P0902 Purpose Code: Receipts for use, through licensing arrangements, of produced originals or prototypes, patents, copyrights, trademarks, industrial processes, franchises etc.

Purpose code P0902 is used when an Indian rights holder receives royalties or licence fees from abroad for the use of intellectual property they own.

What is the P0902 purpose code?

Purpose code P0902 covers money received from abroad for letting someone else use intellectual property you own. The description reaches widely: produced originals and prototypes such as manuscripts and films, patents, copyrights, trademarks, industrial processes and franchises. What ties them together is the arrangement rather than the asset, since in every case a licence is granted, ownership stays with you, and the licensee pays for use. That is the distinction to hold on to, because selling the same asset outright transfers ownership and is treated as a capital account receipt instead. Under RBI FEMA guidelines, this inward payment is classified under Charges for the use of intellectual property n.i.e. and reported accordingly.

When to use P0902 purpose code?

Use P0902 when an overseas licensee pays you for the use of intellectual property you continue to own, whether that is a royalty on a book or film, a patent licence fee, a trademark licence, or payment for the use of an industrial process. It is the correct RBI purpose code for licensing income across all those asset types. Where franchising is involved the neighbouring code also applies, so a franchisor with a mixed fee structure should confirm with their bank how the two divide.

When to use a different code:

• Use P0901 when the payment is for franchise services rather than for the use of intellectual property under a licence
• Use P0019 when you have sold the intellectual property outright rather than licensed its use
• Use the matching S-code when you are paying a foreign vendor rather than receiving money

Who typically uses P0902 purpose code

Indian rights holders earning licensing income from overseas, including authors and publishers licensing manuscripts, studios and producers licensing films and content, patent holders and technology firms licensing processes, and brand owners licensing trademarks. It applies whether you license as an individual creator, a proprietorship, or a registered company.

Examples of transactions covered under P0902 purpose code

• Royalties received from an overseas publisher on a book licensed for foreign publication
• Licence fees from an international distributor for rights to a film or series
• Patent royalties paid by a foreign manufacturer using a process licensed from India
• Trademark licence fees received from an overseas company using an Indian brand

When NOT to use P0902 purpose code

• The payment is for franchise services rather than for the use of intellectual property under a licence (use P0901)
• You have sold the patent, copyright, or trademark outright rather than licensing its use (use P0019)
• The payment is for software consultancy or development work rather than for licensing intellectual property (use P0802 or P0807)
• You are paying a foreign vendor rather than receiving (use the matching S-code)

Documents required for P0902 purpose code

To receive a payment under P0902, keep the following documents ready so your bank or platform can verify the transaction and report it correctly under FEMA.

How is a P0902 Purpose Code declared?

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

1. Grant the licence: Enter the licensing arrangement with the overseas party, setting out the rights and the royalty terms.
2. Receive the statement: The licensee reports usage or sales for the period and calculates what is due.
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 licence agreement and royalty 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 P0902 purpose code

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

1. Confusing a licence with a sale: Using P0902 when you have assigned the intellectual property outright, which transfers ownership and is a capital account receipt under P0019. Ownership staying with you is what places the money here.
2. Splitting franchise income by guesswork: Assuming where franchise fees divide between this code and P0901, when the descriptions overlap and your bank is the right authority.
3. Code and document mismatch: The code not matching what your licence agreement describes, which flags the payment.
4. Incomplete documents: Missing the licence agreement or royalty 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 P0902 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 P0902 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.