S0104 Purpose Code: Intermediary trade or transit trade, i.e., third country export passing through India

Purpose code S0104 is used when an Indian importer pays a foreign supplier for intermediary or transit trade, where goods move between two foreign countries while the transaction passes through India.

What is the S0104 purpose code?

Purpose code S0104 is used when an Indian business sends money abroad to pay for intermediary trade or transit trade, where the commercial transaction passes through India even though the goods move between two foreign countries. It covers payments for third country exports in which an Indian entity is the intermediary, arranging purchase from one foreign supplier and sale to another foreign buyer. It does not apply to regular imports of goods into India, which use other import purpose codes such as S0101 to S0103 depending on the nature of goods. Under RBI FEMA guidelines, this outward payment is classified under imports and reported accordingly.

When to use S0104 purpose code?

Use S0104 when you are paying an overseas supplier for goods in a third country export or transit trade structure, where your Indian business is the intermediary and the shipment does not enter India. It is the correct RBI purpose code for intermediary trade payments routed through India on a commercial basis, even if the goods ship directly between two foreign locations. S0104 is specific to intermediary or transit trade arrangements and not to standard imports where goods land in India.

When to use a different code:

• Use the specific import of goods code when the goods are shipped directly into India for your own use
• Use the relevant service import code when the payment is for services rather than for physical goods
• Use the matching P code when you are receiving money rather than paying

Who typically uses S0104 purpose code?

Indian trading companies and merchant exporters that act as intermediaries between foreign buyers and foreign suppliers in cross-border goods trade. It also applies to Indian importers and distributors that structure third country export or transit trade deals where the commercial transaction passes through India even though the goods do not physically enter India.

Examples of transactions covered

• Payment to a foreign supplier for goods shipped directly from Country A to your overseas customer in Country B under a back-to-back intermediary trade deal
• Settlement to an overseas manufacturer for a bulk order routed through your Indian trading company, where goods move between two foreign ports
• Advance remittance to a foreign wholesaler for transit trade stock that will be on-sold to another foreign buyer under your Indian entity’s contract
• Final payment to an overseas vendor after delivery under a third country export contract arranged and invoiced by your Indian business

When NOT to use S0104 purpose code

• The payment is for a normal import of goods into India where the shipment is cleared through Indian customs (use the appropriate standard import of goods code)
• The payment is for services such as consultancy, software or professional fees rather than physical goods (use the relevant service import code)
• The payment relates to capital account transactions like overseas investment, loans or acquisition of assets (use the specific capital account code)
• You are receiving money rather than paying (use the matching P code)

Documents required

To send a payment under S0104, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S0104 Purpose Code declared?

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

1. Receive the vendor invoice: Your overseas supplier issues a commercial invoice for the intermediary or transit trade goods, clearly describing the shipment and trade structure.
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 S0104 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. Treating normal imports as intermediary trade: Using S0104 for standard imports where goods are actually shipped into India, which should use the appropriate import of goods code.
2. Code and invoice mismatch: The code not matching what your vendor invoice describes, which flags the payment.
3. Assuming a Rule 220(3) exemption: Skipping Form 145 on a payment that is not on the specified list, which carries a ₹1,00,000 penalty per instance.
4. Incomplete documents: Missing invoice, contract or Form A2, so the bank holds the remittance until provided.
5. Missing PAN or KYC: Incomplete verification stops the bank from releasing the payment.
6. Using an outward code for an inward receipt: Applying a payment code to money coming in instead of the matching P code.

How Skydo helps with payments under S0104 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 S0104 as your default for these 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.