P1505 Purpose Code: Deemed Exports

Purpose code P1505 is used for supplies treated as exports between special economic zones, export processing zones and the rest of India.

What is the P1505 purpose code?

Purpose code P1505 covers deemed exports, meaning supplies treated as exports even though the goods do not leave the country. Special economic zones and export processing zones sit outside India's customs territory for these purposes, so a supply from the domestic tariff area into a zone is treated as an export and a supply the other way as an import. The code exists because these transactions need recording as trade even though nothing crosses a national border. Whether a particular supply qualifies as a deemed export, and what follows from that status, is governed by the zone and trade policy framework rather than by the purpose code. Under RBI FEMA guidelines, this receipt is classified under Others and reported accordingly.

When to use P1505 purpose code?

This code applies where a supply between a special economic zone or export processing zone and the domestic tariff area is treated as a deemed export and settled in foreign exchange. Establish the deemed export status of your supply under the applicable framework before relying on the code, since the classification follows from that status rather than creating it. Where your supply is an ordinary export leaving India, the export codes in group 01 apply instead.

When to use a different code:

• Use the group 01 export codes when goods actually leave India rather than moving between a zone and the domestic tariff area
• Use P1502 when the money is a reversal or refund rather than payment on a deemed export
• Use the matching S-code when money is being paid out rather than received

Who typically uses P1505 purpose code

Indian businesses supplying goods to units in special economic zones and export processing zones from the domestic tariff area, and units within those zones supplying into the domestic tariff area. The parties are both located in India, which is what makes the transaction a deemed rather than an actual export.

Examples of transactions covered under P1505 purpose code

• Payment received by a domestic tariff area supplier for goods supplied to an SEZ unit
• Settlement on a supply from an export processing zone into the domestic tariff area
• A receipt on a transaction treated as a deemed export under the applicable framework
• Payment on a zone-related supply your bank has confirmed reports as a deemed export

When NOT to use P1505 purpose code

• The goods actually leave India, which is an ordinary export under the group 01 codes
• The supply is a domestic transaction between parties both in the domestic tariff area, which is not an export of any kind
• The money is a reversal or refund rather than payment on a supply (use P1502)
• Money is being paid out rather than received (use the matching S-code)

Documents required for P1505 purpose code

To receive a payment under P1505, keep the following documents ready so your bank can verify the transaction and report it correctly under FEMA.

How is a P1505 Purpose Code declared?

The purpose code follows the underlying classification rather than establishing it.

1. Establish the status: Confirm under the applicable framework that your supply qualifies as a deemed export.
2. Make the supply: Deliver the goods between the zone and the domestic tariff area under your contract.
3. Raise your invoice: Bill the counterparty for the supply.
4. Declare the purpose: State the purpose of the remittance on your bank's form, with the supporting documents.
5. Reporting is completed: The receipt is documented and reported under FEMA.

Common mistakes to avoid while using P1505 purpose code

A few common slips can cause reporting problems.

1. Treating the code as conferring deemed export status: Assuming that declaring P1505 makes a supply a deemed export, when the status follows from the zone and trade policy framework and the code only records it.
2. Confusing deemed and actual exports: Using P1505 where goods genuinely leave India, which is an ordinary export under the group 01 codes, or using an export code for a zone supply that never crosses a border.
3. Code and document mismatch: The code not matching what your supply documentation describes, which flags the payment.
4. Incomplete documents: Missing the documents establishing deemed export status, so the bank cannot confirm the classification and holds the payment 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 being paid out instead of the matching outward code.

How Skydo helps you receive international business payments

P1505 covers deemed exports between zones and the domestic tariff area, where both parties are in India, which is not a flow Skydo processes. If your business also invoices clients abroad for goods or services, here is how Skydo helps you get paid.

1. Complete onboarding: Share PAN, Aadhaar, and Indian bank details. Setup is fully online.
2. Get virtual account details: Receive account details in USD, GBP, EUR and other currencies your clients pay in.
3. Your client pays like a local: They send a domestic transfer in their own country, no SWIFT and no wire fee on their end.
4. FIRA is generated automatically: Free e-FIRA on every payment, stored in your dashboard for GST and audits.
5. INR settles within 24 hours: Mid-market rate with a flat, visible fee, no FX markup.