Purpose Code S0210 - Freight on exports (airline companies)

The S0210 purpose code is for an Indian exporter paying a foreign airline to fly goods out of India. Check when it applies, the tax points and the documents your bank needs for this outward remittance.

The S0210 purpose code is used when an Indian exporter pays a foreign airline for air cargo leaving India. The RBI description is "freight on exports – airlines companies". You pay export air freight when you sell on terms like CIP (carriage and insurance paid) or CPT (carriage paid to). The price you charge the buyer includes carriage, so you book and pay the airline. S0210 is a current account transaction, a normal trade-related payment. Your export proceeds come in under a P code, and the freight you pay goes out under S0210. If the airline's Indian office or agent bills you in rupees, there may be no outward remittance at all. S0210 fits when you pay the airline abroad in foreign currency.

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:

• CIP pharma shipments - Air freight on medicines flown from Hyderabad to Europe on carriage-paid terms.
• Perishable exports - Air cargo for fresh fruit, flowers or seafood sold delivered to the buyer's airport.
• High-value goods - Air freight on cut diamonds or jewellery sent to Antwerp or Dubai.
• Garment orders under deadline - Freight on a late fashion order flown instead of shipped.
• Charter freighters - A full cargo aircraft hired from a foreign airline for a large export order.

Do not use this code when:

• The goods go by sea (use S0204 instead).
• You pay air freight on goods coming into India (use S0209 instead).
• You send samples or documents through an express courier (use S0222 instead).
• You are paying an overseas buyer's agent a commission (use 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 "S0210 – Freight on exports (airline companies)" on Form A2 or your bank's outward remittance screen.
2. Upload the airline's freight invoice, the air waybill and the shipping bill.
3. File Form 145 (earlier Form 15CA), with Form 146 (earlier Form 15CB) from a CA where your bank asks for it.
4. The bank checks the documents and sends the payment to the airline.

Additional Notes:

• Foreign airlines are often taxed only in their home country under the air transport article of a tax treaty, so TDS is commonly nil. Keep the airline's TRC and Form 10F.
• Where no treaty applies, Indian law taxes a fixed share of the airline's receipts as profit, and TDS may apply on that share. Ask your CA.
• Your export invoice should show CIP or CPT terms so the bank can see why you are paying freight.

• 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