India taxes individuals based on a system of income slabs. Different tax rates are assigned to different ranges of income.&nbsp;

Understanding tax slabs is crucial for several reasons.

As a person earns more, the tax liability also increases, creating a fair and progressive tax system in the country. To achieve this, the government regularly updates and announces changes to tax slabs in the Union Budget.

The income tax slabs differ between the old and new tax regimes. Let's explore the specific slab rates applicable to Individuals for FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25).

Income Tax Slab Rates For FY 2023-24 (AY 2024-25)&nbsp;

Rates of the old tax regime slabs are categorized into three groups:

The new tax regime applies uniform tax rates to all individuals, eliminating the age-based distinctions in the old system. The new tax regime slabs 2023-24 are outlined below.

Applicability of Surcharge for FY 2023-24 (AY 2024-25)

The income tax <a href="https://incometaxindia.gov.in/charts%20%20tables/tax%20rates.htm">surcharge</a> is an extra fee imposed on top of the <a href="https://www.skydo.com/blog/how-to-file-taxes-under-44ada">regular income tax</a>. An additional tax is applied to individuals with higher income earnings in a specific financial year. Let’s look at the applicable surcharge rate under the Old and New tax regime.

However, 25% or 37% surcharge rates will not apply to income under the following sections.

Consequently, the highest surcharge rate on the tax payable for such incomes will be 15%.

Starting from the Assessment Year 2023-24, the maximum surcharge rate on tax payable for dividend income or capital gain specified in Section 112 will be capped at 15%.&nbsp;

A 4% Health and Education cess will be applied to all cases’ total income tax liability and surcharges.

Comparison of tax rates under the New tax regime and the Old tax regime for FY 2022-23 (AY 2023-24)

How do you calculate the income tax from the income tax slabs?

Let’s understand the calculation with an example.

Sanjana, aged 35, has a total taxable income of Rs. 8,50,000. She has opted for the old tax regime. Her income includes income from salary, interest and rental income. Deductions under section 80 have been reduced. Now, Sanjana wants to know her <a href="https://www.skydo.com/blog/gst-requirements-international-service-sales">tax liability</a> for FY 2022-23 (AY 2023-24).

*Sanjana, an individual taxpayer under the age of 60, enjoys an income exemption limit of up to Rs 2,50,000. Other taxpayers, i.e., senior and super senior citizens, have higher income tax exemption thresholds of Rs 3,00,000 and Rs 5,00,000, respectively.

Please be aware that the tax rates in the New Tax Regime are uniform for all categories of individuals, including regular individuals, senior citizens, and super senior citizens.&nbsp;

Individuals with a net taxable income of up to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability in both the New and Old tax regimes. It's important to note that in Budget 2023, the rebate under the new regime has been extended, making income up to Rs 7 lakh tax-free from the FY 2023-24 onward.

Let's delve into effective strategies to maximize your investments while minimizing the associated tax burdens.

ELSS mutual funds provide a dual benefit of potential capital appreciation and tax savings under Section 80C of the Income Tax Act. Investing in ELSS reduces taxable income and offers a path for long-term wealth growth.

2. Explore tax-efficient investment avenues

Health insurance qualifies for tax benefits under Section 80D. You can claim tax benefits on premiums paid - up to Rs 20,000 for senior citizens and Rs 15,000 for others. For example, if you pay Rs 15,000 for your policy and Rs 20,000 for your senior citizen parent, you can claim a total tax benefit of Rs 35,000.&nbsp;

Maturity value is tax-free for sums received under critical illness insurance policies.

This strategy entails selling loss-making assets to realize the capital loss and using it to offset the gains earned by profit-making assets.

For instance, if you have a loss of Rs. 20,000 in Stock A and a gain of Rs. 30,000 from Stock B, you can sell Stock A during a market downturn to offset the gains. This way, you can reduce your taxable income. The saved amount can be reinvested for portfolio growth.

Ensure that tax loss harvesting aligns with your overall financial goals and plan by considering a discussion with a financial professional or tax advisor.

<a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business">Consult financial professionals or tax advisors</a> for effective tax planning and strategic advice. Their expertise can provide tailored insights aligned with your financial goals and ensure a well-informed approach to optimize your tax situation.

If you need help deciding what is right for you, we will connect you with our panel of Indian and US-based CA / CPAs. Feel free to reach out to us.

Q1. How is a taxpayer's income categorized?

Ans: A taxpayer's income falls into five categories outlined in Section 14 of the Income Tax Act. These include Income from salary, Profits from a business or profession, Income from House Property, Capital Gains, and Income from Other Sources.

Q2. Is it possible to avail of 80C deductions while choosing the new tax slabs 2023-24?

Ans: No, under the new tax regime, several deductions and exemptions, including those under section 80C, are not permitted. Opting for the new tax regime means foregoing the ability to claim deductions under section 80C.

Q3. What do "Previous Year" and "Assessment Year" mean?

Ans: We have two important terms in income tax provisions: (i) Previous Year and (ii) Assessment Year. Previous Year is when you earn income, typically from April 1st to March 31st. The year right after the Previous Year, from April 1st to March 31st, is called the 'Assessment Year.'

For example, the Previous Year is from April 1, 2023, to March 31, 2024 (FY 2023-24). The corresponding Assessment Year is from April 1, 2024, to March 31, 2025 (AY 2024-25).

Q4. What is the tax exemption limit for calculating income tax rebate under section 87A?

Ans: For FY 2023-24 (AY 2024-25), the rebate limit has been increased to Rs. 7,00,000 under the new tax regime. This means a resident individual with taxable income up to Rs 7,00,000 will receive Rs 25,000 or the amount of tax payable (whichever is lower) as tax relief. However, the old tax regime's threshold limit will remain the same, i.e., Rs 12,500 if taxable income is up to Rs 5,00,000.

Q5. How much is the standard deduction for FY 2023-24?

Ans: You can claim a standard deduction of ₹50,000 to the income taxable under the head ‘Salaries.’ The standard deduction is a tax benefit that can be claimed irrespective of the amount spent on Transport or Medical Allowance. It applies to individuals earning a salary or pension income.

Prepare for the upcoming year's tax season by understanding the tax slabs for 2023-24 and optimizing your tax savings.

Tax Slabs in 2023-24: Plan Ahead for Next Year Tax Savings

8,50,000. She has opted for the old tax regime. Her income includes income from salary, interest and rental income. Deductions under section 80 have been reduced. Now, Sanjana wants to know her tax liability for FY 2022-23 (AY 2023-24).

How do you calculate the income tax from the income tax slabs

Sanjana, aged 35, has a total taxable income of Rs

Please be aware that the tax rates in the New

Tax Regime are uniform for all categories of individuals, including regular individuals, senior citizens, and super senior citizens.

Individuals with a net taxable income of up

to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability in both the New and Old tax regimes It's important to note that in Budget 2023, the rebate under the new regime has been extended, making income up to Rs 7 lakh tax-free from the FY 2023-24 onward. Check if your global business is compliant: 10 point checklist Compliance guidelines Must have documents Expert Insights Download checklist.

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Rohit Khuranna

Every business wants speed and convenience. It is the mantra In the contemporary world of commerce, and cash transactions have naturally taken a backseat. Even outside the capital markets, we see the reign where credit and trust are a currency. Transactions of all sizes are hinging on a fundamental pledge—the buyer commits to settling the bill later.&nbsp;

Today, physical currency only changes hands with this financial choreography, the bill of exchange.

A bill of exchange is a written, unconditional commitment by one party, known as the drawer, to another party, the drawee, to pay a certain sum of money to a third party, the payee, either on demand or at a specific future date. This financial instrument serves as a guarantee of payment for goods or services provided.

The bill of exchange has been a fundamental legal instrument in global trade, binding the exporter and the importer and enabling smooth transactions between parties across international borders.&nbsp;

In case of dishonor, the payee can seek legal recourse to enforce payment, utilizing the legal provisions outlined in the governing framework to ensure the settlement of the outstanding amount and any associated damages or penalties.

Let's consider a scenario where a Bengaluru-based software company (Exporter) is providing software services to a Silicon Valley company (Importer). The Bengaluru company, acting as the exporter, creates a Bill of Exchange. This document includes details such as the total amount due, the due date, and other relevant terms.

The Bengaluru company is the drawer, the Silicon Valley company is the drawee, and the bank may be involved as a financial intermediary. The Silicon Valley company reviews the document and, if satisfied, accepts the Bill of Exchange, acknowledging its commitment to pay the specified amount on the due date.

On the due date specified in the Bill of Exchange, the Silicon Valley company makes the payment to the Bengaluru company or through the bank. The transaction is considered complete, and the Bengaluru company delivers the software services as agreed.

A bill of exchange offers several key advantages, making it a valuable tool in commercial transactions and international trade.

A bill of exchange comprises several key components that define its structure and functionality, ensuring clarity and enforceability within commercial transactions.

A bill of exchange involves three parties: the drawer, drawee, and payee, where the drawee must pay the payee. In contrast, a promissory note is a two-party instrument in which one party unconditionally promises to pay a specified sum to the other party.&nbsp;

A bill of exchange is suitable for commercial transactions involving the sale of goods or services on credit, providing a structured framework for payment and trade. On the other hand, a promissory note is more appropriate for individual lending arrangements, personal loans, or informal credit agreements, facilitating clear repayment terms between the lender and the borrower.

<a href="https://www.skydo.com/blog/guide-for-tech-exporters-on-global-compliance">Regulatory compliance</a> is essential when handling bills of exchange formats involving stringent legal requirements and documentation practices.

The bill of exchange is crucial for managing credit, fostering trust, facilitating international trade, providing financing opportunities, and offering legal protections. Thus, it streamlines complex financial transactions and contributes to the smooth functioning of global trade networks.

By integrating a bill of exchange into their operations, businesses can enhance their financial flexibility, minimize risks, and foster stronger relationships with their trade partners, thereby ensuring a seamless and secure exchange of goods and services on a global scale.

Q1. What do you mean by a bill of exchange?

Ans: A bill of exchange is a written order from one party to another, directing the second party to pay a specific sum of money to a third party on a specific date or demand.&nbsp;

Q2. What are the legal provisions regarding bills of exchange?

Ans: The negotiable instruments law of a specific country typically governs the legal provisions for bills of exchange.&nbsp;

Q3. Who is an acceptor of a bill of exchange?

Ans: An acceptor of a bill of exchange is the individual or entity formally agreeing to honour the obligation stated in the bill. The acceptor assumes the primary liability for paying the specified amount indicated in the bill, either on a fixed date or upon demand.

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With the introduction of online payments, both you and your clients have become more comfortable with digital payments in the last few years. But if you have to pay Rs. 5 lakh to a supplier today, what payment mode should you use: NEFT or RTGS?

You frequently encounter two seemingly similar yet distinctly important methods in the complex web of financial dealings. But are they just interchangeable acronyms, or do they <a href="https://www.skydo.com/blog/how-you-can-streamline-international-transactions-for-your-business">streamline your financial operations</a>?

This question is best answered by understanding the difference between NEFT and RTGS.&nbsp;

NEFT (National Electronic Funds Transfer)

National Electronic Funds Transfer (NEFT) is an Indian nationwide payment system that allows individuals to transfer funds online from one NEFT-enabled bank to another. The Reserve Bank of India introduced the payment system in November 2005 as a digital alternative to depositing money in someone else’s bank account at a bank branch.&nbsp;

Previously, there were several restrictions on the timings of money transfers through NEFT, which the RBI removed by updating the payment system in November 2019. Now, individuals can transfer money through NEFT 24x7 and 365 days a year.&nbsp;

We need some basic information to conduct any RTGS or NEFT transaction

Here are some features and characteristics of financial transactions executed through NEFT:&nbsp;

Financial transactions made through NEFT have a minimum transfer limit of Rs 1. RBI has not set any maximum limit for NEFT transactions but a per-transaction limit of Rs 50,000 for cash transactions. However, there is no upper limit on the total amount individuals can transfer using the NEFT facility.&nbsp;

This means you can transfer as much money as you want, but you must limit the amount to Rs 50,000 per transaction and use multiple transactions to transfer money above Rs 50,000. However, few banks have set their own maximum daily limit on the amount you can transfer using the NEFT facility.&nbsp;

There are no transaction charges for the recipient of funds sent through the NEFT facility. Individuals who execute financial transactions through NEFT online also don’t have to incur any money transfer fee. However, if you are initiating an NEFT fund transfer offline by visiting the bank, it may charge the following (these costs vary depending on the bank and type of account:&nbsp;

Real-Time Gross Settlement (RTGS) is a nationalized electronic fund transfer system used by Indian banks and financial institutions to execute time-sensitive and high-value transactions. Financial transactions executed through RTGS are considered the safest among payment systems as the transactions are done in real-time and in full rather than in batches.&nbsp;

The term ‘gross’ in Real-Time Gross Settlement (RTGS) signifies the payment execution process done individually without offsetting and netting against other transactions. Individuals can transfer money through RTGS 24x7 and 365 days a year. The <a href="https://www.skydo.com/blog/real-time-tracking-of-international-payments">real-time payment</a> process ensures that the financial transactions are highly secure and independent of other financial transactions.&nbsp;

Here are some features and characteristics of financial transactions executed through RTGS:

RTGS transactions are meant for high-value transactions, and the RBI has set the minimum RTGS limit to initiate a transaction at Rs 2 lakh. RBI has not set any maximum limit for financial transactions that individuals can make through RTGS. However, banks may set their own upper limit for the maximum funds that can be transferred through RTGS in a single day.&nbsp;

There are no transaction charges for the recipient of funds sent through the RTGS facility. However, individuals making the payment through RTGS must incur a certain money transfer fee, which banks may adjust at their convenience. Mostly, RTGS transaction charges are around:&nbsp;&nbsp;

There are numerous differences between NEFT and RTGS based on their transaction processing speeds, minimum and maximum transaction limits, applicability for different types of transactions, etc.

The major difference is the settlement type. Let’s say you have to transfer Rs. 2,50,000 to your supplier. If you send it by RTGS, your bank A will send it to their bank B, and they will receive it almost immediately.

However, if you send it through NEFT, then Bank A will block these funds from your account. At the end of the settling window, they will check if Bank B owes them any money. If Bank B has to pay them Rs. 1,00,000, Bank A will only transfer Rs. 1,50,000 to them. This ‘netting’ of what one bank must give vs what they have to get is the core mechanism of an NEFT transaction.

Here are the key differences between NEFT and RTGS: 



Understanding the key differences between NEFT and RTGS is the best way to understand which payment mode suits you best.

If you want to transfer money lower than Rs 2 lakh without the urgency of instant settlements, you can use NEFT online as it offers a free-of-cost way. For example, if you are a freelancer and want to transfer or receive fees of Rs 40,000, you can opt for NEFT as a <a href="https://www.skydo.com/blog/cut-international-transaction-costs">cost-effective way</a>.&nbsp;

On the other hand, if you want to make high-value transactions higher than Rs 2 lakh, it is beneficial to ensure that the payment is settled instantly and in full. You can opt for RTGS as the payment mode in such a case. For example, if you want to execute a business transaction, which is generally high-value and above Rs 2 lakh, you can opt for RTGS, as it will instantly confirm a fund transfer. It is deemed that on such a large amount, you will be comfortable incurring the cost of RTGS payments.

Money transfers are one of the most critical aspects for any business, whether as a freelancer or an entrepreneur. Facilities such as NEFT and RTGS have made it easier for customers nationwide to send and receive payments anytime and with the utmost security.&nbsp;

It is common for individuals making payments lower than Rs 2 lakh to use NEFT, while individuals looking to transfer funds higher than Rs 2 lakh choose RTGS. However, it entirely depends on your business type and the urgency of financial transactions’ settlement to make an informed choice between NEFT and RTGS. That being said, if you want to receive international funds in foreign currencies, look no further than <a href="https://www.skydo.com/?utm_campaign=demo_click">Skydo</a>. With a Skydo payment platform, you can <a href="https://www.skydo.com/blog/seamless-payment-experience-with-international-bank-accounts">open an international bank account in just five minutes</a>.&nbsp;

Q1.&nbsp; Which mode of payment, NEFT or RTGS, is faster?

Ans: When compared based on their settlement speeds, RTGS is a faster mode of payment as it settles the funds in full and instantly. On the other hand, NEFT takes around 30 minutes for payment settlement and settles them in batches.&nbsp;

Q2. Is it compulsory to have an Indian bank account to transfer funds through NEFT and RTGS?

Ans: Yes, you need to open a bank account with an Indian bank and opt for Internet banking to transfer funds through NEFT and RTGS online.&nbsp;

Q3. What security measures are in place for NEFT and RTGS transactions?

Ans: The Reserve Bank of India has made it mandatory to create a beneficiary before making payments through NEFT and RTGS for extensive security. The bank requires you to enter the recipient's bank account details, such as the recipient's name, bank and branch name, account number, and <a href="https://www.skydo.com/blog/is-ifsc-and-swift-code-same">ifsc code</a>. The bank matches and cross-checks the details for utmost security.&nbsp;

Q4. Can I reverse a transaction made through NEFT or RTGS?

Ans: No, you can not stop or reverse a payment once made through NEFT and RTGS. However, you can inform the bank immediately if you have sent the money to the wrong recipient. In fact, if the bank finds some mismatch in the account name and number details, they shall reverse the transaction by themselves, too.&nbsp;

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If you’re involved in international remittances, getting purpose codes right is crucial. These alphanumeric codes are used to define the reason for a transaction, and using the correct one is key to smooth payments.

A wrong or missing purpose code might lead to:

Rejection of the payment and its return to the source, or

Delays while the bank verifies the transaction’s purpose

To avoid these issues, Skydo is here to ensure your international payments are fast, easy, and compliant. Let’s explore how our autosave purpose code feature supports you in creating a seamless payment experience.

Skydo: Simplifying Purpose Code Allocation

For Indian businesses, handling international payments and invoicing can be both complex and time-consuming. From creating invoices and tracking payments to managing purpose codes, the process can take up a lot of your time.

That is where Skydo comes in. We offer automation features that make these tasks easier, helping you manage cross-border transactions more efficiently.

With Skydo, you can automate invoice generation, payment tracking, and purpose code management, so you can focus more on your business and less on paperwork.

Steps to Autosave Purpose Code in your Invoice with Skydo

If you cater to several foreign clients and send out invoices regularly, manually entering purpose codes in hundreds of invoices over a long period can not only be tedious but very prone to potential human errors.&nbsp;

But with Skydo, you can eliminate the manual effort and mitigate risk because it saves the purpose code in its database and prefills it corresponding to the services offered.

Let’s understand the step-by-step process of creating an invoice on Skydo and how the purpose code feature works:

Realizing Efficiency Gains and Compliance

As we’ve seen, using incorrect or missing purpose codes can cause significant problems for cross-border transactions. Banks may flag these transactions as suspicious, which can lead to delays or even failures in processing payments.

When a transaction is flagged, it can disrupt your business cash flow and create obstacles for smooth operations. This not only affects your current transactions but can also hinder your ability to scale and grow your business.

To avoid the inconvenience of delays and complications with international transactions, Skydo takes care of the purpose code for you. By adding the correct purpose code based on your previous input, Skydo ensures that your <a href="https://www.skydo.com/blog/inward-remittance-in-india">inward remittance</a> arrives on time.

This accuracy not only reduces your business risks but also supports rapid growth and scalability. Plus, Skydo’s approach helps you stay compliant with regulatory requirements, minimizing the risk of hefty penalties.

By facilitating accurate purpose codes, Skydo contributes to a smoother global financial ecosystem, making cross-border transactions seamless and efficient.

<a href="https://www.skydo.com/blog/rbi_purpose_code_for_inward_remittance">rbi purpose codes</a> play a key role in a stable financial system, enabling the monitoring of foreign funds and preventing fraud. Accurate use of these codes facilitates smooth international transactions and supports business expansion.

We understand that manually handling these purpose codes can be difficult and prone to mistakes. Skydo’s automated feature makes this task easy and ensures compliance, so you can focus on growing your business.

<a href="https://www.skydo.com/?utm_campaign=demo_click">Join the Skydo payment platform today</a> to experience seamless cross-border transactions and mitigate financial and non-compliance risks!

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An eBRC (Electronic Bank Realization Certificate) is digital proof you can generate from the Directorate General of Foreign Trade (DGFT) portal once you receive payment for an export. Simply put, it confirms that you’ve been paid for your goods or services.

This certificate is important because it helps you report your earnings, file taxes easily, and even access government benefits meant for exporters including low-cost loans, subsidies, duty exemptions and more.&nbsp;

Before eBRC, getting a <a href="https://www.skydo.com/blog/bank-realisation-certificate-all-you-need-to-know">Bank Realization Certificate (BRC)</a> was a tedious process. Exporters had to visit their bank, apply for a physical BRC, and then submit it to the Directorate General of Foreign Trade (DGFT). The DGFT would manually enter transaction details, making the process slow and complicated, especially for claiming export incentives.

In 2012, the <a href="https://www.skydo.com/blog/e-brc-update">DGFT introduced eBRC</a>, eliminating the need for physical visits to the bank and a lot of paperwork. Now, banks transmit Inward Remittance Messages (IRM) digitally to DGFT and an exporter can match their shipping bill/SOFTEX details with their payment and generate an eBRC on the DGFT portal.&nbsp;

DGFT has made it mandatory for all exporters to apply for and receive the eBRC to demonstrate that they have received payment for their exported goods or services per DGFT regulations.

The eBRC system provides a digital record of export transactions, making it easier for exporters to maintain and retrieve records for audit and compliance.  Additionally, exporters can avoid visiting the bank and DGFT offices.&nbsp;

One of the main reasons exporters apply for the eBRC is to reap the benefits of various export benefits offered by the Indian government under its Foreign Trade Policy. Submitting an eBRC allows the exporters to be eligible for benefits such as low-cost loans, duty exemptions, subsidies, etc.&nbsp;

The eBRC process connects your export shipment, payment realization, and DGFT records to create digital proof that you received payment for your exports.

Once your overseas buyer makes the payment, your bank or payment service provider receives the inward remittance. If the payment comes through a PSP, you typically receive a <a href="https://www.skydo.com/blog/importance-of-fira-for-freelancers">FIRA</a> (Foreign Inward Remittance Advice) as proof of receipt.

Step 2: Bank creates and shares IRM details

Your Authorised Dealer (AD) bank records the payment as an IRM (Inward Remittance Message) and electronically shares the realization details with the Directorate General of Foreign Trade system.

The exporter logs into the <a href="https://www.skydo.com/blog/dgft-guide-indian-exporters">DGFT</a> portal and matches the IRM against the relevant shipping bill, <a href="https://www.skydo.com/blog/softex-form-guide-indian-exporters">SOFTEX</a> entry, or export invoice details. The system also allows multiple IRMs to be mapped against a single export transaction where required.

Step 4: Generate eBRC and complete closure

Once the details are matched and validated, the eBRC is generated on the DGFT portal. Exporters can then use the eBRC for export incentive claims and submit the required documents to their bank for <a href="https://www.skydo.com/blog/understanding-edpms-full-form-and-its-essential-role-in-export-management">EDPMS</a> closure and compliance tracking.

How to check eBRC status on DGFT Website?

We have gone through the DGFT portal to figure out how to check eBRC status so that you don't have to. Here's a quick summary:

Open DGFT eBRC Services: Visit the Directorate General of Foreign Trade portal and navigate to Services → eBRC

Select “View eBRC”: Under the eBRC services page, click the View any e-BRC option.

Enter Export Details: Fill in the required information, including:

IEC (Importer Exporter Code),

eBRC Number,

Shipping Bill or Invoice Number,

and Port Code.

Complete CAPTCHA Verification: Enter the CAPTCHA code displayed on the screen.

View eBRC: Click View eBRC to access the eBRC details linked to the entered export transaction.

Is eBRC required for freelancers receiving foreign payments?

No, eBRC is not mandatory for most freelancers receiving foreign payments.

The eBRC (Electronic Bank Realisation Certificate) is primarily required for exporters of goods and software services that fall under the purview of the DGFT or are covered under SOFTEX regulations. It is used to claim export incentives like RoDTEP or SEIS, and to comply with certain regulatory filings.

However, if you're a freelancer offering services like marketing, design, consulting, writing, or other non-software services, and you're not registered under DGFT or filing for export schemes, you typically do not need an eBRC.

What you’ll usually need instead:
For most freelancers, a <a href="https://www.skydo.com/blog/importance-of-fira-for-freelancers">FIRA (Foreign Inward Remittance Advice) </a>is sufficient. It serves as a bank-issued proof of receiving foreign currency into your Indian account and is often used for accounting, tax filings, and general documentation.

How to Claim Export Incentives using eBRC

In India, the DGFT decides on the value of the incentives which an exporter can seek under the various export benefits. The value is decided by analysing the Free on Board (FOB) of the exported goods and services mentioned in the shipping bills, and the total received payments per the eBRC.&nbsp;

Here's how you can claim these benefits with eBRC:

However, you must ensure that the bank has submitted an error-free e-BRC and it reflects the consolidated realisation value. Furthermore, you must enter freight values, insurance and commission values in the refund application, as the e-BRC excludes such values.&nbsp;

eBRC is essential for export compliance, DGFT processes, and claiming export incentives. But manually matching remittances with shipping bills and generating eBRCs can be time-consuming.

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An RBI purpose code is a standardised, alphanumeric label that classifies the reason for a <a href="https://www.skydo.com/blog/inward-remittance-in-india">foreign inward remittance</a> (e.g., P1401 salary, P0102 export realisation, P0802 software services). AD banks must capture and report it to the RBI for every incoming transfer under FEMA reporting.

Why the right RBI purpose code is critical (inward remittance)

Picking the correct RBI purpose code for inward remittance isn’t a formality; it directly affects compliance, speed of credit, and your documentation trail.

1) It’s a regulatory must-have (FEMA/RBI).
Authorised Dealer (AD) banks must capture and report every foreign inward transaction to RBI with a valid receipt (“P”) purpose code under FETERS. If the code is missing/wrong, banks can’t file accurate returns, triggering holds or rework.&nbsp;

2) It keeps your paperwork clean (<a href="https://www.skydo.com/blog/all-you-need-to-know-about-firc-a-complete-guide">firc</a>/evidence).
The purpose you declare flows into your compliance evidence (e.g., FIRC details and audit trails). Declaring the accurate code up front helps your bank issue the right certificate without back-and-forth.&nbsp;

3) It prevents delays, manual reviews, and returns.
A vague or incorrect purpose (e.g., tagging a service payment as goods realisation) often triggers manual checks, queries, or even a return to sender until corrected.&nbsp;

4) It improves accounting clarity and BoP classification.
Purpose codes classify inflows (e.g., P01 goods exports, P08 computer &amp; information services, P10 other business services, P13 transfers, P14 income), allowing clean bookkeeping and accurate national statistics—another reason banks insist on precise coding.

5) It reduces compliance risk later.
If you repeatedly misclassify remittances, you create inconsistencies between invoices/contracts and RBI filings—raising the odds of additional questions or penalties under FEMA. Industry guidance stresses getting the code right at the remitter setup stage (sender’s bank/platform usually captures it) to avoid re-papering.&nbsp;

How to pick the correct code (step-by-step)

Find the right purpose code for inward remittance with Skydo

Our purpose code finder is your shortcut to identifying the correct purpose code for inward remittance and explaining when to use it. You can either search for the activity to find the relevant purpose code or directly look up the specific purpose code for a simple explanation of when to use it.&nbsp;

Please note that this tool doesn't contain the exhaustive purpose code list for inward remittance.&nbsp; For complete compliance and accuracy, it's always advisable to get in touch with your financial advisor for professional advice.

Personal vs. Business: Quick Selector for the Right Purpose Code

Personal / family inflows (individuals):

Business / freelance inflows (exporters, agencies, SaaS, consultants):

Common RBI Purpose Codes for Inward Remittance for Freelancers, Businesses, and Agencies

While there are over 150 RBI purpose codes for inward remittance, we break down below some of the commonly used ones especially for freelancers, businesses and agencies:

RBI Category:&nbsp;Computer &amp; Information Services