S1106 Purpose Code: Recreation and sporting activities services

Purpose code S1106 is used when an Indian business pays a foreign service provider for recreation or sporting activities services.

What is the S1106 purpose code?

Purpose code S1106 is used when an Indian business sends money abroad to pay for recreation or sporting activities services. This typically covers services like access fees paid to overseas sports facilities, charges for organising sporting events, or recreation and leisure activity services purchased from foreign providers. It applies to the service component, not to any goods or equipment imported for recreation or sport, which fall under the relevant import of goods codes. Under RBI FEMA guidelines, this outward payment is classified under personal, cultural and recreational services and reported accordingly.

When to use S1106 purpose code?

Use S1106 when you are paying an overseas vendor for recreation or sporting activity services delivered to your business or its customers in India. It is the correct RBI purpose code for importing leisure, recreation or sports related services from a foreign provider, whatever your business structure. S1106 covers the service, not any physical sports or recreation equipment you import as goods.

When to use a different code:

• Use a suitable goods import code when the payment is for sports or recreation equipment you are importing as physical goods
• Use a different services code when the payment is for unrelated professional or business services such as consulting, IT or marketing
• Use the matching P code when you are receiving money rather than paying

Who typically uses S1106 purpose code?

Indian companies, clubs and event organisers that buy recreation or sporting activity services from overseas providers, such as foreign sports facilities, international event organisers or specialist recreation service companies. It applies whether you pay as a private limited company, LLP, partnership firm or proprietorship, as long as the recreation or sporting service is supplied from outside India.

Examples of transactions covered

• Fees to an overseas sports academy for hosting a coaching camp in collaboration with your Indian organisation
• Payment to a foreign event organiser for managing an international sports tournament held in India
• Charges paid to an international recreation company for designing and operating a themed activity zone for your customers
• Service fees to an overseas sports federation for organising qualifying events or competitions in coordination with your business

When NOT to use S1106 purpose code

• The payment is for importing sports or recreation equipment as physical goods rather than services (use the relevant import of goods code)
• The payment is for professional or technical services such as legal, accounting, IT or management consulting (use the appropriate professional services code)
• The payment is for travel related recreation or holiday expenses for individuals going abroad (use the relevant travel purpose code)
• You are receiving money rather than paying (use the matching P code)

Documents required

To send a payment under S1106, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S1106 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 recreation or sports service provider bills you, clearly describing the activities or 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 S1106 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 services with goods: Tagging a payment for imported sports or recreation equipment under S1106 when it actually belongs under an import of goods code.
2. Code and invoice mismatch: Using S1106 when the vendor invoice clearly describes unrelated professional or technical services, which flags the payment.
3. Assuming a Rule 220(3) exemption: Skipping Form 145 on a 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 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 S1106 to money coming in instead of using the matching P code.

How Skydo helps with payments under S1106 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 S1106 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.