You’ve closed a deal with an overseas client. The invoice is raised. Now your bank asks for an IEC (Importer-Exporter Code), and your accountant mentions SOFTEX (Software Export Declaration). Every search about DGFT leads to pages filled with government jargon that feels suitable for goods exporters, but not service businesses.

Most exporters slow down here, as the process isn’t explained clearly anywhere. This guide closes that gap, explaining DGFT in a comprehensive way that service exporters would find contextual. Check out how it fits into your workflow, key aspects that matter, and areas where mistakes commonly happen.&nbsp;

DGFT stands for Directorate General of Foreign Trade. It works under the Ministry of Commerce and Industry and oversees the regulation of exports and imports in India. It is responsible for setting the rules and providing the systems exporters use to operate legally.

Today, DGFT is used not just for large exporters. Many service exporters assume DGFT is only for physical goods. That is not true. If you are earning in foreign currency, you are already part of the DGFT ecosystem. You are still part of the same system even if you are:

DGFT is responsible for issuing the registration, documentation, and approvals needed to export and receive foreign payments properly.

What is the Role of DGFT in Export &amp; Import?

DGFT is the starting point for all export businesses. This is where you create your export identity before proceeding to payments, <a href="https://www.skydo.com/blog/export-compliance-guide-india">compliance filings</a>, and incentives.

Businesses must understand the different roles of DGFT in export and import comprehensively, as explained below.

DGFT implements the Foreign Trade Policy of India. The current cycle is FTP 2023.

You may not deal with the policy in your daily operations, but it defines the rules that apply to your exports.

This is the most important function of DGFT. A DGFT IEC is a 10-digit code linked to your PAN. Without it:

For instance, a freelancer in Bengaluru invoices a US client for $3,000. Without IEC, the bank may hold the payment or ask for additional documentation before releasing funds. That is why IEC is always the first step.

DGFT is also responsible for managing the HS code system, also known as ITC-HS.

Even for service exporters, classification is important. For instance, an IT consulting firm may use a service accounting code integrated with software or consulting exports. If the classification is wrong, it may experience reporting mismatches later during compliance checks.

Not all exports are “free”, as some require approvals. This is where different types of DGFT licenses come in. Some of these are:

Most service exporters may not require these in regular operations. However, they are necessary when dealing with restricted items or certain export schemes.

DGFT is also used to manage export-related schemes, such as the <a href="https://www.skydo.com/blog/export-promotion-schemes">RoDTEP</a> (Remission of Duties and Taxes on Exported Products), which is meant for exporters of goods. Earlier, service incentives such as SEIS (Service Exports from India Scheme) were also administered by DGFT.

DGFT also oversees certain export approvals and types of licenses, like Advance Authorization and EPCG (Export Promotion Capital Goods), along with controls for restricted categories under frameworks like SCOMET (Special Chemicals, Organisms, Materials, Equipment and Technologies).

Many schemes today have been formulated for goods. However, an update in policy may still affect service exporters, particularly considering compliance and reporting.

Besides acting as a regulator, DGFT also provides systems and services that exporters use regularly.&nbsp;

The main platform is dgft.gov.in, where you can:

Everything is digital now. There is no need for physical visits in most cases.

DGFT maintains a connection with banks. It tracks export payments through eBRC, or the electronic Bank Realisation Certificate.

For instance, your client sends $5,000, and the receipt is confirmed by your bank. This transaction gets recorded and is linked to your export data. Considering compliance and incentives, this role is crucial.

The DGFT COO validates the place where your goods or services come from. This feature comes in handy for goods exporters. However, if you export services, you may still find this in some contracts or compliance cases.

For instance, a business exporting software bundled with hardware may require the COO to confirm the place of origin of the physical component.

The Niryat Bandhu Scheme has been launched for free mentoring and handholding for new or small exporters. Particularly, this helps new exporters by providing them with training sessions and basic guidance, besides cultivating export awareness. So, if you’re just starting and need methodical support, DGFT can prove handy.

In case something goes wrong, businesses can turn to the DGFT portal for online grievance submission. It also provides regional support at offices. This helps exporters resolve issues like:

Now, exporters must try to avoid the common errors while dealing with DGFT.

Common DGFT Mistakes Exporters Make and How to Avoid Them

In most cases, businesses encounter export issues due to small mistakes that usually go unnoticed early. Have a look at the common errors that you must avoid.

The correct <a href="https://www.skydo.com/blog/rbi_purpose_code_for_inward_remittance">purpose code</a> has to be used when you receive payments. In case the purpose code is wrong, the records with the bank won’t match the trade DGFT data. Moreover, eBRC may not generate properly.

So, if a SaaS company chooses the wrong purpose code for a subscription payment, the bank will process it, but there might be a mismatch in reporting. This can amount to issues later on.

Sometimes, exporters forget to update the IEC annually. It may get deactivated, eventually blocking export transactions.

When there’s a mismatch between the invoice value, amount received, or reported value of exports, your compliance filings may be delayed.&nbsp;

For instance, you raise an invoice of $10,000 but after deductions, you receive $9,800. These reporting issues might show up if the records are not aligned.

In case an exporter uses the wrong DGFT HS code or service classification, it can lead to errors during reporting or compliance delays.

For service exporters, it’s important to select the correct SAC (Service Accounting Code) based on what they offer. For example, IT services, software development, or consulting services fall under the 998313 code. If there’s a mismatch between the classification and the nature of the service, it might create issues in eBRC, RBI reporting, or export documentation.

Now, check out the common mistakes businesses make while using these codes, and understand how you can fix them.

The Role of Digital Signature Certificates (DSC) in DGFT

As all the processes associated with DGFT are fully digital, exporters need a Class 3 Digital Signature Certificate. A DSC is a digital identity that is used to sign applications and submit documents online.

The purpose of DGFT is to verify the authenticity of information and prevent misuse of data. It streamlines paperless processing for exporters. Unless businesses obtain the DSC, they cannot complete IEC applications, place any request for a license, or make any kind of modifications.

You can obtain a DSC from certified providers like eMudhra, Sify, and nCode. For DGFT filings, a Class 3 Digital Signature Certificate is required. It ensures secure and authenticated submissions. The DSC usually remains valid for 2-3 years. The cost of a Class 3 DSC in India typically ranges from ₹1,000 to ₹3,500. The exact cost depends on validity, provider, and whether a USB token is included.

A DSC is necessary for service exporters, too. So, even if you are a freelancer or running a small agency, you would need it if you are handling the filings yourself.

For instance, a freelancer applying for IEC or filing eBRC independently needs to use DSC to submit the application and verify it.

By now, you have understood how IEC, purpose codes, and compliance help in receiving your export payments seamlessly. Once you complete your DGFT setup, the next challenge lies in handling payments without delays, hidden charges, or constantly following up with your bank. Platforms like <a href="https://www.skydo.com/">Skydo</a> can help exporters in these situations.&nbsp;

How Does Skydo Help After Your DGFT Compliance Is Sorted?

DGFT may help exporters get started, but it won’t handle your payment flow. A platform like Skydo can help you manage your incoming payments and documentation efficiently. It offers the following features.

Think of it this way: DGFT gives you the ability to export. Then, <a href="https://www.skydo.com/">Skydo</a> helps you receive and manage the money that comes in.

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Third-party payments need careful documentation. Skydo issues FIRA on every payment for clean RBI reporting.

Are you receiving a third party export payment and concerned if you’re compliant with the RBI rules? Or whether a tripartite agreement is mandatory for such payments?

This blog will help you figure that out as it covers the RBI guidelines, documentation, process, and common mistakes exporters make.

What is third party payment in export transactions

A third party payment in exports happens when the payment comes from someone other than the buyer.

This might sound confusing to you, but in international business, it is a common mode of trade payment. Trade payment means any payment you receive in exchange for goods or services sold abroad.

In most cases, a third party is a parent company paying for its smaller branch, group entity, or a buying agent who settles bills for their clients.

Practical example: An Indian IT firm finished a $50,000 software project for a new US-based startup. They sent the client an invoice, but the payment came from a large parent company in the UK.

How is third party payment different from third party export

Third party payment and third party export sound similar, but they’re not the same.

Third party payment: You ship the goods to an international buyer, but the payment comes from someone else who is not involved in the transaction

Third party export: You ship to a country other than the buyer’s, but the buyer makes the payment. For example: the buyer is in Germany, you export your goods to Spain, but the buyer still pays for it.

Here’s a table comparing third party export payments vs third party export

What are the RBI guidelines for third party export payments

Every third party export payment in India must fulfill these RBI regulatory norms to avoid severe penalties. Remember and save this list somewhere, so you can refer to it the next time you accept such a payment.

A tripartite agreement in simple terms means a three-way contract. It is a formal written agreement signed by you (the exporter), your buyer, and the third party who will send the money to your Indian bank account.

<a href="https://www.fatf-gafi.org/en/home.html">FATF</a> stands for the Financial Action Task Force. The FATF is a global organization that continuously monitors illegal activities like terrorist financing and money laundering, and sets standards to mitigate them.

<b>Authorized Banking Channels and EDF Declaration</b>

An<a href="https://www.skydo.com/blog/export-declaration-form"> Export Declaration Form (EDF)</a> is an official government form where you declare what you are selling, the value of the goods, and how you will be paid.

Besides the FATF-blacklisted countries, the RBI advises banks to be vigilant about third party export payments in the following ways:

What documents are required for third party export payments

This document list is what you need to ensure your trade is compliant, and the bank releases the payment on time:

How to receive third party payments in five steps

These are five simple tips that will save you from back and forth and keep everyone on the same page:

Step 1: Agree on trade payment terms with all parties

Even before you ship the goods, confirm the payment details. Ask: Which company will make the payment, and where is it located? Also decide the payment method: bank transfer (T/T), Letter of Credit (LC), or some other international payment method.

Step 2: Draft and execute the tripartite agreement

The next step is to execute the tripartite agreement in writing. It must include the names, addresses, and specific roles of all three parties. Get the agreement signed by the authorized representatives of all the parties.

Step 3: File shipping bill with third party declaration

When you file the shipping bill, mention the third party payer’s full name, their country, and a brief note explaining their relationship to the buyer. The customs department might flag this information and verify with your AD bank when the payment reaches India.

Step 4: Submit documents to authorized dealer bank

After shipping the goods, submit the commercial invoice, a copy of the shipping bill, and the tripartite agreement to your AD bank. The bank will run a FATF-compliance and Know Your Customer (KYC) check to ensure the money is coming from a legitimate source. Respond quickly if your bank asks for extra proof or email trails

The last step is when you receive the SWIFT transfer in your bank account. The bank issues a<a href="https://www.skydo.com/blog/all-you-need-to-know-about-firc-a-complete-guide"> Foreign Inward Remittance Certificate (FIRC)</a>, which is the official proof you need for GST refunds.

Then, the bank generates an<a href="https://www.skydo.com/blog/what-is-e-brc"> Electronic Bank Realization Certificate (e-BRC)</a> to close your export record on the DGFT portal.

How third party payments affect FIRC and GST refunds

Do third-party export payments affect FIRC and GST refunds? This is a common confusion for exporters.

An FIRC remains unaffected for third-party payments as long as it complies with the RBI norms.

Receiving money from a third party does not disqualify you from getting IGST and ITC refunds if your documentation is perfect.

The most-common error is when the name on the FIRC doesn’t match the buyer’s name on the invoice. The GST department might raise queries if that happens.

Keep your tripartite agreement handy to resolve such queries.

What are common mistakes exporters make with third party payments

Watch out for these common mistakes that can delay payments or get you involved in compliance hassles

How Skydo simplifies third party export payments

Third party export payments have a lot of moving pieces: tight documentation, multiple compliance norms, and FIRC follow-ups with banks. The best way to manage this is by using modern payment platforms like <a href="https://www.skydo.com">Skydo</a>.

Virtual accounts in multiple currencies: Get third party payments from companies in the US, UK, EU, Singapore, Australia, and Canada without opening foreign bank accounts. No SWIFT fee or intermediary bank charges are involved.

Automated compliance documentation: Skydo assists you at every step of the third-party payment documentation process so you miss nothing.

Free FIRC generation Every payment you receive comes with a FIRC. No extra charges, no follow-up calls, and GST refund-ready.

Transparent flat fees: With Skydo, you always know how many fees you are paying. No hidden FX markups.

Real-time payment tracking: You get real-time notifications as payments move through different stages. No more chasing banks for status updates or asking clients for<a href="https://www.skydo.com/blog/mt103-what-is-it-why-it-matters-and-how-to-get-one"> MT103</a>.

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Your shipment is ready. The buyer is waiting. And then customs flags it, not because anything is wrong with the goods, but because a document you didn't know was mandatory.

The certificate of origin is one of those documents that sits quietly in the background until it causes a very loud problem.

This guide breaks down what a country of origin certificate is, when you need one, the different types, and how to get one without the last-minute panic.

A certificate of origin is an official document that confirms the country where your goods were manufactured, grown, or substantially processed. Customs authorities in the destination country use it to determine applicable duties, whether the goods qualify for trade agreement (FTA) benefits, and whether the shipment can enter at all. You'll see it referred to as a CO, COO, cert of origin, or country of origin certificate, depending on who you're dealing with, but they all mean the same thing.

How the certificate of origin differs from the country of origin and the rules of origin

These three terms often get used interchangeably, but they're not the same thing.

Why exporters need a certificate of origin

Without a certificate of origin, your shipment arrives at the destination country as unknown. Customs doesn't know where the goods came from, so they can't confirm the applicable duties, verify trade agreement eligibility, or clear the shipment without delays.&nbsp;

For Indian exporters, the COO is often the document that determines how much your buyer pays in import duties. If India has a Free Trade Agreement with the destination country, a valid certificate of origin can help your goods qualify for a reduced or zero tariff rate. Without it, your buyer pays the standard rate, which can make your product significantly more expensive than a competitor's from a country that submitted the right paperwork.

There are two primary categories of COO, and which one you need depends on whether a trade agreement exists between India and your destination country.&nbsp;

This is the standard certificate used when no Free Trade Agreement applies between the exporting and importing countries. Customs authorities use it for import procedures, statistical reporting, and in some cases, anti-dumping enforcement.&nbsp;

Most countries require a non-preferential CO as a baseline document regardless of any trade agreement status. Think of it as the default; you'll need it even when nothing special is going on.

This one comes into play when India has a trade agreement with the destination country, and your goods qualify for reduced or zero import duties under that agreement. The buyer's customs authority needs proof that the goods genuinely originate from India before granting the benefit, and the preferential CO is that proof.

Examples include the India-ASEAN FTA, India-UAE CEPA, India-Sri Lanka FTA, and SAFTA. Each agreement has its own rules of origin criteria that your goods must meet before you can claim preferential treatment.

The key difference from a non-preferential CO comes down to what's at stake.&nbsp;

They're also issued differently. Non-preferential certificates are typically issued by chambers of commerce, while preferential certificates are often issued by government bodies such as the DGFT or require a specific format mandated by the trade agreement.

When is a certificate of origin required?

Whether you need one depends on where you're shipping, what you're shipping, and what your buyer needs to clear the goods on their end.

Countries that require a certificate of origin

Requirements vary significantly by destination.&nbsp;

The Middle East, particularly Saudi Arabia, the UAE, Kuwait, and Qatar, is known for strict COO requirements, often needing attestation from the chamber of commerce and sometimes the destination country's embassy.&nbsp;

Most ASEAN countries require it when preferential duties are being claimed under the India-ASEAN FTA.&nbsp;

The US, UK, and EU generally don't mandate it for every shipment but do require it for specific product categories or when anti-dumping duties are in question.

When a certificate of origin may be waived

Not every shipment needs a formal COO. Low-value shipments are often exempt; many countries set a threshold below which origin documentation isn't required. The exact value varies by country, so it's worth checking rather than assuming.

Under certain trade agreements, exporters can submit a simplified origin declaration directly on the invoice instead of a formal certificate. This is common under agreements like the India-UAE CEPA for eligible exporters. Some agreements also allow for the importer's knowledge, where the importer themselves can declare the origin of goods based on their own documentation, removing the need for a formal certificate entirely.

These exemptions exist, but they come with conditions. Using them incorrectly exposes you to the same penalties as a wrong declaration.

The issuing authority depends on the type of certificate you need and the trade agreement involved.&nbsp;

For most standard and non-preferential certificates, the local Chamber of Commerce is your go-to. You submit your application along with supporting documents, they review and stamp it, and the signed certificate is accepted by customs authorities across most destinations. In India, chambers like FICCI, CII, and regional chambers are authorised to issue these.

Government agencies and customs authorities

Some trade agreements require certificates issued specifically by government bodies. Under the India-ASEAN FTA, for instance, the certificate must come from the<a href="https://www.skydo.com/blog/iec-code-registration"> DGFT</a> rather than a chamber. DGFT also handles preferential COOs under several other Indian FTAs. These carry greater regulatory weight and are directly tied to the agreement's compliance framework.

Self-certification and third-party certifiers

Newer trade agreements are moving toward exporter self-certification, in which eligible exporters can declare origin themselves on the invoice or in a standalone declaration. India-UAE CEPA allows this for approved exporters. It's faster, but the compliance responsibility shifts entirely to you; an incorrect self-certified declaration carries the same penalties as any other wrong declaration, sometimes more.

How to get a certificate of origin for export

Most chambers and government bodies now offer online submission, so you're not always running to an office with a physical file. That said, accuracy matters more than speed here; a wrong HS code or vague product description can get your application rejected or, worse, cause problems at the destination.

Before you fill anything out, gather these: your commercial invoice, packing list, bill of lading or air waybill, and, if applicable, a manufacturer's declaration or production proof. The manufacturer's declaration becomes important when you're not the one producing the goods.

&nbsp;&nbsp;2. Complete the application form

The form will ask for exporter and importer details, a description of the goods, the HS code, the quantity, and the value. The product description must match your invoice exactly; any inconsistency will flag the application. Double-check your HS code before submitting. It's one of the most common and most consequential errors.

For non-preferential certificates, submit to your regional Chamber of Commerce. Many chambers now have online portals; FICCI and CII both offer digital applications. For preferential certificates under specific FTAs, submissions are made through the DGFT portal. Note that chamber applications often require membership, so factor that in if you're applying for the first time.

Fees vary by chamber and certificate type. Paper certificates typically cost more to process than electronic ones. Most chambers charge somewhere between ₹200 and ₹500 per certificate for standard processing, with expedited options available if your shipment timeline is tight. DGFT fees for preferential certificates are separate and depend on the agreement.

Standard processing takes one to three working days at most chambers. Digital certificates are often faster. You'll receive either a stamped paper certificate or a digitally verified electronic version, depending on your destination's requirements. Keep a copy on file; some importers and banks ask for it months after the shipment has cleared.

Paper vs electronic certificates of origin

Paper certificates are still widely accepted, but they come with obvious friction, physical submission, courier time, and the risk of damage or loss in transit. Electronic certificates of origin (eCOs) have largely solved these problems. They're faster to process, harder to forge, and increasingly accepted across major trade destinations, including the UAE, EU, and ASEAN countries.

The bigger advantage of eCOs is verification. Digital certificates carry unique tracking numbers that customs authorities can authenticate in real time, reducing fraud and speeding up clearance.

Common certificate of origin mistakes to avoid

Some mistakes don't show up until the shipment is already held.

Certificate of Origin vs. Other Export Documents

Each document answers a different question. Customs authorities need all of them together because no single document tells the full story of a shipment.

Simplify your export payment documentation with Skydo

Getting your certificate of origin right is only one part of export compliance. The payment side needs equal attention; FIRA, GST-compliant invoices, and transaction records all come into play when you're receiving <a href="https://www.skydo.com/blog/cross-border-payments">international payments</a>.

Skydo makes this easier for Indian exporters. You get instant <a href="https://www.skydo.com/blog/automated-firc-simplifying-international-payments-compliance">FIRA </a>delivered to your inbox the moment a payment is received, GST-compliant invoicing built into the dashboard, and real-time payment tracking so you're never chasing a client for updates.

On the cost side, Skydo charges a flat fee with zero FX margin and no hidden charges that eat into what your client actually paid you.

<a href="https://www.skydo.com/">Explore Skydo!</a>

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You close your cash books for the month, relieved that the numbers look correct. But when the bank statement arrives, things do not add up. Sounds familiar?

This mismatch, which is pretty common, shows up because your books and your bank did not record the transactions at the same time, or in the same way. That’s the reason businesses need to prepare a bank reconciliation statement (BRS).

This guide explains the correct bank reconciliation statement format and how to deal with challenges when you deal with <a href="https://www.skydo.com/blog/cross-border-payments">cross-border payments</a>.

A bank reconciliation statement is a document through which you can identify the differences between the balance recorded in your cash book or accounting records and the balance that your bank passbook shows on a given date. It happens because the transactions do not appear at the same time in both records.

For instance, you issue a cheque today and get it recorded in your books. The bank is likely to update the balance only when the cheque is cleared. Both the balances will differ until that happens. In a bank reconciliation statement, all these differences are listed. This helps you understand how the bank statement arrives at the final balance.

Businesses must understand that this reconciliation statement is not a formal financial statement. Instead, it’s an internal control tool that is usually prepared monthly or at the end of the period. However, you may also get it done daily or weekly if you run a high-volume business.

Why is a Bank Reconciliation Statement Prepared?

As a business, you may assume that your bank balance always remains accurate. However, many organizations end up making risky decisions as they continue to rely on a single source.

The main reasons why a bank reconciliation statement is prepared have been presented below:

There’s always a chance for errors to creep into your cash books as a result of incorrect entries. Even processing issues can result in incorrect entries in bank statements.

At times, there are certain transactions that are showing up in your bank statements, but they do not appear in your books. These usually include bank charges, interest credits, and customer deposits.

You may also notice unexpected entries in your bank statements. These include unauthorized withdrawals and duplicate payments. A bank reconciliation statement helps to identify these issues.

Often, your cash books may show more money than you actually have. In these situations, you may be approving payments that cannot be cleared or delaying payments to your vendors unnecessarily. With accurate reconciliation, you would be making your decisions based on the availability of real cash.

It takes time to track some transactions. These include cheques issued but not yet presented, and deposits made close to the month-end. Through reconciliation, you can track these pending items.

Auditors largely rely on bank reconciliation statements to verify whether your financial records are accurate. They also get a clear picture of the completeness of your transactions. A comprehensive reconciliation statement serves as an audit trail.

In case you’re dealing with global clients, mismatches in bank statements can be more complex. For instance, a company invoices $4,000 at ₹83 per dollar. In this case, the expected amount would be ₹3,32,000.

However, the bank credits the funds, considering the dollar value to be ₹82. It also deducts ₹3,000 as fees. The actual amount received would be ₹3,25,000, creating a difference of ₹7,000. Unless you have a well-prepared bank reconciliation statement, this difference would be unclear.

Now, check out the process of preparing a bank reconciliation statement.

How to Prepare a Bank Reconciliation Statement?

Businesses must have a clear idea of the bank reconciliation statement rules to prepare these statements.

First, collect your cash book or general ledger that contains relevant records. Also, get the bank statement for the same period. In case there’s a difference in time periods, you can identify the false mismatches.

Now, you need to compare each entry in your books with that in your bank statement. Look at the amount in the transactions, date, and the reference number. Mark the entries that appear in both the records, as they are already reconciled.

Next, shortlist the entries that appear only in one record. Usually, they come under two categories.&nbsp;

These include cheques that have been issued but still have not been cleared, and deposits that have not yet been credited.

These numbers usually include charges deducted by the bank, interest credited, and direct transfers.

Now that you know the mismatches, group them into differences in timing, missing entries, and errors. This would make your next step easier.&nbsp;

Start with the balance based on your cash book. Then, add the transactions that have been recorded by the bank but not by you. Deduct the transactions that you recorded, but the bank has yet to process. The figure you adjusted must match the bank balance.

Now, check whether the final balances match and whether the documents support all the entries. As per your financial records, save the statement. Some of the common categories of mismatch include:

Note: A few extra steps are required for foreign transactions.

What is the Format of a Bank Reconciliation Statement?

A reconciliation statement starts with one balance and uses reconciling items to adjust it until it matches the other balance. Here’s the standard bank reconciliation statement format:

Businesses must understand how these adjustments work in real scenarios before they apply the process. The examples below demonstrate how mismatches usually appear and how reconciliation helps to resolve them.

Reconciling local transactions is manageable. However, when international payments involve exchange rate changes, hidden deductions, and delayed confirmations, the process becomes challenging to manage. Particularly, if there are multiple such transactions that involve different currencies in a single day, the process gets complicated over time.

If you’re tired of chasing SWIFT copies and manually calculating forex differences, check out how <a href="https://www.skydo.com/blog/minimise-tds-foreign-payments">Skydo</a> gives you clear transaction records and payment visibility in real time.

What Are the Challenges in Preparing Bank Reconciliation Statements?

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