Key points
- Codes starting with S are for payments out of India; codes starting with P are for receipts.
- Imports of goods use S0101 to S0104; exports of goods use P0101 to P0103.
- Merchanting trade uses the pair S0108 and P0108.
- The wrong code can leave an IDPMS or EDPMS entry open and change the tax papers required.
How the codes are built
RBI's purpose codes have five characters: a letter and four digits. S marks a payment from India and P a receipt into India. The first two digits group the purpose, so 01 covers trade in goods, 08 computer and information services and 10 other business services, and the last two digits narrow it down.
Codes for goods
For imports, S0101 is an advance payment and S0102 a payment against an invoice, with related codes for other import situations. These are on the specified list for tax purposes, so no Form 145 is needed. For exports, P0101 covers bills negotiated, purchased or discounted, P0102 bills sent on collection and P0103 an advance against an export contract. The bank uses these codes to settle entries in IDPMS and EDPMS.
Codes for services
Service payments carry codes that describe the service: S0802 for software consultancy and implementation, including SaaS subscriptions, S0803 for data processing and hosting, S0902 for royalties and licence fees and S1006 for business and management consultancy, among many others. These usually need Form A2 and the tax analysis behind Form 145, because most are not on the specified list.
Why the code matters
- It decides whether the payment is reported in IDPMS or EDPMS and which entries it can settle.
- It decides whether Form 145 and Form 146 are required.
- It feeds RBI's balance-of-payments statistics, so banks are careful about corrections.
- Changing a code after the payment needs a request to the bank and often supporting documents.
FxLayer only lets a remittance settle the records its purpose code allows, so an advance cannot be matched to a Bill of Entry by mistake and a merchanting payment cannot close an ordinary import.
Questions
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.