Purpose Code S0102 - Payment towards imports (settlement of invoice)

The S0102 purpose code is for paying a foreign supplier's invoice for goods imported into India. Check when it applies, the documents your bank needs and how to link the Bill of Entry to this outward remittance.

The S0102 purpose code is used when an Indian importer pays a foreign supplier's invoice for goods that have been shipped or have already arrived. The RBI description is "payment towards imports, settlement of invoice, other than Nepal and Bhutan". Import payments are current account transactions, meaning normal trade payments, not investments. Your AD bank (the bank licensed to deal in foreign exchange) checks it against the import documents. Each import payment is matched in IDPMS, the RBI system that tracks import payments, against a Bill of Entry (the customs import document). Under the FEMA export and import rules in force from 1 October 2026, the payment date follows the terms in your contract, not a fixed six-month window.

This Purpose Code should be used only where the transaction fits its defined regulatory scope. Here's when you should and shouldn't use this code:

You should use this code when:

• Goods on credit terms - A manufacturer pays 60 days after shipment, as agreed with a supplier in Germany.
• Balance after an advance - The remaining 70% of an order after the S0101 deposit, once the goods are shipped.
• Documents against payment - Your bank pays the supplier when the shipping documents arrive through the bank.
• Letter of credit settlements - The LC is paid on the due date for goods already shipped.
• E-commerce inventory - An online seller pays a foreign brand for stock that has cleared customs.

Do not use this code when:

• You pay before the goods are shipped (use S0101 instead).
• The supplier is in Nepal or Bhutan (use S0109 instead).
• The goods never enter India and are sold on abroad (use S0108, the import leg of merchanting trade, instead).
• You are paying freight or a commission agent, not the supplier (use the matching transport code or S1002 instead).

RBI purpose codes are mandatory under FEMA to classify the nature of cross-border transactions entering or leaving India. They allow banks and regulators to accurately track foreign exchange flows and apply the correct regulatory, tax, and reporting treatment.

For individuals, businesses and institutions, correct purpose code usage:

• Ensures transactions are classified correctly under FEMA.
• Enables accurate reporting to the RBI and other regulators.
• Reduces delays caused by compliance checks or misclassification.
• Supports clean audit trails and tax reconciliation.

Bottom-line:

Using the correct purpose code helps ensure smooth processing, regulatory compliance, and faster credit of funds.

1. Select "S0102 – Payment towards imports, settlement of invoice" on Form A2 or your bank's import payment screen.
2. Upload the commercial invoice, Bill of Entry and transport document (bill of lading or airway bill).
3. Give your IEC; Form 145/146 (earlier Form 15CA/15CB) is usually not needed for import of goods.
4. The bank matches the payment to the Bill of Entry in IDPMS and remits the funds.

Additional Notes:

• One Bill of Entry can be settled by several payments, and one payment can cover several Bills of Entry.
• If the Bill of Entry is not ready, some banks pay against shipping documents and ask for it later.
• The invoice amount, currency and supplier name should match the Bill of Entry.

• Using a generic or incorrect purpose code instead of the exact RBI-prescribed purpose code can lead to misclassification of the transaction under FEMA and trigger additional compliance checks by the bank.
• Mismatch between purpose code, invoice, and remittance narration may place the transaction on hold until clarification is provided.
• Submitting unclear or incomplete supporting documents that do not clearly describe the nature of the transaction often result in delays, as banks rely on documentation to validate FEMA compliance.
• Missing mandatory PAN or incomplete KYC documentation can prevent banks from releasing funds until verification is completed.
• Using service-related purpose codes for non-service transactions like capital receipts, investments, gifts, or refunds can result in incorrect regulatory treatment and potential reporting issues.
• Assuming small or recurring transactions do not require accuracy and repeated misclassification can attract regulatory scrutiny over time.

Cross-border payments require accurate purpose code selection and complete compliance documentation. Xflow helps businesses and individuals receive international payments while staying aligned with RBI and FEMA requirements.

With Xflow, you can:

• Select the correct purpose code with clarity
• Organize and maintain supporting documents
• Reduce compliance back-and-forth with banks
• Support FEMA compliant inward remittances