For Foreign Merchants
For Indian Businesses
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Expert insights on cross-border payments, global trade, and international finance.
Every foreign currency payment that crosses an Indian bank carries a five character purpose code. Your bank puts it on the transaction whether you choose it or not, and it is the single field that decides how RBI classifies your money in India's balance of payments. Here is the complete current list. All 297 codes, both directions, in RBI's own wording. TL;DR * There are 297 codes: 138 inward (P), 136 outward (S), and 23 cover page codes that only banks use for fortnightly aggregates. * P
A merchant of record is the legal entity that sells to your customer. It takes the payment, appears on the card statement, carries the chargeback, and owes the sales tax. Most software companies use one so they can sell into forty countries without registering in forty countries. India splits that role in a way most markets do not, and the split is the thing to understand before you sign anything. Two facts decide everything below. A merchant of record based outside India cannot itself collect
Section 195 of the Income-tax Act, 1961 required you to deduct tax at source before paying a non-resident anything chargeable to tax in India. That obligation still exists. The section number does not. For any payment where the earlier of credit or payment falls on or after 1 April 2026, the governing provision is Section 393(2), Table Sl. No. 17 of the Income-tax Act, 2025. Same duty, same rates, different reference, and the reference is the part that bites, because the filing utility validate
Customs duty is the tax Indian Customs charges on goods crossing the border. On imports you pay it before your cargo is released, no payment, no Out of Charge, no delivery. It is calculated on the assessable value of the shipment, not the invoice value, and it is almost never a single tax. That last point is where most importers lose money. You budget for "20% duty," the Bill of Entry lands at 44%, and the difference was sitting in three separate line items you didn't know were stacked on top o
Form 15CA is the declaration you file before sending money out of India to a non-resident. Form 15CB is the chartered accountant's certificate that supports it when the payment is taxable and crosses ₹5 lakh in a tax year. Together they are how the Income Tax Department sees a foreign remittance before your bank releases it. Both forms have been renumbered. Under the Income-tax Rules, 2026, Form 15CA is now Form No. 145 and Form 15CB is now Form No. 146. The rule that governs them moved from Ru
A merchanting trade transaction is a trade where an Indian entity buys goods from a seller in one foreign country and sells them to a buyer in another foreign country, with the goods shipping directly between those two countries and never entering India's Domestic Tariff Area. The Indian party is a principal, not a broker, it takes title, takes the risk, and keeps the margin between the import leg and the export leg. Merchanting trade is regulated by the Reserve Bank of India under FEMA, and bot
