P0105 Purpose Code: Export bills (in respect of goods) sent on collection

Purpose code P0105 is used when an Indian exporter reports an export bill for goods that has been sent to the foreign buyer's bank on a collection basis.

What is the P0105 purpose code?

What is the P0105 purpose code?

Purpose code P0105 is used when an Indian exporter has an export bill for goods that is sent on collection, meaning the shipping documents are forwarded to the foreign buyer's bank for payment against acceptance or presentation rather than being negotiated or discounted upfront. This differs from P0102, which covers the actual realisation of a bill already sent on collection once payment comes through. Under RBI FEMA guidelines, this inward payment is classified under Export of Goods and reported accordingly.

When to use P0105 purpose code?

When to use P0105 purpose code?

When to use a different code:

• Use P0105 when your export bill for goods has been sent on collection to the foreign buyer's bank. It is the correct code for this collection-basis reporting, as distinct from a negotiated or discounted bill.
• Use P0101 when the bill is being negotiated, purchased, or discounted rather than sent on collection
• Use P0102 when you are realising a bill that was already sent on collection
• Use the matching S-code when you are paying a foreign vendor rather than receiving money

Who typically uses P0105 purpose code

Who typically uses P0105 purpose code

Goods exporters in India who ship on a collection basis, sending shipping documents to the foreign buyer's bank rather than negotiating the bill upfront. It applies whether the exporter invoices as a proprietorship, partnership, or registered company.

Examples of transactions covered

• Examples of transactions covered under P0105 purpose code
• An export bill sent on collection to a foreign buyer's bank for a goods shipment
• Documents forwarded under a documents-against-payment collection arrangement
• Documents forwarded under a documents-against-acceptance collection arrangement
• A goods shipment reported to the bank as sent on collection rather than negotiated

When NOT to use P0105 purpose code

• When NOT to use P0105 purpose code
• The bill is being negotiated, purchased, or discounted rather than sent on collection (use P0101)
• The bill has already been realised after being sent on collection (use P0102)
• The bill has gone overdue and is being converted to collection mode (use P0106)
• You are paying a foreign vendor rather than receiving (use the matching S-code)

Documents required

Documents required for P0105 purpose code

To receive a payment under P0105, keep the following documents ready so your bank can verify the transaction and report it correctly under FEMA.

How is a P0105 Purpose Code declared?

How is a P0105 Purpose Code declared?

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

1. Raise your invoice: Bill your foreign buyer for the goods shipment, clearly describing the terms.
2. Send documents on collection: Forward the shipping documents to the buyer's bank for payment against acceptance or presentation.
3. Declare the purpose: State the purpose of the inward remittance using P0105 on your bank's form.
4. Submit supporting documents: Provide the shipping bill, collection instructions, and 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.
6. With a traditional bank you handle each step of your payment journey. But with a platform built for cross-border payments, you can preselect a default purpose code so that the payments land smooth.

Common mistakes to avoid

Common mistakes to avoid while using P0105 purpose code

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

1. Using the realisation code instead: Tagging a bill with P0102 when it's still at the sent-on-collection stage and should be P0105.
2. Code and shipping bill mismatch: The code not matching what your shipping bill and collection instructions describe, which flags the payment.
3. Incomplete documents: Missing shipping bill, collection instructions, or KYC, so the bank holds funds until provided.
4. Missing PAN or KYC: Incomplete verification stops the bank from releasing the payment.
5. Ignoring small payments: Assuming low-value receipts don't need the correct code, which invites scrutiny.
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 Indian businesses with cross-border payments

How Skydo simplifies inward remittance under P0105 Purpose Code

With a bank, you declare the purpose code on your own for every single payment. With Skydo, you can preselect your code once and every payment gets tagged automatically.

1. Preselect the code once - Set P0105 as your default and Skydo tags every incoming payment for you, so there's no form to fill on each one.
2. No repeat declarations - A bank makes you restate the purpose for every remittance. Skydo does it in the background, the same way each time.
3. Instant, free FIRA - Your remittance proof is generated and stored on every payment, ready for your CA, GST, and audits, with no request and no fee.
4. Zero FX markup - You get the live mid-market rate with a flat, visible fee, instead of a markup hidden inside the bank's rate.
5. Settled in 24 hours - Your payment reaches your Indian bank within a day, fully reported and compliant.