S1023 Purpose Code: Other Technical Services including scientific and space services

Purpose code S1023 is used when an Indian business pays a foreign vendor for technical services, including scientific or space related work, delivered from outside India.

What is the S1023 purpose code?

Purpose code S1023 is used when an Indian business sends money abroad to pay for other technical services, including scientific or space related work, provided by a foreign supplier. This covers specialised technical consulting, scientific research services, engineering analysis, testing or space related support purchased from outside India. It is meant for service imports, not for buying physical equipment or hardware, which fall under the relevant goods import codes. Under RBI FEMA guidelines, this outward payment is classified under other business services and reported accordingly.

When to use S1023 purpose code?

Use S1023 when you are paying an overseas vendor for technical, scientific or space related services delivered to your business in India. It is the correct RBI purpose code for specialised technical or scientific work bought from a foreign partner, whatever your business structure. S1023 covers the import of services, not the import of physical goods or instruments.

When to use a different code:

• Use the specific goods import code when the payment is for importing physical equipment or hardware
• Use the matching code for management or business consultancy when the payment is for general advisory rather than technical services
• Use the matching P code when you are receiving money rather than paying

Who typically uses S1023 purpose code?

Indian companies, research institutions and startups that buy specialised technical, scientific, engineering or space related services from overseas experts or organisations. It applies whether you pay as a private limited company, LLP, proprietorship or research body, as long as the service provider is located outside India.

Examples of transactions covered

• Payment to a foreign research organisation for scientific testing and analysis services
• Fees to an overseas engineering firm for specialised technical design or simulation work
• Charges to an international space agency or vendor for satellite data processing or space mission support services
• Consulting fees to an overseas expert for specialised technical advice on a complex industrial project

When NOT to use S1023 purpose code

• The payment is for importing physical machinery, equipment or instruments rather than a service (use the appropriate goods import code)
• The payment is for general management, business or strategy consultancy instead of technical services (use the relevant consultancy service code)
• The payment is for software development or implementation services, not broader technical or scientific work (use the appropriate software services code)
• You are receiving money rather than paying (use the matching P code)

Documents required

To send a payment under S1023, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S1023 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 technical, scientific or space service provider bills you, clearly describing the work 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 S1023 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 technical services with goods or general consultancy: Tagging import of equipment or broad management advice under S1023 instead of the correct goods or consultancy 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 S1023 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 S1023 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.