P1408 Purpose Code: Inward remittance of profit by branches of Indian FDI Enterprises operating abroad

Purpose code P1408 is used when an overseas branch of an Indian enterprise remits its profits back to India.

What is the P1408 purpose code?

Purpose code P1408 covers profit an overseas branch of an Indian enterprise sends home, with bank branches named explicitly in the description. A branch is not a separate legal entity from its Indian parent, so what it remits is profit rather than a dividend, and that structural point is what places a receipt here rather than under the neighbouring code for dividends from overseas subsidiaries. The term FDI enterprise means one in which direct investment has been made, meaning a lasting or controlling interest, which separates this code and its immediate neighbours from the portfolio investment codes further down the group. Under RBI FEMA guidelines, this inward payment is classified under Primary Income and reported accordingly.

When to use P1408 purpose code?

Use P1408 where a branch your enterprise operates abroad remits its profits to India. It is the correct RBI receipt code where the overseas operation is a branch rather than a separately incorporated company, including where the branch is a bank branch. Two things settle it: the overseas operation is a branch of the same legal entity, and the money is profit rather than a return of capital.

When to use a different code:

• Use P1409 when the overseas entity is a separate company distributing dividends rather than a branch remitting profit
• Use P1410 when the money is interest paid by your overseas enterprise to the Indian parent rather than profit
• Use the matching S-code when money is being sent abroad rather than received

Who typically uses P1408 purpose code

Indian enterprises operating branches abroad, including banks with overseas branches, engineering and services firms running foreign establishments, and companies whose international presence is structured as branches rather than subsidiaries. The recipient is the Indian parent entity.

Examples of transactions covered under P1408 purpose code

• Profit remitted to India by an overseas branch of an Indian bank
• Surplus sent home by a foreign branch of an Indian company after local costs and tax
• Periodic profit repatriation from a branch establishment abroad
• Accumulated branch profits transferred to the Indian head office

When NOT to use P1408 purpose code

• The overseas entity is a separate company distributing dividends rather than a branch remitting profit (use P1409)
• The money is interest paid by your overseas enterprise to the Indian parent (use P1410)
• The money is income from a portfolio investment rather than from a direct investment (use P1411 or P1412)
• Money is being sent abroad rather than received (use the matching S-code)

Documents required for P1408 purpose code

To receive a payment under P1408, keep the following documents ready so your bank can verify the transaction and report it correctly under FEMA.

How is a P1408 Purpose Code declared?

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

1. Confirm the structure: Establish that the overseas operation is a branch rather than a separately incorporated entity.
2. Determine the profit: Establish the surplus available after the branch has met its local costs and tax.
3. Receive the remittance: The branch remits the profit to the Indian entity's account.
4. Declare the purpose: State the purpose of the inward remittance on your bank's form.
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 P1408 purpose code

A few common slips can cause reporting problems.

1. Ignoring the branch and subsidiary distinction: Using P1408 for money from a separately incorporated overseas company, when a subsidiary distributes dividends under P1409 and only a branch remits profit here.
2. Working from an older code list: Reaching for the general profit repatriation code, when the current group carries specific codes by structure and your bank will expect the one matching your arrangement.
3. Confusing direct and portfolio investment income: Applying P1408 where the money arises from a portfolio holding rather than an enterprise you direct, which reports under the portfolio codes.
4. Code and document mismatch: The code not matching what the branch accounts describe, which flags the payment.
5. Incomplete documents: Missing the branch accounts or the documents establishing the structure, so the bank holds the remittance until provided.
6. Using an inward code for an outward payment: Applying a receipt code to money being sent out instead of the matching outward code.

How Skydo helps you receive international business payments

P1408 covers profit remitted by your own overseas branches, which Skydo does not process. If your business invoices 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.