S1006 Purpose Code: Business and management consultancy and public relations services

Purpose code S1006 is used when an Indian business pays a foreign vendor for business or management consultancy or public relations services.

What is the S1006 purpose code?

Purpose code S1006 is used when an Indian business sends money abroad to pay for business and management consultancy or public relations services. This covers work like strategy and management advisory, organisational or operational consulting, marketing or communications consulting, and retained or project-based PR support from foreign firms. It does not apply to legal, audit, engineering or IT consulting, which fall under their own specific service categories. Under RBI FEMA guidelines, this outward payment is classified under other business services and reported accordingly.

When to use S1006 purpose code?

Use S1006 when you are paying an overseas consultant, advisory firm or PR agency for business, management or public relations services delivered to your organisation in India. It is the correct RBI purpose code for cross border advisory work on strategy, operations, organisation, brand positioning, communication plans and media relations provided by a foreign service provider. S1006 covers the consulting or PR service itself, not any separate software, media buying or production contracts that may be billed under other categories.

When to use a different code:

• Use a technical services code when the payment is for specialised engineering or IT implementation rather than general business advisory
• Use a marketing or advertising services code when the payment is primarily for media buying or ad placements rather than consultancy or PR
• Use the matching P code when you are receiving money rather than paying

Who typically uses S1006 purpose code?

Indian companies, startups and agencies that buy business consulting, management advisory or PR services from overseas firms or independent consultants. It applies whether you pay as a private limited company, LLP, partnership or proprietorship, as long as the service provider is located outside India.

Examples of transactions covered

• Fees to an international consulting firm for advising on business strategy and organisational restructuring
• Payment to an overseas management consultant for an operations efficiency review and implementation roadmap
• Monthly retainer to a foreign PR agency for global media relations and corporate communications support
• Project fee to an international advisory firm for market entry consulting and brand positioning in a new geography

When NOT to use S1006 purpose code

• The payment is for specialised engineering or technical consulting rather than general business or management advice (use the appropriate technical services code)
• The payment is mainly for advertising placements or media buying instead of consultancy or PR advisory (use the relevant advertising or marketing services code)
• The payment relates to software development, implementation or IT consulting services (use the appropriate computer and information services code)
• You are receiving money rather than paying (use the matching P code)

Documents required

To send a payment under S1006, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S1006 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 consulting or PR partner bills you, clearly describing the business, management or communications services delivered.
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 S1006 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 consulting scope: Tagging technical IT work, engineering design or pure advertising spend under S1006 when those belong under their own RBI service codes.
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 S1006 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 S1006 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.