combine the two into one application; the purpose code still decides what else is needed.

Form A1: imports of goods

Form A1 is the application for a payment for goods imported, or to be imported, into India. It covers advance payments against a proforma invoice and payments against a commercial invoice and Bill of Entry. The bank uses it to report the remittance in IDPMS and to link it later to the Bill of Entry. Because imports of goods are on the specified list, no Form 145 or Form 146 is needed.

Form A2: everything else

Form A2 is the application for other outward remittances: payments for services, royalties and licence fees, subscriptions, overseas office expenses, the import leg of a merchanting trade, and remittances by individuals under the Liberalised Remittance Scheme. It records the purpose code and asks the remitter to declare that the payment complies with FEMA. Where the purpose is not on the specified list, the bank also needs the Form 145 acknowledgement, and for Part C the Form 146 certificate.

What goes with each application

  • A request letter on your letterhead, instructing the bank to remit and to debit your account.
  • The invoice, and for goods the Bill of Entry or proforma; for services, the agreement or purchase order.
  • The beneficiary's bank details, including SWIFT code and, where the bank asks, an intermediary bank.
  • Instructions on who bears bank charges, and whether to use a booked forward contract or a rate agreed with the dealing desk.

Getting it right the first time

Choose the purpose code first; it decides the form, the tax papers and how the bank reports the payment. FxLayer picks the form from the purpose code, fills it from the transaction and the party master, and shows only what still needs to be answered.

Questions

Yes, if they are from the same supplier and paid in one remittance. The request letter should list each invoice and Bill of Entry it covers.
Banks treat refunds of export advances as a separate purpose and usually ask for a request letter with the original remittance details. Check your bank's format.
Many banks now accept digitally signed applications through their trade portals or by email from registered addresses. Check what your bank accepts.

This article is general information on Indian foreign exchange and tax rules as they stood on the date shown. It is not legal or tax advice. Rules and limits change; confirm the current position with your AD bank, the relevant RBI Master Direction or your adviser before acting.

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