P0605 Purpose Code: Auxiliary services including commission on insurance

Purpose code P0605 is used when an Indian business is paid from abroad for insurance-related services, most commonly brokerage or agency commission.

What is the P0605 purpose code?

Purpose code P0605 covers money received for services provided around insurance rather than for insurance itself. Commission is the example the description names, which in practice means brokerage and agency income earned by intermediaries placing or servicing business. The word including signals that commission is an example rather than the whole scope, so other auxiliary services supporting insurance business also sit here. What separates this code from the rest of the group is direction of service: here you are being paid for work done, not receiving premium for cover you carry or paying out on a claim. Under RBI FEMA guidelines, this inward payment is classified under Insurance and Pension Services and reported accordingly.

When to use P0605 purpose code?

Use P0605 when your business is paid from abroad for insurance-related services, whether that is commission on business placed, brokerage on a renewal, or other auxiliary work supporting an insurer. It is the correct RBI receipt code where you are the service provider and an insurer or reinsurer is your customer. The test is whether the money is a fee for what you did, as opposed to premium for cover you are carrying.

When to use a different code:

• Use P0603 when the money is general insurance, reinsurance, or term life premium rather than commission
• Use P0602 when the money is freight insurance premium on goods in transit
• Use the matching S-code when you are paying a foreign vendor rather than receiving money

Who typically uses P0605 purpose code

Indian insurance brokers, agents and intermediaries earning commission from overseas insurers and reinsurers, along with businesses providing auxiliary services that support insurance operations. It applies whether you operate as a proprietorship, a partnership, or a registered company, since the code turns on the service provided rather than the size of the firm.

Examples of transactions covered under P0605 purpose code

• Brokerage received from an overseas insurer on business placed with them
• Agency commission remitted from abroad on policies sold or serviced
• Commission earned on a reinsurance placement with a foreign reinsurer
• Fees received from an overseas insurer for auxiliary services supporting its business

When NOT to use P0605 purpose code

• The money is premium on general insurance, reinsurance, or term life cover (use P0603)
• The money is premium on a life policy with a savings or maturity element (use P0601)
• The money is freight insurance premium on goods in transit (use P0602)
• The money is a claim settlement being paid rather than a fee for services, which reports under the claim settlement codes

Documents required for P0605 purpose code

To receive a payment under P0605, keep the following documents ready so your bank or platform can verify the transaction and report it correctly under FEMA.

How is a P0605 Purpose Code declared?

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

1. Provide the service: Place or service the business, or carry out the auxiliary work agreed with the insurer.
2. Raise your statement or invoice: Bill the overseas insurer for the commission or fees earned in the period.
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 agency agreement and commission 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 P0605 purpose code

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

1. Confusing commission with premium: Using a premium code because the money came from an insurer, when this code covers what you earned for placing or servicing business rather than the premium itself.
2. Netting commission against premium: Treating a single remittance covering both as one receipt, when premium and commission report under different codes and need separating.
3. Code and invoice mismatch: The code not matching what your commission statement describes, which flags the payment.
4. Incomplete documents: Missing the agency agreement or commission statement, so the bank cannot establish the basis for the payment 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 money you're sending out instead of the matching outward code.

How Skydo simplifies inward remittance under P0605 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 P0605 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.