P0008 Purpose Code: Foreign direct investment in India in real estate

Purpose code P0008 is used when an Indian entity receives foreign direct investment into real estate activity in India.

What is the P0008 purpose code?

Purpose code P0008 is used when an overseas investor puts money into real estate in India as direct investment, and that money lands in the recipient entity's Indian bank account. It sits alongside P0006 and P0007 as the third leg of foreign direct investment into India, separated from them by the asset the money goes into rather than by who is investing. Foreign investment into Indian real estate is a restricted area, and only certain activities are open to it, so confirm your specific activity is permitted under current FDI policy before treating this code as the right one. Under RBI FEMA guidelines, this inward payment is classified under Capital Account and reported accordingly.

When to use P0008 purpose code?

Use P0008 when an Indian entity receives foreign direct investment into real estate activity in India that is open to such investment. It is the correct RBI receipt code for the real estate leg of foreign direct investment, where the same investor might otherwise bring money in as equity or as debt. P0008 applies to what the investment goes into, and the permissibility of that activity is a separate question you settle first.

When to use a different code:

• Use P0006 when the payment is foreign direct investment in India in equity
• Use P0007 when the payment is foreign direct investment in India in debt securities
• Use the matching S-code when you are sending money abroad rather than receiving money

Who typically uses P0008 purpose code

Indian entities receiving foreign investment into real estate and construction development activity that is open to such investment, including development projects funded by an overseas investor. This is an entity-level code, since the recipient is the Indian entity into which the investment is being made.

Examples of transactions covered under P0008 purpose code

• Funds received by an Indian entity from an overseas investor backing a permitted construction development project
• Investment received into an Indian real estate development where foreign participation is allowed
• Money received from a foreign investor funding development activity carried out by an Indian entity
• Payment received against a foreign investor's committed contribution to a permitted real estate project

When NOT to use P0008 purpose code

• The foreign direct investment is in company equity rather than real estate (use P0006)
• The foreign direct investment is in debt securities rather than real estate (use P0007)
• A non-resident individual is buying immovable property in India for their own use, which is a personal property purchase rather than foreign direct investment
• You are sending money abroad rather than receiving (use the matching S-code)

Documents required for P0008 purpose code

To receive a payment under P0008, keep the following documents ready so your bank can verify the transaction and report it correctly under FEMA.

How is a P0008 Purpose Code declared?

Declaring the code is pretty straightforward. Here's how the payment gets tagged and reported.

1. Confirm the activity is permitted: Check that the real estate activity is open to foreign investment before the money moves.
2. Receive the funds: The investor remits the money into your entity's Indian bank account.
3. Declare the purpose: State the purpose of the inward remittance on your bank's form.
4. Submit supporting documents: Provide the investment agreement, the KYC report on the investor, and your own KYC so the bank can verify the transaction.
5. Get your FIRA: Once processed, your FIRA is issued as proof and the payment is reported under FEMA.

Common mistakes to avoid while using P0008 purpose code

A few common slips can hold up your payment or cause compliance issues. Here's what to watch for.

1. Assuming the code settles permissibility: Treating P0008 as authorisation to receive foreign investment into real estate, when the code only classifies a transaction that is already permitted.
2. Tagging an equity investment as real estate: Using P0008 when the overseas investor took shares in the Indian company, which belongs under P0006.
3. Code and document mismatch: The code not matching what your investment agreement describes, which flags the payment.
4. Incomplete documents: Missing the investment agreement, investor KYC, or your own KYC, so the bank holds funds until provided.
5. Missing PAN or KYC: Incomplete verification stops the bank from releasing the payment.
6. Using an inward code for an outward payment: Applying a receipt code to money you're sending out instead of the matching outward code.

How Skydo helps you receive international business payments

P0008 covers capital account transactions, which Skydo does not process. If you also invoice foreign clients for goods or services, here is how Skydo helps you get paid.

1. Complete onboarding: Share PAN, Aadhaar, and Indian bank details. Setup is fully online.
2. Get virtual account details: Receive account details in USD, GBP, EUR and other currencies your clients pay in.
3. Your client pays like a local: They send a domestic transfer in their own country, no SWIFT and no wire fee on their end.
4. FIRA is generated automatically: Free e-FIRA on every payment, stored in your dashboard for GST and audits.
5. INR settles within 24 hours: Mid-market rate with a flat, visible fee, no FX markup.