P0607 Purpose Code: Insurance claim Settlement of non-life insurance; and life insurance (only term insurance)

Purpose code P0607 is used when a claim settlement is received in India on a non-life policy or on a term life policy.

What is the P0607 purpose code?

Purpose code P0607 covers money arriving in India because an insurance claim has been settled, on either a non-life policy or a term life policy. The direction is the reverse of the premium codes: here an overseas insurer or reinsurer is paying out rather than being paid, so the Indian party is a claimant or a ceding insurer recovering under a treaty. Non-life and term life are paired here for the same reason they are paired for premium under P0603, since term cover is pure protection with no maturity value. Claims on life policies carrying a savings element settle under P0608 instead. Under RBI FEMA guidelines, this inward payment is classified under Insurance and Pension Services and reported accordingly.

When to use P0607 purpose code?

Use P0607 when a settlement reaches India on a non-life claim or on a term life claim, whether the payer is a foreign insurer settling directly or a reinsurer paying a recovery to an Indian cedant. The policy type is the test: non-life of any kind, and life cover only where it is term. A life policy with a maturity or savings element takes the other claims code even though the payment mechanics look identical.

When to use a different code:

• Use P0608 when the claim is on a life policy other than term insurance
• Use P0603 when the money is premium being received rather than a claim being paid
• Use the matching S-code when you are paying a foreign vendor rather than receiving money

Who typically uses P0607 purpose code

Indian businesses and individuals receiving settlement of a non-life claim from an overseas insurer, and Indian insurers recovering from foreign reinsurers on claims they have paid out. The recipient is whoever the settlement is due to, which makes this a claimant's code rather than an insurer's income code.

Examples of transactions covered under P0607 purpose code

• Settlement received from an overseas insurer on a cargo or property claim
• Reinsurance recovery paid to an Indian insurer by a foreign reinsurer
• Term life claim proceeds paid into India by an overseas insurer
• Interim payment received from a foreign insurer against an ongoing non-life claim

When NOT to use P0607 purpose code

• The claim is on a life policy with a savings or maturity element rather than term cover (use P0608)
• The money is premium being received for cover rather than a claim being settled (use P0601, P0602 or P0603 depending on the policy)
• The money is commission or fees for insurance-related services (use P0605)
• You are paying a foreign vendor rather than receiving (use the matching S-code)

Documents required for P0607 purpose code

To receive a payment under P0607, keep the following documents ready so your bank or platform can verify the transaction and report it correctly under FEMA.

How is a P0607 Purpose Code declared?

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

1. Confirm the policy type: Establish that the claim is on non-life cover or on term life, since savings-linked life claims take a different code.
2. Settle the claim: The overseas insurer or reinsurer agrees the amount and issues its settlement advice.
3. Receive the payment: The money is remitted to your Indian bank account.
4. Declare the purpose: State the purpose of the inward remittance, on your bank's form or through your platform.
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 P0607 purpose code

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

1. Using the wrong claims code for a life policy: Applying P0607 to a claim on a life policy with a savings element, when only term life belongs here and the rest go to P0608.
2. Coding a claim as premium: Using a premium code because the money involves an insurer, when this code covers money paid out on a claim rather than money paid in for cover.
3. Code and document mismatch: The code not matching the policy type your settlement advice describes, which flags the payment.
4. Incomplete documents: Missing the policy details or settlement advice, so the bank cannot confirm which claims code applies 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 P0607 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 P0607 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.