India taxes individuals based on a system of income slabs. Different tax rates are assigned to different ranges of income.&nbsp;

Understanding tax slabs is crucial for several reasons.

As a person earns more, the tax liability also increases, creating a fair and progressive tax system in the country. To achieve this, the government regularly updates and announces changes to tax slabs in the Union Budget.

The income tax slabs differ between the old and new tax regimes. Let's explore the specific slab rates applicable to Individuals for FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25).

Income Tax Slab Rates For FY 2023-24 (AY 2024-25)&nbsp;

Rates of the old tax regime slabs are categorized into three groups:

The new tax regime applies uniform tax rates to all individuals, eliminating the age-based distinctions in the old system. The new tax regime slabs 2023-24 are outlined below.

Applicability of Surcharge for FY 2023-24 (AY 2024-25)

The income tax <a href="https://incometaxindia.gov.in/charts%20%20tables/tax%20rates.htm">surcharge</a> is an extra fee imposed on top of the <a href="https://www.skydo.com/blog/how-to-file-taxes-under-44ada?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">regular income tax</a>. An additional tax is applied to individuals with higher income earnings in a specific financial year. Let’s look at the applicable surcharge rate under the Old and New tax regime.

However, 25% or 37% surcharge rates will not apply to income under the following sections.

Consequently, the highest surcharge rate on the tax payable for such incomes will be 15%.

Starting from the Assessment Year 2023-24, the maximum surcharge rate on tax payable for dividend income or capital gain specified in Section 112 will be capped at 15%.&nbsp;

A 4% Health and Education cess will be applied to all cases’ total income tax liability and surcharges.

Comparison of tax rates under the New tax regime and the Old tax regime for FY 2022-23 (AY 2023-24)

How do you calculate the income tax from the income tax slabs?

Let’s understand the calculation with an example.

Sanjana, aged 35, has a total taxable income of Rs. 8,50,000. She has opted for the old tax regime. Her income includes income from salary, interest and rental income. Deductions under section 80 have been reduced. Now, Sanjana wants to know her <a href="https://www.skydo.com/blog/gst-requirements-international-service-sales?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">tax liability</a> for FY 2022-23 (AY 2023-24).

*Sanjana, an individual taxpayer under the age of 60, enjoys an income exemption limit of up to Rs 2,50,000. Other taxpayers, i.e., senior and super senior citizens, have higher income tax exemption thresholds of Rs 3,00,000 and Rs 5,00,000, respectively.

Please be aware that the tax rates in the New Tax Regime are uniform for all categories of individuals, including regular individuals, senior citizens, and super senior citizens.&nbsp;

Individuals with a net taxable income of up to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability in both the New and Old tax regimes. It's important to note that in Budget 2023, the rebate under the new regime has been extended, making income up to Rs 7 lakh tax-free from the FY 2023-24 onward.

Let's delve into effective strategies to maximize your investments while minimizing the associated tax burdens.

ELSS mutual funds provide a dual benefit of potential capital appreciation and tax savings under Section 80C of the Income Tax Act. Investing in ELSS reduces taxable income and offers a path for long-term wealth growth.

2. Explore tax-efficient investment avenues

Health insurance qualifies for tax benefits under Section 80D. You can claim tax benefits on premiums paid - up to Rs 20,000 for senior citizens and Rs 15,000 for others. For example, if you pay Rs 15,000 for your policy and Rs 20,000 for your senior citizen parent, you can claim a total tax benefit of Rs 35,000.&nbsp;

Maturity value is tax-free for sums received under critical illness insurance policies.

This strategy entails selling loss-making assets to realize the capital loss and using it to offset the gains earned by profit-making assets.

For instance, if you have a loss of Rs. 20,000 in Stock A and a gain of Rs. 30,000 from Stock B, you can sell Stock A during a market downturn to offset the gains. This way, you can reduce your taxable income. The saved amount can be reinvested for portfolio growth.

Ensure that tax loss harvesting aligns with your overall financial goals and plan by considering a discussion with a financial professional or tax advisor.

<a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Consult financial professionals or tax advisors</a> for effective tax planning and strategic advice. Their expertise can provide tailored insights aligned with your financial goals and ensure a well-informed approach to optimize your tax situation.

If you need help deciding what is right for you, we will connect you with our panel of Indian and US-based CA / CPAs. Feel free to reach out to us.

Q1. How is a taxpayer's income categorized?

Ans: A taxpayer's income falls into five categories outlined in Section 14 of the Income Tax Act. These include Income from salary, Profits from a business or profession, Income from House Property, Capital Gains, and Income from Other Sources.

Q2. Is it possible to avail of 80C deductions while choosing the new tax slabs 2023-24?

Ans: No, under the new tax regime, several deductions and exemptions, including those under section 80C, are not permitted. Opting for the new tax regime means foregoing the ability to claim deductions under section 80C.

Q3. What do "Previous Year" and "Assessment Year" mean?

Ans: We have two important terms in income tax provisions: (i) Previous Year and (ii) Assessment Year. Previous Year is when you earn income, typically from April 1st to March 31st. The year right after the Previous Year, from April 1st to March 31st, is called the 'Assessment Year.'

For example, the Previous Year is from April 1, 2023, to March 31, 2024 (FY 2023-24). The corresponding Assessment Year is from April 1, 2024, to March 31, 2025 (AY 2024-25).

Q4. What is the tax exemption limit for calculating income tax rebate under section 87A?

Ans: For FY 2023-24 (AY 2024-25), the rebate limit has been increased to Rs. 7,00,000 under the new tax regime. This means a resident individual with taxable income up to Rs 7,00,000 will receive Rs 25,000 or the amount of tax payable (whichever is lower) as tax relief. However, the old tax regime's threshold limit will remain the same, i.e., Rs 12,500 if taxable income is up to Rs 5,00,000.

Q5. How much is the standard deduction for FY 2023-24?

Ans: You can claim a standard deduction of ₹50,000 to the income taxable under the head ‘Salaries.’ The standard deduction is a tax benefit that can be claimed irrespective of the amount spent on Transport or Medical Allowance. It applies to individuals earning a salary or pension income.

Prepare for the upcoming year's tax season by understanding the tax slabs for 2023-24 and optimizing your tax savings. 

Tax Slabs in 2023-24: Plan Ahead for Next Year Tax Savings

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Rohit Khuranna

Outdated financial systems and processes can create significant inefficiencies and costly business errors. Finance Heads are often forced to spend time firefighting instead of strategising. Unfortunately, the role of the modern Finance Head is about more than just overseeing financial operations; it's about leading businesses through uncharted waters.&nbsp;

Platforms like <a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Skydo</a> offer a solution to these deep-rooted problems through their payment platform. This guide explains how you, as a Finance Head, can make your organisation more agile, and efficient, and stay ahead of the curve with Skydo.

As a key strategic partner in driving growth, you navigate the complexities of a globalised business landscape. Despite this expanded role, there are still numerous challenges that come with being at the top of the finance tier in a company.

Ensuring Data Security and Fraud Prevention

Being a modern Finance head comes with its share of challenges but also great influence and strategic importance. To effectively address these challenges, a combination of technology, process optimisation, and forward-thinking is necessary. With the right approach, you can have a major impact on a company's success.

Overcoming Finance Challenges with Skydo: A Comprehensive Solution

Skydo’s payment platform is designed specifically to address the pain points of Finance Heads iterated above. Here's how we help overcome these challenges and achieve company goals.

Navigating Regulatory Compliance with Ease

1. <a href="https://www.skydo.com/blog/automated-firc-simplifying-international-payments-compliance">Auto-generated FIRAs </a>Operating in international markets includes the daunting task of ensuring compliance with local regulations. But with Skydo, this process is simplified thanks to our auto-generated Foreign Inward Remittance Certificates (FIRAs). As soon as the amount reaches the business bank account, the FIRA is available to download to ensure compliance.

Businesses can rest assured that they are always compliant without dealing with manual hassle.

2. Purpose Code according to RBI guidelines

Skydo's purpose code field ensures that every transaction aligns with RBI guidelines, eliminating the risk of non-compliance. This pre-filled field includes the suggested codes relevant to your business, which you can simply select once the invoice is generated. 

Different transactions have different purposes, and the Reserve Bank of India (RBI) mandates specific codes for each, which must be followed to comply with regulations.

Say goodbye to manual invoicing and chasing clients for payments. <a href="https://www.skydo.com/blog/transforming-your-invoicing-experience-with-skydo?Internal%20links%20should%20have%20the%20UTM%20tag%20-%20utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Skydo offers automated invoice creation</a> and timely payment reminders, ensuring a steady cash flow for businesses. This allows you to focus on strategic financial planning without the hassle of administrative tasks.

Gaining a Holistic View of Financial Operations

At Skydo, we understand that every client is unique, and their financial interactions with your business reflect that. Skydo provides a <a href="https://www.skydo.com/blog/make-data-driven-business-decisions-with-customer-level-revenue-analysis?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">client-specific overview</a> to help you gain a deeper understanding of each client's financial footprint.&nbsp;

This insight allows for better relationship management and strategic decision-making to drive success for both your clients and your business.

2. Track international accounts in one place

Businesses operating globally often face the challenge of managing multiple international accounts. Skydo offers a solution that consolidates all international accounts to simplify this process, providing a unified view.&nbsp;

Enhancing Real-time Visibility and Control

1. <a href="https://www.skydo.com/blog/real-time-tracking-of-international-payments?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Real-time payment tracking</a>

Tracking payments in real-time is essential for efficient <a href="https://www.quadient.com/en/learn/accounts-receivable/how-ar-automation-affects-cash-flow">cash flow</a> <a href="https://www.quadient.com/en/learn/accounts-receivable/how-ar-automation-affects-cash-flow">management</a>. With our cutting-edge technology, Skydo provides real-time payment tracking, ensuring they are always in the know and can make proactive decisions to drive their business forward.

Financial transparency and accountability are crucial for any business. Thus, Skydo's ledger view is a must-have tool, providing a detailed record of all financial transactions to ensure clarity, accuracy, and informed financial planning.&nbsp;

As finance heads face significant challenges, such as regulatory compliance and real-time data visibility, they can overcome these hurdles with the proper strategy and tools.

Skydo's payment platform is a comprehensive and innovative tool designed for modern finance heads. With features like auto-generated FIRAs and real-time payment tracking, it offers a holistic solution to the challenges faced by top finance officials. With Skydo, you can ensure compliance and efficiency while also utilising real-time data to make strategic decisions.

If you are a CFO or financial leader looking to transform and elevate your financial operations, Take the first step towards a more efficient, strategic approach to financial management with <a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=demo_click">Skydo</a> today.

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The traditional banking experience was a revolution upon discovery. However, the integration of technology in banking has resulted in the need to continuously innovate to make the entire transacting experience easier.&nbsp;

Imagine a financial world where you have the power to mix and match services from various providers, creating a truly personalised banking experience. Enter open banking – the current revolution in the financial industry where the talks around the utilities, possibilities, and risks associated with open banking are reaching a fever pitch.

Open banking attempts to break the monolithic structures of conventional banks and institutions and bring a ‘mix-and-match’ of services from multiple financial providers catered to the consumers. It is a system where customers can securely share their financial data with authorised third-party service providers through APIs to allow greater collaboration and foster the development of innovative, tailored financial solutions.&nbsp;

Open banking shifts the focus of financial services from a single-bank model to a collaborative approach. It helps securely and effectively <a href="https://www.skydo.com/blog/make-data-driven-business-decisions-with-customer-level-revenue-analysis?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">leverage consumer data</a> to foster an ecosystem based on data portability and interoperability.&nbsp;

This article aims to address some of these opportunities in the context of cross-border payments and international banking.&nbsp;&nbsp;

Open Banking and Global Payments: Bridging Distances

When expanding globally, businesses face major constraints while navigating payment cultures in different countries. For instance, corporate credit cards are most prevalent in the US, but most of Europe relies on wire transfers.&nbsp;

Payments through ACH (Automatic Clearing Houses) can take days to get authorised. The constant back-and-forth between multiple banks and clearing houses painfully limits and slows the process. There are also specific regulatory abidance for each country that businesses need to adhere to.&nbsp;&nbsp;

Open banking makes it possible for fintech services to serve customers at their homestead. It addresses the fundamental problems in traditional payment mechanisms and eases bank-to-bank payments. It automates manual processes to help customers authorise payments in a few clicks.&nbsp;

Open banking further cuts the fluff involved in <a href="https://www.skydo.com/blog/benefits-of-multi-currency-accounts?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">international banking transactions</a> to help businesses attain global growth.&nbsp;

For instance, assessment, interchange, and processing fees cost<a href="https://www.bankrate.com/finance/credit-cards/merchants-guide-to-credit-card-processing-fees/"> 1.5% to 3.5% of every credit card transaction</a> to merchants in 2020. Open banking cuts out the intermediaries and directly connects customer’s bank accounts. This arrangement saves considerable time and costs for businesses with slimmer margins.&nbsp;

Open Banking: A Pathway to Financial Innovation

Earlier, customers were at the mercy of the banks. Most of the banks provided similar services, often limited in nature. The open banking framework has turned the tide in favour of customers. Fintech service providers compete to build a wide range of products and services that deliver a stupendous experience, ease of use, transparency, and cost efficiency.&nbsp;

Stripe and Braintree have disrupted the payment scenario by granting access to the underserved. In China, WeChat and AliPay are the new digital finance ecosystems serving customers based on their needs.&nbsp;

UPI and mobile wallets are among India's biggest use cases for domestic payment solutions based on open banking. In the US, large banks have struck data-sharing deals with third-party providers. Chase partnering with Intuit and Wells Fargo with Xero and Finicity are a few examples.&nbsp;&nbsp;&nbsp;

Customer Empowerment Through Open Banking

Open banking further empowers customers through data ownership and control. Fintech startups, technology companies, and financial institutions are synergising their efforts to enhance the overall customer experience by leveraging banking data.&nbsp;&nbsp;

Customers can enjoy seamless transactions, personalised financial insights, and transparent pricing frameworks while fully controlling with whom they share their financial data and to what extent.&nbsp;

APIs allow seamless integration of financial services such that businesses get a personalised suite of services for international dealings and cross-border payments. Many fintech service providers provide the dual benefit of the ease and simplicity of bank transactions and cutting-edge services like e-wallets, easy remittances, and currency exchanges.&nbsp;

In fact, the focus of such services and platforms is to provide their customers with the best user experience and innovative financial solutions. Yet, the pressing question remains about the regulatory and security aspects of this revolutionary banking avenue.

Regulatory Navigation in the Open Banking Era

Most apps and platforms based on open banking are built on robust security protocols and comply with their country's stringent data protection regulations. The General Data Protection Regulation (GDPR)&nbsp; is an important EU law that governs data sharing.&nbsp;

PSD2, another set of data protection rules in Europe, explicitly grants the authority to share data to account holders instead of banks. India also passed its new data protection bill in the recently concluded monsoon session. Many regional <a href="https://www.skydo.com/blog/mastering-compliance-a-step-by-step-guide-to-data-protection-payments-laws-and-industry-regulations-for-tech-exporters?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">regulatory frameworks</a> mandate consumer protection and privacy to the highest degree.&nbsp;

Third-party service providers need to ensure compliance at multiple levels as different data requires different levels of security. Data sharing is mostly risk- and permission-based in financial services. It must have proper audit trails per the regulations and risk management guidelines.&nbsp;

Fintech services can follow enhanced KYC procedures, identity validation, and fraud detection for compliance and regulatory adherence.&nbsp;

Addressing the Risks: Security in Open Banking

Open banking is based on data sharing of personal and sensitive information. Securing such information is the elephant in the room, which needs addressing. It poses risks in the form of increased exposure and vulnerability of data toward potential breaches, frauds, misuse, and hacks.&nbsp;&nbsp;

Fintech services and platforms must implement robust security measures and data protection guardrails such as encryption, monitoring, authorisation, and authentication. Measures like two-factor authentication, KYC norms, in-built security walls, etc., enhance data protection and eliminate manipulation or tampering.&nbsp;

The Horizon of Open Banking: Glimpse into the Future

<a href="https://assets.kpmg.com/content/dam/kpmg/ua/pdf/2019/09/future-of-digital-banking-in-2030-cba.pd.pdf">A KPMG report</a> states the banking industry will see more changes in the next decade than it has in the past 100 years.&nbsp;

The Integration of IoT (Internet of Things) and AI (Artificial Intelligence) with open banking will help customers embark on a journey of autonomous financial experiences. Fintech services and banks will have a greater insight into their customers’ lives, which calls for greater trust and robust security mechanisms. New business models and use cases for financial services will emerge to redefine the service provider-customer relationship.&nbsp;&nbsp;

Consolidation of services into a ‘super app’ will occur as AI and other emerging technologies interface with open banking solutions. AI will play a critical role in helping customers overcome their low levels of financial literacy. Technologies such as IoT and Distributed Ledger Technologies (DLT) will create trustless models of customer engagement and automation in financial services.&nbsp;

Businesses need to accept the change if they seek growth and relevance readily. Along with this technology adoption, IT exporters and international businesses need to be at the forefront of compliance and security to provide their customers with the best experience and smoothly functioning business processes.&nbsp;&nbsp;&nbsp;

Currently, the world relies on heterogeneous modes of payments, and abiding by all can get time-consuming and expensive for small-scale IT exporters and businesses. Open banking is revolutionising the banking sector and creating opportunities for businesses to grow globally.

Furthermore, cross-border payments are expected to reach<a href="https://www.bankofengland.co.uk/payment-and-settlement/cross-border-payments#:~:text=The%20value%20of%20cross%2Dborder,trillion%20in%20just%2010%20years."> $250 billion by 2027</a>. Consequently, the need to smoothen the creases and bumps in the international payments process is more pertinent than ever.&nbsp;

Fintech solutions like <a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=demo_click">Skydo</a>, driven by open banking, will be crucial in building and streamlining collaborative <a href="https://www.skydo.com/blog/seamlessly-accept-international-payments-in-india?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">international payments</a> infrastructure from scratch.

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India has witnessed an impressive surge in its startup ecosystem in recent years. Factors such as a large and diverse consumer base, a burgeoning middle class, access to talent, and increasing investor interest have contributed to this growth. Indian startups are making strides in various sectors, including technology, e-commerce, healthcare, and fintech.

As this ecosystem continues to evolve, Indian startups are poised to play a pivotal role in shaping the future of India and the global business landscape.

<a href="https://www.skydo.com/blog/what-are-capital-and-current-account-transactions?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Current accounts</a> play a pivotal role in the financial operations of businesses, including startups, for several reasons:

Now, imagine you're the founder of a promising startup in its early stages. Your venture is fueled by ambition, innovation, and a grand vision. However, in these initial phases, your resources are limited, and you're carefully managing every rupee going in and out of your company. By design, current accounts don't pay any interest and hence shouldn’t ideally charge any fee or have a mandatory Minimum Account Balance (MAB). However, some current accounts impose a high MAB.

In such a scenario, a Zero Balance Current Account (ZBA) becomes an invaluable asset and an indispensable financial tool.

Introducing Zero Balance Current Accounts

In the nascent stages of a startup, every penny counts. A ZBA allows you to operate your business with minimal financial constraints. You don't need to maintain a substantial minimum balance, which means you can invest your limited funds in growing your business rather than locking them in a bank account.

It removes the financial burden, provides flexibility, and enables financial inclusion.

A Chartered Accountant of a fintech startup with such an account explained, “Most startups keep their money in an overnight fund which earns them ~6% interest and conveniently transfer the funds from it to a zero balance account just when they need to disburse them.”

Steps for Zero Balance Current Account Opening Online

Follow these steps to open a zero-balance current account.

The specific steps would differ depending on the financial institution.

Documents Needed to Open Zero-Balance Current Account Online

The specific documents required to open a zero-balance current account online may vary depending on the bank or the financial institution. However, here is a list of common documents that are typically requested when opening a zero-balance current account online:

Does your business need a Zero Balance Current account?

It is not compulsory to have a zero-balance current account because the monthly average balance requirement is not very high in non-zero-balance accounts. For instance, a <a href="https://www.hdfcbank.com/content/bbp/repositories/723fb80a-2dde-42a3-9793-7ae1be57c87f/?path=/Personal/Save/Accounts/Current%20Account/Premium%20Current%20Account/Non-Managed-Plus-Premium-Regular-Leaflet.pdf">regular current account</a> in the HDFC Bank requires you to keep an average quarterly balance of ₹10,000 on non-metro locations and its non-maintenance can cost ₹1,500.&nbsp;

But any money saved is equivalent to money earned. This part is vital for the following reasons.

Advantages of Zero-Balance Current Account

While zero-balance current accounts offer several advantages, they also come with certain challenges and considerations that businesses should know.

Zero-balance current accounts offer a compelling array of advantages that can significantly boost businesses' financial accessibility, cost efficiency, effective cash flow management, financial inclusivity, and streamlined operations.

You must choose a correct business account that helps you smoothen your daily operations with utmost efficiencies, and the least cost and zero balance current account can be a great starting point.

Q1. Can zero-balance current accounts support high transaction volumes for growing businesses?

Ans: Yes, one of the strong suits of a zero-balance current account is its ability to support high transaction volumes for growing businesses.

Q2. Are there any limitations or fees associated with zero-balance current accounts that businesses should be aware of?

Ans: Some zero-balance current accounts can impose limits on the number of free transactions or the total transaction amount within a specific period. Exceeding these limits can result in additional charges. While monthly maintenance fees for zero-balance current accounts are often lower than traditional accounts, there may still be fees for certain additional services.

Q3. How can businesses ensure they choose the right bank for their zero-balance current account needs?

Ans: One of the best ways to ensure the right bank for their zero-balance current account needs is to seek recommendations from their business networks and do your research, feature comparison, assess fees, and review customer support.

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For exporters, eBRC (Electronic Bank Realization Certificate) is a key compliance document that serves as proof of payment received from abroad for exported goods or services. It is especially important for goods and software exporters covered under SOFTEX.

In this blog, we’ll break down what eBRC is, why it matters, how to obtain it, and everything else you need to know.

An eBRC (Electronic Bank Realization Certificate) is digital proof that your bank issues once you receive payment for an export. Simply put, it confirms that you’ve been paid for your goods or services.

This certificate is important because it helps you report your earnings, file taxes easily, and even access government benefits meant for exporters including low-cost loans, subsidies, duty exemptions and more.&nbsp;Since eBRC includes all the transaction details, it also makes compliance with authorities like the Income Tax Department smooth and hassle-free.

Before eBRC, getting a <a href="https://www.skydo.com/blog/bank-realisation-certificate-all-you-need-to-know">Bank Realization Certificate (BRC)</a> was a tedious process. Exporters had to visit their bank, apply for a physical BRC, and then submit it to the Directorate General of Foreign Trade (DGFT). The DGFT would manually enter transaction details, making the process slow and complicated—especially for claiming export incentives.

In 2012, the DGFT introduced e`BRC, eliminating the need for physical visits and paperwork. Now, banks issue BRCs digitally, making it faster, easier, and more efficient for exporters to claim benefits and comply with regulations.

In India, banks issue an -BRC to exporters through the following process.

How do you check the eBRC status on the DGFT Website?

Here are the steps to check the status of your eBRC (Electronic Bank Realization Certificate) online.

DGFT has made it mandatory for all exporters to apply for and receive the eBRC to demonstrate that they have received payment for their exported goods or services per DGFT regulations.

The eBRC system provides a digital record of export transactions, making it easier for exporters to maintain and retrieve records for audit and compliance.  Additionally, exporters can avoid visiting the bank and DGFT offices.&nbsp;

One of the main reasons exporters apply for the eBRC is to reap the benefits of various export benefits offered by the Indian government under its Foreign Trade Policy. Submitting an eBRC allows the exporters to be eligible for benefits such as low-cost loans, duty exemptions, subsidies, etc.&nbsp;

Enhancing transparency and accountability

The Indian government and authorities such as the Income Tax Department and the DGFT constantly monitor and manage the country's foreign exchange reserves and tax filing. Issuing e-BRC ensures that the foreign exchange earned through exports is accurately reported and accounted for with effective tax filing.&nbsp;

How to Claim Export Incentives using eBRC

In India, the DGFT decides on the value of the incentives which an exporter can seek under the various export benefits. The value is decided by analysing the Free on Board (FOB) of the exported goods and services mentioned in the shipping bills, and the total received payments per the eBRC.&nbsp;

Here's how you can claim these benefits with eBRC:

However, you must ensure that the bank has submitted an error-free e-BRC and it reflects the consolidated realisation value. Furthermore, you must enter freight values, insurance and commission values in the refund application, as the e-BRC excludes such values.&nbsp;

Here are some key resources and tools that can help you in your endeavour to obtain your e-BRC.

eBRC is a crucial certificate issued by the bank and verified by the DGFT for streamlining the payment procedure for exporters and working as an income proof for better transparency and tax filing.&nbsp;

It is mandatory for an exporter receiving payments for the export of goods and services to apply for eBRC and ensure that the bank uploads it on the DGFT website. Utilising the eBRC, exports can present their eligibility for various export incentives and increase their profit margin.&nbsp;

However, as an exporter, you must maintain accurate records of your export transactions and related documents to facilitate the e-BRC application process. Since the regulations and the procedure may change over time, it's important to stay updated with the latest information from official government sources and industry associations.&nbsp;

You can contact <a href="mailto:support@skydo.com">industry experts at Skydo</a> to help you with the eBRC process and in case you have any other queries related to foreign exchange.&nbsp;

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The global trade business is more interconnected than ever. Technological advancements have made it possible to connect with buyers globally and track logistics in real-time.

However,&nbsp; receiving cross-border payments through the traditional banking system still remains a cumbersome and expensive process thanks to lengthy processing times, hidden charges, and tax compliance issues. This is where virtual accounts step in, offering an innovative alternative to physical bank accounts. It eliminates the above challenges and simplifies cross-border payments for exporters.

What exactly are virtual bank accounts? How do you even open a virtual account? We answer these questions and a lot more in this blog.

Virtual bank accounts are digital accounts linked to your physical bank account. Each virtual bank account has a unique 18-digit number you can share with your international clients to receive payments. However, virtual bank accounts have one notable difference from physical bank accounts. The difference is they cannot actually hold money, they are like digital delivery agents receiving payments and delivering them to your bank account.

Virtual accounts add two major advantages for exporters:&nbsp;

By sharing your virtual unique account number, you don't have to reveal your bank account details. Keeping bank details private reduces the threat from security breaches.

When you work with multiple clients across multiple regions and countries, you can open different virtual bank accounts in each such country and consequently receive payments in different currencies each assigned to a different client. This way you can keep track of every client's payment history more efficiently.

Before we get to the working of virtual accounts, here's something you must know. Virtual accounts can be created for both domestic and international transactions. In the case of domestic transactions, each account has a unique virtual account number that can receive payments only in Indian Rupee (INR). However, the real utility of virtual bank accounts lies in international transactions. Let's understand this with the help of an example.

Imagine you're an exporter receiving payments from multiple international clients. You can share your physical bank account number with them, but it has challenges for them and you. For starters, your clients might be sceptical about making payments to a foreign bank account because of security issues like financial fraud or data breaches. For you, it's an expensive option because various charges are deducted from the amount before finally crediting it to your traditional bank account.

We have listed down the different charges that are typically deducted to help you understand better:

<a href="https://www.skydo.com/blog/swift-money-transfer-ultimate-guide">SWIFT Fees</a>: This ranges from Rs. 500 to Rs.1000 depending on the bank. Now while SWIFT fee is levied on the sender, more often than not, it will be passed on to the receiver.&nbsp;

Currency Conversion Markup: Banks charge a forex markup on the current exchange rate. For example, if the current USD to INR exchange rate is Rs. 85, the bank might deduct a markup of Rs.2 on every dollar. So when a client sends USD 10,000, the real exchange value is Rs. 850,000, but the bank will credit Rs. 830,000 after deducting the markup.&nbsp;

<a href="https://www.skydo.com/blog/automated-firc-simplifying-international-payments-compliance">Foreign Inward Remittance Advice (FIRA)</a> fees: After the amount gets credited, you must also pay the bank to obtain FIRA as proof that you have received an international payment.

Should you open multiple foreign bank accounts then?

Opening bank accounts where your clients are based is a valid option to bypass these charges. However, that's also an expensive process because you must pay maintenance fees for each account. Moreover, you have to face numerous regulatory hurdles.&nbsp;

A virtual account works as a win-win solution here. You can open virtual international bank accounts in your client's country without your presence and extensive paperwork.&nbsp;

For example, you open a new virtual account in the US for your American clients. They can transfer the payments in US Dollars like a local transfer therefore there are no SWIFT fees involved. Once the amount is received in your virtual account, it’s consolidated first, then converted into a currency of your choice – which is INR in most cases for Indian exporters – and deposited into your bank account. You can open virtual accounts in the same manner for different customers based out of countries like the UK, Singapore and more.

Opening a virtual bank account is much simpler and takes less time compared to opening a traditional bank account. The process is streamlined and requires less documentation. In India, platforms like<a href="https://www.skydo.com/"> Skydo</a> and<a href="https://www.skydo.com/blog/wise-transfer-charges-in-india"> Wise Business</a> offer international virtual<a href="https://www.skydo.com/blog/benefits-of-multi-currency-accounts"> multicurrency accounts</a> to manage receivables from different countries.

Here's how the 5-minute onboarding process at Skydo looks like:

What Documents Are Required to Open a Virtual Bank Account?