S0902 Purpose Code: Payment for use, through licensing arrangements, of produced originals or prototypes (such as manuscripts and films), patents, copyrights, trademarks and industrial processes etc.

Purpose code S0902 is used when an Indian business pays a foreign rights holder for the licensed use of intellectual property such as patents, copyrights, trademarks or industrial processes.

What is the S0902 purpose code?

Purpose code S0902 is used when an Indian business sends money abroad to pay for the licensed use of intellectual property owned by a foreign party. This includes licence fees, royalties or usage charges for produced originals like films and manuscripts, patented technologies, copyrighted content, trademarks, industrial processes and similar IP rights. It does not cover buying the IP asset outright, which generally falls under capital account transactions with different purpose codes. Under RBI FEMA guidelines, this outward payment is classified under charges for the use of intellectual property n.i.e and reported accordingly.

When to use S0902 purpose code?

Use S0902 when you are paying an overseas rights holder for the right to use their intellectual property, such as a patent licence, content royalty, trademark licence or industrial process know‑how, for your business in India. It is the correct RBI purpose code for recurring or one‑time licence and royalty charges where the ownership of the IP remains with the foreign party. S0902 covers the usage fee for intellectual property, not the purchase of the underlying asset.

When to use a different code:

• Use the appropriate import of goods code when the payment is mainly for physical goods that embed IP, such as packaged media or branded merchandise
• Use the appropriate professional or technical services code when the payment is for advisory, consulting or implementation services rather than for IP usage itself
• Use the matching P code when you are receiving money rather than paying

Who typically uses S0902 purpose code?

Indian companies, startups, studios and manufacturers that pay foreign licensors for IP usage, such as technology licences, media content rights, brand licensing or industrial know‑how. It applies whether you pay as a private limited company, LLP, firm or proprietorship, as long as the licence or royalty is for intellectual property owned by a party outside India.

Examples of transactions covered

• Royalty payment to a foreign company for the licensed use of patented technology in your Indian manufacturing plant.
• Annual licence fees to an overseas media house for broadcasting rights to films or TV content in India.
• Trademark licensing charges paid to a foreign brand owner for using their brand name on products manufactured and sold in India.
• Technical know‑how and process licence fees paid to an international partner for using their industrial process in your Indian factory.

When NOT to use S0902 purpose code

• The payment is mainly for importing physical goods that incidentally contain IP, such as packaged software or media, which should be tagged under the relevant import of goods code.
• The payment is for consulting, advisory or other professional services rather than for using intellectual property, which should be tagged under the appropriate service import code.
• The payment is for acquiring full ownership of intellectual property as a capital asset, which usually falls under capital account transaction codes.
• You are receiving money rather than paying (use the matching P code).

Documents required

To send a payment under S0902, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S0902 Purpose Code declared?

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

1. Receive the licensor invoice: Your overseas IP owner or rights holder bills you, clearly describing the intellectual property licensed, the period, territory and royalty or licence fee basis.
2. Determine taxability: Establish whether the licence or royalty 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 S0902 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. Mixing licence with service fees: Tagging a consulting or implementation service payment as an IP licence under S0902 when it should be under a relevant service import 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, licence agreement 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 S0902 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 S0902 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.