Reporting Foreign Remittances to RBI: Inward and Outward Transactions

Most foreign exchange transactions are reported to the Reserve Bank of India through the bank that handles them, but the business or individual concerned is responsible for giving the bank correct information and, for several transactions, for filing forms within fixed time limits. Mistakes in purpose codes, missed filings and unrealised export or import entries are among the most common FEMA issues faced by Kerala businesses and families with members abroad.

This article explains how different types of inward and outward remittances are reported, and who is responsible for what.

Inward remittances

Purpose	How it is reported	Responsibility of the recipient
Investment in shares of an Indian company	FC-GPR on the FIRMS portal after allotment	Allot within 60 days of receipt; file FC-GPR within 30 days of allotment
Export of goods	Through the shipping bill and EDPMS	Realise proceeds within the prescribed period and ensure the bank closes the shipping bill
Export of services	Through the bank, with the correct purpose code	Give the correct purpose code; obtain FIRC or e-BRC
Foreign loan (external commercial borrowing)	Form ECB for a Loan Registration Number, and monthly ECB-2 returns	Obtain LRN before drawdown; file ECB-2 every month
Donations to an NGO from foreign sources	Under FCRA, not FEMA	Receive only in the designated FCRA account, with registration or prior permission
Remittances by NRIs to family	Personal remittance through the bank	Generally no reporting by the recipient, but the purpose should be correctly stated

See obtaining FIRC and its importance and ECB returns.

Outward remittances

Purpose	How it is reported	Points to note
Payment for imports	Through the bank and IDPMS, against the bill of entry	Submit the bill of entry to the bank so that the import entry is closed
Payment for services, royalty, fees	Through the bank, with Form 15CA and, where required, a chartered accountant’s certificate in Form 15CB	Income tax withholding must be applied before remittance
Overseas investment by a company or individual	Form ODI through the AD bank	Within 30 days of remittance; APR every year
Individuals’ remittances under LRS	Through the bank, with Form A2 and PAN	Overall limit of USD 250,000 per financial year; tax collected at source above the threshold for certain purposes

See ODI compliance.

Purpose codes

Every foreign exchange transaction is classified by a purpose code in the bank’s records. The code determines how the RBI treats the transaction. A remittance for share subscription coded as a gift, or export proceeds coded as a family remittance, creates a mismatch that later prevents filing FC-GPR, closing an export entry or claiming GST benefits. The purpose should be communicated to the remitter before payment, and checked when the bank credits the money.

Annual reporting

• FLA return: companies and LLPs that have received foreign investment or made overseas investment must file the Annual Return on Foreign Liabilities and Assets by 15 July each year, even if there were no new transactions.
• APR: Indian entities with ODI must file the Annual Performance Report of each foreign entity by 31 December.
• Annual return under FCRA: for organisations receiving foreign contribution.

When things go wrong

• Late reporting: delays in filing FC-GPR, FC-TRS, ODI and certain other forms can be regularised by paying a late submission fee, within the period allowed.
• Other contraventions: can be compounded by the RBI on application, which avoids adjudication under FEMA.
• Unrealised exports or unclosed imports: should be taken up with the bank promptly, with documents, to avoid the entity being placed on a caution list.

See consequences of non-compliance under FEMA and FEMA compliance checklist.

Frequently asked questions

Does a company file anything when it receives money from abroad?

It depends on the purpose. Investment in shares requires FC-GPR; export proceeds are reported through EDPMS by the bank; loans require ECB reporting. The company must give the bank correct information in each case.

Do family remittances from the Gulf need to be reported?

Personal remittances from NRIs to family members are handled by the bank and generally do not require separate reporting by the recipient, although the source and purpose should be documented.

What is the LRS limit?

Resident individuals can remit up to USD 250,000 per financial year under the Liberalised Remittance Scheme for permitted purposes.

ചുരുക്കം (Summary in Malayalam)

വിദേശ പണമിടപാടുകൾ ബാങ്ക് വഴിയാണ് RBI-യെ അറിയിക്കുന്നതെങ്കിലും, ശരിയായ വിവരങ്ങൾ നൽകുന്നതും നിശ്ചിത ഫോമുകൾ സമയത്ത് ഫയൽ ചെയ്യുന്നതും ബിസിനസിന്റെ ഉത്തരവാദിത്തമാണ്. ഓഹരി നിക്ഷേപത്തിന് FC-GPR, കയറ്റുമതിക്ക് EDPMS, വിദേശ വായ്പയ്ക്ക് ECB റിപ്പോർട്ടിംഗ്, വിദേശ നിക്ഷേപത്തിന് ODI ഫോം എന്നിവ ആവശ്യമാണ്. ശരിയായ പർപ്പസ് കോഡ് ഉപയോഗിക്കണം. വിദേശ നിക്ഷേപമുള്ള കമ്പനികൾ എല്ലാ വർഷവും ജൂലൈ 15-നകം FLA റിട്ടേൺ നൽകണം.

This article gives a general overview of reporting foreign exchange transactions under FEMA. Forms, limits, time limits and procedures are revised from time to time; for accurate and current requirements, refer to the latest RBI directions and consult the AD bank. The article is not advice on any particular case.