India’s software export sector is growing faster than ever, with SaaS startups, IT service companies, and freelancers serving clients across the world. As this growth continues, the correct classification of international payments has become essential. That’s where the P0807 purpose code is issued by the Reserve Bank of India (RBI) specifically for off-site software exports.
You must use the P0807 code when receiving payments from overseas clients for software development, licensing, or maintenance work that is completed entirely from India. Using the wrong code may lead to payment delays, compliance checks, or requests for extra documents.
This article will help you understand and apply the P0807 code correctly so you can receive payments smoothly and stay compliant.
Key Takeaways
- P0807 purpose code must be used for off-site software exports where the entire work is delivered remotely from India.
- Proper documentation is essential invoices, SoW, and proof of delivery help classify the export under the correct code before receiving the payment.
- Choosing between P0807 and P0802 depends on the service model.
- Tools like Razorpay MoneySaver Export Account can simplify compliance by offering one-click eFIRCs and faster settlements through regulated banking partners.
What Is the P0807 Purpose Code and Its Scope?
Deciphering P0807: Definition and Usage
The P0807 purpose code falls under the RBI’s Computer & Information Services category and is assigned to off-site software exports. It covers software development, implementation, licensing, or enhancement work delivered remotely from India. The RBI uses this code to track foreign exchange inflows under FEMA and ensure that exports are properly documented.
Transactions that qualify for P0807 include:
- Software development and coding projects.
- Software maintenance, debugging, testing, or updates.
- Remote support, cloud deployment, integrations, and licensing.
Related read : Mastering Purpose Codes with Razorpay
Why Is Accurate P0807 Classification Critical for Indian Exporters?
Using the correct P0807 classification helps your bank recognise the remittance as an export of services, which is important for FEMA compliance and national export reporting. It also ensures your payment is recorded as foreign exchange earnings, an advantage when applying for loans, incentives, or government schemes for exporters.
Why accurate classification matters:
- Prevents delays in receiving international payments.
- Reduces the chances of compliance queries from banks or regulators.
- Helps maintain eligibility for export-related benefits.
- Avoids penalties caused by misclassification or incorrect tagging of funds.
Navigating Regulatory Compliance: RBI and FEMA Mandates for P0807
RBI’s Mandate: Why Purpose Codes Are Non-negotiable
- They ensure every foreign transaction complies with RBI’s FEMA guidelines and stays within regulatory boundaries.
- Purpose codes bring clarity to the nature of each transaction, making the flow of funds completely transparent.
- They act as a safeguard against misuse helping prevent money laundering, tax evasion, or fraudulent reporting.
- Correct purpose codes allow banks to process remittances faster and with fewer queries or delays.
- Banks cannot issue electronic Foreign Inward Remittance Certificates (e-FIRCs) or Foreign Inward Remittance Advice (FIRAs) without an accurate purpose code making them essential for GST, audits, and export documentation.
FEMA Regulations: Ensuring Legality in Software Export Payments
- FEMA, 1999, regulates how foreign funds enter India and ensures that export transactions follow proper documentation and timelines.
- FEMA also makes it mandatory for exporters to bring their earnings into India within the stipulated time and through authorised banking channels
- As per the latest guidelines, export proceeds must be realised and repatriated to India within 9 months. The earlier 15-month COVID relaxation has been withdrawn and is no longer applicable.
- An Importer Exporter Code (IEC) is mandatory for businesses exporting services.
- Additionally, software exports qualify as zero-rated services under GST, which means no GST is charged, but you must keep proper documents to prove the export.
Understanding SOFTEX Forms and Their Reporting Requirements
- SOFTEX filing is mandatory for all software exporters, regardless of business size or STPI status.
- It must be filed within 30 days from the date of issuing the invoice.
- The form helps banks and the RBI verify the export value declared under the P0807 purpose code.
- It supports FEMA compliance and clean documentation for audits and GST exemption claims.
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Essential Documentation for P0807 Inward Remittances
Key Documents to Prepare for Smooth Processing
- Invoice – The invoice should clearly mention “off-site software export” or state that the work was performed remotely from India.
- Contract / Statement of Work (SoW) – This confirms what was agreed upon between you and the client, including the scope of work, payment terms, and duration.
- Proof of Delivery – Banks often ask for evidence that the project was delivered. Client confirmation emails, completion reports, or acceptance letters are usually accepted.
- Other Supporting Documents – These may include KYC details, bank statements showing the foreign inward remittance, or a purpose code declaration form if requested by the bank.
The Link Between P0807, FIRC, and Tax Compliance
Once the payment is credited to your account, the bank issues a FIRC. This serves as legal proof that you have earned foreign income through software exports. It is especially important if you want to claim GST exemption or export benefits.
The purpose code declared during the transaction directly affects the information recorded on the FIRC. If the wrong code is used, the FIRC may show an inaccurate nature of service, which can lead to tax scrutiny or delays in claiming benefits.
Using P0807 correctly helps maintain clean records and supports compliance during audits under FEMA and GST regulations.
CHECKLIST
Use this checklist to ensure you have everything ready before or after receiving an inward remittance under P0807:
☐ Invoice clearly mentioning “off-site software export”
☐ Contract or SoW
☐ Proof of delivery
☐ KYC details requested by your bank
☐ Bank statement showing the inward remittance
☐ FIRC copy (request it if not issued automatically)
☐ Purpose code declaration form (only if your bank requires it)
Avoiding Common Pitfalls: Best Practices for P0807 Classification
What Happens When the P0807 Code Is Used Incorrectly?
Using the wrong purpose code may seem like a small mistake, but banks treat it seriously. They may:
- Hold or delay the payment until the correct documents are provided.
- Ask for revised invoices or clearer service descriptions.
- Request additional proof to verify the nature of the work.
In cases where the misreporting appears intentional or repeated, it can draw attention from regulatory authorities. Under FEMA and RBI guidelines, incorrect classification of inward remittances may invite penalties or compliance notices.
P0807 vs. P0802 Choosing the Right Code for Your Services
Both P0807 and P0802 fall under software-related exports, but their use cases are different. Choosing the right one depends on the nature of the work:
Use P0807 when the software work is delivered remotely from India, such as:
- SaaS subscriptions
- Software development and support are done fully off-site
- Maintenance or licensing without any on-site deployment
Use P0802 when your service involves consulting or implementation work, such as:
- Custom software advisory
- Software installation at the client’s location
- Projects where the Software Export Declaration (SOFTEX) is not filed
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Pro Tip: To avoid confusion, make sure the purpose code aligns with the details mentioned on invoices, contracts, and emails. Banks match the wording in documents with the code provided consistency makes verification easier.
Proactive Steps for Accurate Declaration and Error Rectification
You can reduce compliance issues by taking a few simple steps:
- Inform overseas clients in advance about the correct purpose code for remittance, especially if the invoice mentions P0807.
- Check with your bank or a financial consultant if you are unsure whether your work fits P0807 or another category.
- If the wrong code is used, contact your bank immediately. Most banks accept formal correction requests along with revised invoices or supporting documentation.
COMPARISON – P0807 vs. P0802
| Purpose Code | When to Use | Typical Services | Requires SOFTEX? |
| P0807 | Off-site software export from India | SaaS, remote development, licensing, maintenance | Yes (in most cases) |
| P0802 | Software consultancy or implementation | Advisory work, on-site deployment, custom consulting | No |
How Razorpay MoneySaver Export Account Simplifies P0807 Compliance
If you’re exporting software services from India and need to apply the purpose code P0807, the Razorpay MoneySaver Export Account offers several features that can make your compliance process smoother, clearer and more efficient.
- When you get paid through the MoneySaver Export Account, the money goes through trusted banks and straight into your Indian account. Because everything is tracked clearly, the bank knows what the payment is for and can apply the correct code, like P0807, without confusion.
- The platform allows one-click eFIRC generation after the payment is settled. This certificate confirms that the bank has recorded the remittance under the correct purpose code, such as P0807, which helps during audits, GST refunds, and export compliance checks.
- The onboarding process is quick and requires minimal paperwork compared to traditional foreign bank accounts. This makes it easier to set up a compliant system for receiving export payments under codes like P0807.
Simplify P0807 Compliance with Razorpay
Receive export payments under correct purpose codes, access instant eFIRC,
and maintain clear compliance records with ease.
Conclusion: Ensuring Compliant and Seamless Software Export Remittances
Using the P0807 purpose code correctly is essential for anyone exporting off-site software services from India. It ensures that your foreign payments are classified accurately and that your exports remain compliant with RBI and FEMA guidelines. When invoices, SOFTEX forms, and supporting documents are clearly aligned, banks process remittances faster, and tax benefits become easier to claim.
Ultimately, smooth international payments depend on proactive management of purpose codes. Staying compliant today helps you build credibility, scale exports, and receive payments with confidence.
FAQs
1. What is the P0807 purpose code used for?
It is used for off-site software exports, covering payments received from foreign clients for software development services performed entirely in India.
2. When should an Indian company use the P0807 purpose code?
You should use P0807 when you receive export payments for software rendered to clients outside India.
3. What happens if an incorrect purpose code is used for inward remittance?
The bank may delay the payment, request additional documents, or misreport it to the RBI, affecting FIRC issuance and compliance under FEMA.
4. Are there any penalties for incorrect use of the P0807 code?
Yes. Misreporting or negligence can attract FEMA penalties and lead to delays in future transactions.
5. Is the P0807 purpose code applicable for on-site services?
No. P0807 is only meant for software work completed entirely from India.
6. What documents are required for P0807 remittances?
You generally need an invoice with service details, a contract or SoW, and proof of delivery, such as client approval emails or completion reports.
