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Foreign Inward Remittance Certificate (FIRC): Full Form, Meaning and RBI guidelines

Foreign Inward Remittance Certificate (FIRC): Full form, meaning and RBI guidelines
prashanth
Prashanth18 November 2023

As an Indian exporter, navigating the complexities of international payments and compliance can feel like solving a complex puzzle. Today, we'll explore a crucial piece of that puzzle: FIRC

FIRC or Foreign Inward Remittance Certificate, is a document issued by banks as proof of receiving international payments. Over the years, regulations around FIRC have changed significantly, creating confusion and mystery around this important document. Let's clear the air and decode the what, who, and why of FIRC.

Decoding FIRC: Understanding its Meaning, Full Form, Significance, and Content

As we've covered, the full form of FIRC is a Foreign Inward Remittance Certificate. Until 2016, AD Category I Banks were authorised to issue FIRCs to exporters for receiving international payments. This document was essential for exporters to obtain after each cross-border payment. It served not only as proof of payment receipt but also as a crucial document for claiming export-related incentives, such as tax exemptions on foreign currency payments received in India.

Changing RBI Guidelines: From FIRC to FIRA

  1. In 2016, the RBI introduced the Export Data Processing Management System (EDPMS) to digitally record all export-related data.
  2. With the introduction of EDPMS, RBI issued guidelines for banks to stop issuing FIRCs for export collections. Banks now issue FIRAs (Foreign Inward Remittance Advice) instead of FIRCs for export collections.
    FIRA is also interchangeably called FIRS (Foreign Inward Remittance Statement) or NOCs (Non-Objection Certification) by banks. FIRA/FIRS/NOC serve the same purpose. As we have seen, along with proof of receiving international payment, it is also essential for claiming export-related benefits and GST refunds. 
  3. FIRCs are issued for only specific transactions like receiving inward remittances from FDI and FII. Both FDI and FII indicate investment in foreign countries or projects. The key difference is that FDI involves long-term investments in physical assets, while FII represents short-term investments in financial markets. So, you would need a FIRC from banks if you are receiving returns from foreign investments.

FIRA is often still referred to by its old name, FIRC. While both documents serve the same purpose, FIRC is technically only issued for returns on FDI or FII. For all other export collections, FIRA is what you need.

Who needs a FIRC/FIRA? 

Anyone receiving foreign payments needs a FIRC certificate or FIRA. Beyond exporters, many individuals and entities may receive international payments without realising it. 

Overall, the following typically require a FIRA:

  • Indian exporters receiving international payments.
  • Companies in India providing services to overseas companies and receiving payment in foreign currency.
  • Salaried individuals working remotely as contractors for international companies, and receiving compensation in foreign currency.
  • Freelancers serving international clients and receiving compensation in foreign currency.
  • Freelancers service international clients via marketplaces such as Upwork and TopTal.

Why do Exporters Need FIRA? 

Beyond compliance, here’s why FIRA is crucial for exporters:

Understanding the content of FIRC/FIRA

Sample FIRC

This is a sample FIRA/FIRC. All crucial details have been masked for security purposes. Now let’s break the content of a FIRA down:

  1. Name and details of the sender bank i.e. your client’s bank 
  2. Name and address of the sender, i.e., your client’s details
  3. Name of the person/org receiving the payment i.e your details 
  4. Transaction number
  5. The Foreign exchange rate applied to your transaction
  6. Amount paid in foreign currency
  7. The amount received in INR
  8. Purpose code of the remittance (e.g., P0802 if your business is a Software Consulting service)

How do I get my FIRC/FIRA from the bank?

Receiving your export payment directly through your bank can make obtaining a FIRC/FIRA a lengthy process. You need to submit a request to the bank, and the bank typically takes 7-15 days to provide the FIRA. You may also need to follow up multiple times, and banks often charge at least INR 400 to issue the FIRA, depending on the institution.

Enter yours truly!

Get your FIRA from Skydo Instantly

Getting a FIRA might sound like a hassle, but with Skydo, it's a breeze. Our fully automated payment system along with built-in partnerships with banks, ensures effortless compliance with RBI guidelines, without needing any manual intervention.

When you receive an export payment through Skydo, we automatically generate the required FIRA for you at no extra cost. Just log into our user-friendly dashboard, and you'll find your FIRA ready to download, complete with all the details you need.

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