Automated Digital FIRC: Simplifying International Payments with Skydo

I Gate Global Solutions Ltd., a tech software exporter, filed a claim seeking a service tax rebate paid for all exports during a particular period. Despite filing these tax returns and disclosing the amount paid, the regulatory authority refused to grant the refund, stating that they couldn’t find a correlation between the service tax paid and the exporter's Foreign Inward Remittance Certificates (FIRAs). Moreover, the authority mentioned that no documentary evidence showed that the exporter provided services outside India. 

An appellate authority later overruled the initial claim. However, the case highlights the importance of meticulous documentation and record-keeping of FIRAs for exporters to claim refunds and comply with Indian tax laws. 

Yet, recording FIRA for each foreign inward remittance is challenging. Hence, in 2017, the Foreign Exchange Dealers’ Association of India (FEDAI) discontinued physical FIRAs and notified the authorised banks to issue e-FIRC or FIRA to exporters, which is still a lengthy and challenging process. To resolve challenges for exporters, modern payment platforms like Skydo have automated the FIRA generation process.

Skydo's Automated FIRA Generation: How does it work?

Even though e-FIRC aims to simplify the process, exporters still face many challenges. The foreign inward remittance certificate generation process is quite lengthy and involves the following steps.

This process takes around 7-15 days or longer in case of wrong information or other errors, creating a hassle for exporters, especially those with multiple foreign clients. Realising this issue, Skydo developed a simple solution.

When transacting through Skydo, it automatically generates FIRA for all international payments when they reach your bank account. The document details will be according to the information mentioned in the invoices and payment receipt details. You can easily go to the Skydo dashboard and download FIRA receipts for all or specific transactions.

Eliminating the lengthy FIRA generation process followed by banks helps exporters save time and resources, making it easier to focus on crucial business activities.

Eliminating manual document creation and its associated challenges

Tracking and maintaining international payment documents, especially FIRA, requires manual work, leading to extra cost and resource utilisation. There is also a risk of errors and misplacing manual documents. It can lead to non-compliance, resulting in high penalties and might impact their credibility and reputation. 

Hence, automated FIRA mitigates financial and business risk for exporters and increases efficiency by simplifying compliance with Indian tax laws.

Accuracy and reduction of human errors through automation

As explained above, beneficiaries/exporters must request banks to generate FIRA and provide many details, including account and payment transaction numbers, later uploaded to EDPMS. 

The process requires extensive manual activity, which creates room for errors. In case of incorrect details found during bank verification, exporters repeat the process, leading to delays in claiming tax benefits and adhering to compliances.

However, the Skydo payment platform reduces the risk of human error by automatically capturing information from invoices and payment receipts. It minimises manual effort and increases the accuracy of documents. Let’s explore these efficient features.

Key Benefits of Skydo's Automation Capabilities

1. Streamlining the process of compiling foreign inward remittance information

It is difficult for businesses to manually track or record the foreign inward remittance data every year. However, automatic FIRA generation allows exporters to easily tally their bank statements with individual FIRA details for foreign inward remittance.

By enabling details of all transactions available on a single click, Skydo streamlines the payment compiling process and facilitates accurate reconciliation of bank statements. 

2. One-click FIRA downloads 

Skydo’s user-friendly dashboard simplifies the process by enabling businesses to download FIRA receipts for individual transactions conveniently in one click. Even if you misplace a document, you can click on the particular invoice on the dashboard and download the FIRA receipt again.

3. Efficient tracking and management of export remittance documentation for businesses

Document management and reporting to adhere to Indian tax laws and other regulatory compliances is one of the most tedious tasks for businesses. Downloading FIRA receipts from EDPMS every few days for different transactions and saving them locally makes it difficult for exports to track, manage, and record their export remittance documentation.

However, Skydo automatically generates FIRA receipts for each transaction comprising complete and accurate details of foreign inward remittance and helps businesses efficiently track and manage their international payments.

Ensuring Compliance with Indian Tax Laws

Exported goods and services are considered zero-rated supplies under the Integrated Goods and Services Tax Act, 2017 (IGST Act), which means that foreign buyers do not pay GST on the goods or services received from an Indian exporter. 

Automatic generation of FIRA through Skydo helps businesses adhere to export compliances and get GST refunds smoothly.

The exporters must first pay GST, which can be claimed later. However, the refund process requires exporters to submit various mandatory GST forms and other documents, including FIRA.

The automatic foreign inward remittance advice generated by Skydo complies with the format issued by the RBI and adheres to all guidelines issued by regulatory authorities.

Conclusion

Say goodbye to the cumbersome hours spent navigating bank procedures and welcome an era of efficiency and compliance. Skydo emerges as the game-changer in the international payments realm, providing a seamless solution to the burdensome FIRC generation process. By automating this complex task, Skydo simplifies the workflow for freelancers and businesses and ensures strict adherence to Indian tax regulations and government schemes. 

Request a demo today and take your business global with Skydo's international payments solutions!