P0205 Purpose Code: Purchases on account of operational leasing (with crew) – Shipping companies

Purpose code P0205 is used when an Indian shipping company receives payment for leasing out a vessel together with its crew.

What is the P0205 purpose code?

Purpose code P0205 covers money received for putting a vessel at another party's disposal along with the people to operate it. The parenthetical is what defines the code: the lease includes crew, so the owner keeps responsibility for manning and running the ship while the charterer directs where it goes and what it carries. A lease where the charterer supplies its own crew is a different commercial arrangement and does not belong here. The code has an exact airline counterpart, so the mode of transport determines which one applies. Under RBI FEMA guidelines, this inward payment is classified under Transportation and reported accordingly.

When to use P0205 purpose code?

Use P0205 when your shipping company is paid for leasing out a vessel with its crew to an overseas charterer. It is the correct RBI receipt code where the arrangement is an operational lease including manning, rather than a bare charter or a freight contract. Two things have to be right before it applies: the asset is a vessel rather than an aircraft, and the crew go with it.

When to use a different code:

• Use P0211 when the operational lease with crew is of an aircraft rather than a vessel
• Use P0201 when the receipt is surplus freight or passenger fare from your own overseas operations rather than lease income
• Use the matching S-code when you are paying a foreign vendor rather than receiving money

Who typically uses P0205 purpose code

Indian shipping companies and vessel owners who charter out ships on terms that include the crew, serving overseas charterers who want capacity without taking on manning and technical operation. The lessor is the party this code applies to, since it records income from making the vessel available rather than payment for any cargo carried.

Examples of transactions covered under P0205 purpose code

• Charter hire received from an overseas charterer for a vessel supplied with its crew
• Periodic lease payment on a ship placed at a foreign operator's disposal on manned terms
• Income received for making a crewed vessel available to an overseas party for a fixed term
• Payment from a foreign charterer covering the hire of a vessel the owner continues to man and operate

When NOT to use P0205 purpose code

• The operational lease with crew is of an aircraft rather than a vessel (use P0211)
• The receipt is surplus freight or passenger fare from your own operations abroad rather than lease income (use P0201)
• The lease does not include crew, which is a different commercial arrangement and reports under a different code, so confirm the treatment with your bank
• You are paying a foreign vendor rather than receiving (use the matching S-code)

Documents required for P0205 purpose code

To receive a payment under P0205, keep the following documents ready so your bank or platform can verify the transaction and report it correctly under FEMA.

How is a P0205 Purpose Code declared?

Declaring the code is pretty straightforward. Here's how the payment gets tagged and reported.

1. Agree the charter: Put the vessel at the charterer's disposal on terms that include the crew.
2. Receive the hire: The overseas charterer remits the lease payment to your Indian bank account.
3. Declare the purpose: State the purpose of the inward remittance, on your bank's form or through your platform.
4. Submit supporting documents: Provide the charter party and hire statement so the bank can verify the transaction.
5. Get your FIRA: Once processed, your FIRA is issued as proof and the payment is reported under FEMA.
6. With a traditional bank you handle each step of your payment journey. But with a platform built for cross-border payments, you can preselect a default purpose code so that the payments land smooth.

Common mistakes to avoid while using P0205 purpose code

A few common slips can hold up your payment or cause compliance issues. Here's what to watch for.

1. Overlooking the crew condition: Using P0205 for a lease where the charterer supplies its own crew, when this code covers manned leases only and the unmanned arrangement is treated differently.
2. Using the shipping code for an aircraft: Applying P0205 to an aircraft lease with crew, which belongs under P0211. The two descriptions differ only by asset type.
3. Code and document mismatch: The code not matching what your charter party describes, which flags the payment.
4. Incomplete documents: Missing the charter party or hire statement, so the bank cannot confirm the lease includes crew and holds funds until provided.
5. Missing PAN or KYC: Incomplete verification stops the bank from releasing the payment.
6. Using an inward code for an outward payment: Applying a receipt code to hire you're paying out instead of the matching outward code.

How Skydo simplifies inward remittance under P0205 Purpose Code

With a bank, you declare the purpose code on your own for every single payment. With Skydo, you can preselect your code once and every payment gets tagged automatically.

1. Preselect the code once: Set P0205 as your default and Skydo tags every incoming payment for you, so there's no form to fill on each one.
2. No repeat declarations: A bank makes you restate the purpose for every remittance. Skydo does it in the background, the same way each time.
3. Instant, free FIRA: Your remittance proof is generated and stored on every payment, ready for your CA, GST, and audits, with no request and no fee.
4. Zero FX markup: You get the live mid-market rate with a flat, visible fee, instead of a markup hidden inside the bank's rate.
5. Settled in 24 hours: Your payment reaches your Indian bank within a day, fully reported and compliant.