Purpose Code S0805 - News agency services

The S0805 purpose code is for paying a foreign news agency for news, photo or video feeds. Check when it applies, how it differs from S0806, and the tax forms and documents your bank needs for this outward remittance.

The S0805 purpose code is used when an Indian media business pays a foreign news agency for its services. The RBI description is simply "news agency services". It covers wire copy, photos, video clips and live feeds that agencies supply to publishers and broadcasters. It is a current account transaction, meaning a payment for services, not an investment. It sits in the RBI group for telecom, computer and information services. The user is usually a media company that republishes the content. A reader or company that only subscribes to read news uses S0806 instead.

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:

• Wire service subscriptions - A newspaper pays for an international agency's text news feed.
• Photo feeds - A news site pays for agency photos of global events to use in stories.
• Video news feeds - A TV channel pays for foreign footage and live event coverage.
• Correspondent services - A foreign agency files reports from abroad for an Indian outlet.
• Financial news wires - A business channel pays for a real-time market news feed it airs.

Do not use this code when:

• You only subscribe to read newspapers, journals or magazines (use S0806 instead).
• You are licensing a film, show or other produced content (use S1101 or S0902 instead).
• You are paying for a database or data processing service (use S0803 instead).
• You are paying a foreign PR or communications firm (use S1006 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 "S0805 – News agency services" on Form A2 or your bank's outward remittance screen.
2. Upload the agency agreement and the invoice for the period.
3. File Form 145 (earlier Form 15CA), with a CA's Form 146 (earlier Form 15CB) where needed, and deduct any TDS due.
4. The bank checks the documents, books the FX rate and sends the payment.

Additional Notes:

• Agency fees that include a right to republish content can be seen as royalty for tax purposes, so TDS may apply. The DTAA with the agency's country can lower the rate.
• Keep the agency's TRC and Form 10F on file if you apply a DTAA rate.
• Payments for one-off photo licences and ongoing feeds can follow the same code, but keep each invoice separate.

• 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