S0807 Purpose Code: Off-site software imports

Purpose code S0807 is used when an Indian business pays a foreign supplier for off-site software imports.

What is the S0807 purpose code?

Purpose code S0807 is used when an Indian business sends money abroad to pay for off-site software imports. This covers purchases like downloadable software, cloud or licence-based products, and other software delivered from outside India where the main value is the product rather than a custom service. It applies to the software product import itself and related charges bundled with that product. Under RBI FEMA guidelines, this outward payment is classified under telecommunication, computer and information services and reported accordingly.

When to use S0807 purpose code?

Use S0807 when you are paying an overseas vendor for software products or licences delivered off-site to your business in India. It is the correct RBI purpose code when the primary objective is importing a software product, whether on a subscription, perpetual licence or download basis. S0807 covers the off-site software import, not separate consultancy or implementation services.

When to use a different code:

• Use S0801 when the payment is for hardware consultancy or implementation
• Use S0803 when the payment is for database or data processing charges
• Use the matching P code when you are receiving money rather than paying

Who typically uses S0807 purpose code?

Indian companies, startups and agencies that import software products from overseas vendors, SaaS platforms and software marketplaces. It applies whether you pay as a private limited company, an LLP or a proprietorship, as long as the software is supplied from outside India.

Examples of transactions covered

• Annual subscription payment to a foreign SaaS platform for project management software used by your India team
• Purchase of a downloadable design or development tool from an overseas software vendor for use in your business
• Licence fees to an international software company for enterprise software installed at your India office
• Renewal charges for cloud-based accounting or CRM software hosted abroad and accessed by your Indian business

When NOT to use S0807 purpose code

• The payment is for hardware consultancy or implementation (use S0801)
• The payment is for database or data processing charges (use S0803)
• The payment is for software consultancy, development or implementation services rather than an off-site product import (use S0802)
• You are receiving money rather than paying (use the matching P code)

Documents required for S0807 payments

To send a payment under S0807, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S0807 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 software supplier bills you, clearly describing the software product or licence being imported.
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 S0807 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 with S0807

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

1. Confusing product with service: Tagging a software consultancy or custom development contract as an off-site software import under S0807 when it should be a services code.
2. Code and invoice mismatch: The purpose code not matching what your vendor invoice describes, which can flag the payment for additional checks.
3. Assuming a Rule 220(3) exemption: Skipping Form 145 on a service or software import payment that is not on the specified exemption 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 all papers are provided.
5. Missing PAN or KYC: Incomplete verification or incorrect PAN details can stop the bank from releasing the payment.
6. Using an outward code for an inward receipt: Applying S0807 to money coming in instead of using the matching P code for software receipts.

How Skydo helps with payments under S0807 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 S0807 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.