S0102 Purpose Code: Payment towards imports, settlement of invoice, other than Nepal and Bhutan

Purpose code S0102 is used when an Indian importer pays a foreign supplier for goods imported into India, excluding imports from Nepal and Bhutan.

What is the S0102 purpose code?

Purpose code S0102 is used when an Indian business sends money abroad to settle invoices for imported goods, other than goods sourced from Nepal and Bhutan. It covers outward remittances to foreign exporters for merchandise you have imported into India, such as raw materials, components, finished products or equipment. If the payment relates to services rather than goods, or to imports from Nepal or Bhutan, you should use a different RBI purpose code that matches that transaction. Under RBI FEMA guidelines, this outward payment is classified under imports and reported accordingly.

When to use S0102 purpose code?

Use S0102 when you are paying an overseas supplier to settle an import invoice for goods delivered into India, excluding imports from Nepal and Bhutan. It is the correct RBI purpose code for import payments where you are clearing trade payables for physical goods under your import contracts. S0102 covers the payment for the imported goods themselves, not any associated service fees that should be tagged under the relevant service import code.

When to use a different code:

• Use the matching import code for goods sourced from Nepal and Bhutan
• Use the relevant service import code when the payment is for services rather than goods
• Use the matching P code when you are receiving money rather than paying

Who typically uses S0102 purpose code?

Indian manufacturing companies, traders, ecommerce businesses and other importers that buy goods from overseas suppliers and need to remit funds against import invoices. It applies whether you import as a private limited company, LLP, partnership or proprietorship, as long as the transaction is an import of goods into India from countries other than Nepal and Bhutan.

Examples of transactions covered

• Payment to a foreign manufacturer for importing machinery into India under a commercial invoice
• Settlement of an import invoice for raw materials purchased from an overseas supplier
• Remittance to an international wholesaler for finished goods shipped to your Indian warehouse
• Balance payment to a foreign exporter after receipt and clearance of imported goods at an Indian port

When NOT to use S0102 purpose code

• The payment is for goods imported from Nepal or Bhutan (use the specific import code for Nepal or Bhutan trade)
• The payment is for a service such as consultancy, software or technical support rather than goods (use the relevant service import code)
• The payment is for capital account transactions like importing capital equipment under a loan or lease structure (use the appropriate capital account code)
• You are receiving money rather than paying (use the matching P code)

Documents required

To send a payment under S0102, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S0102 Purpose Code declared?

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

1. Receive the supplier documents: Your overseas seller issues a commercial invoice for the imported goods, backed by the import contract, purchase order and Bill of Entry where applicable.
2. Determine taxability: Establish whether the payment is chargeable to tax in India, since that decides which part of Form 145 you file.
3. File Form 145: Submit the declaration before remitting, with Form 146 from your CA where the taxable amount exceeds ₹5 lakh in the Tax Year.
4. Complete Form A2: State the purpose of the outward remittance as S0102 and submit the supporting documents to your bank.
5. Get your MT103: Once the payment is sent, request the SWIFT MT103 as proof and retain your Form A2 record.
6. With a traditional bank you handle each step of the payment journey. But with a platform built for cross-border payments, you can preselect a default purpose code so the payments go out smooth.

Common mistakes to avoid

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

1. Confusing goods with services: Tagging a service payment or mixed contract as a pure goods import under S0102 when it should use a relevant service or split code.
2. Code and invoice mismatch: Using S0102 when the supplier invoice does not describe an import of goods into India, which can flag the payment for review.
3. Assuming a Rule 220(3) exemption: Skipping Form 145 on a payment that is not clearly covered by the specified exemptions, which carries a ₹1,00,000 penalty per instance.
4. Incomplete documents: Missing invoice, contract, Bill of Entry or Form A2, so the bank holds the remittance until the paperwork is complete.
5. Missing PAN or KYC: Incomplete KYC or incorrect PAN details can stop the bank from releasing the payment.
6. Using an outward code for an inward receipt: Applying S0102 to money coming in instead of using the matching P code for import settlements received.

How Skydo helps with payments under S0102 Purpose Code

With a bank, you fill a fresh Form A2 and chase documents for every single vendor payment. With Skydo, your outward payments run on the same account you already collect into.

1. One account, both directions: Receive from international clients and pay overseas vendors from a single onboarded account, with one KYC.
2. Purpose code applied consistently: Set S0102 as your default for these import payments so every remittance is tagged the same way.
3. Documentation in one place: Your invoices, Form A2 records and payment proofs stay together, ready for your CA and your AD bank.
4. A rate you can see: You get the live mid-market rate with a transparent fee, instead of a markup hidden inside the bank's rate.
5. Payments that go out on schedule: Your vendor gets paid without a branch visit or a week of back and forth.