S1410 Purpose Code: Payment of interest by FDI enterprises in India to their Parent company abroad

Purpose code S1410 is used when an Indian FDI enterprise pays its foreign parent company interest on loans or other debt.

What is the S1410 purpose code?

Purpose code S1410 is used when an Indian FDI enterprise sends money abroad to pay interest to its foreign parent company on loans or other debt. It covers periodic interest payments on shareholder loans, group financing arrangements, or other eligible debt extended by the non-resident parent to the Indian subsidiary or joint venture. It does not apply to repayment of the principal amount of the loan itself, which falls under a separate external commercial borrowing or capital account repayment code. Under RBI FEMA guidelines, this outward payment is classified under Primary Income and reported accordingly.

When to use S1410 purpose code?

Use S1410 when your Indian FDI enterprise is remitting interest to its overseas parent company on loans or debt instruments that funded the Indian operations. It is the correct RBI purpose code for interest payments on eligible intra-group borrowings where the lender is the non-resident parent, regardless of whether the Indian entity is a private limited company, listed company or joint venture. S1410 covers the interest component of the income, not any capital repayment of the underlying loan.

When to use a different code:

• Use the appropriate ECB or loan repayment code when the payment is towards principal on an external commercial borrowing or shareholder loan
• Use the relevant dividend or profit repatriation code when distributing post-tax profits to the foreign parent instead of paying interest
• Use the matching P code when you are receiving money rather than paying

Who typically uses S1410 purpose code?

Indian FDI enterprises such as subsidiaries, joint ventures and group companies that have raised debt funding from their non-resident parent entities and need to remit periodic interest abroad. It is used by finance, treasury and accounts teams of these Indian entities when servicing cross-border intra-group loans or similar debt arrangements.

Examples of transactions covered

• Half-yearly interest payment by an Indian subsidiary to its foreign parent on a shareholder loan used to fund plant expansion
• Quarterly interest remittance on an intra-group loan from the overseas holding company to the Indian FDI enterprise for working capital
• Annual interest payout by an Indian joint venture to its non-resident promoters on a long-term foreign currency loan
• Interest payment on a group treasury financing line extended by the parent company abroad to the Indian entity

When NOT to use S1410 purpose code

• The payment is for repayment of the principal amount of an external commercial borrowing or shareholder loan (use the appropriate ECB or loan repayment code)
• The payment is for dividends or profit distribution to the foreign parent company (use the relevant dividend or profit repatriation code)
• The payment is for management fees, technical services or other operating charges to the parent (use the appropriate service import purpose code)
• You are receiving money from the foreign parent rather than paying interest (use the matching P code)

Documents required

To send a payment under S1410, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S1410 Purpose Code declared?

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

1. Receive the interest schedule: Your Indian FDI enterprise obtains the interest computation or payment advice from the foreign parent based on the underlying loan agreement.
2. Ensure regulatory compliance: Confirm that the FDI and loan structure, including any ECB or ODI reporting, is in place and that the interest rate and payment terms comply with RBI and FEMA norms.
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 S1410 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 and tax records for your files.

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 principal and interest: Tagging a combined principal plus interest remittance fully under S1410 instead of separating the interest from the loan repayment under the correct code.
2. Code and invoice mismatch: The code not matching what your loan agreement and interest advice describe, which flags the payment.
3. Assuming a Rule 220(3) exemption: Skipping Form 145 on an interest payment that is not on the specified list, which carries a ₹1,00,000 penalty per instance.
4. Incomplete documents: Missing loan agreement, approval copies 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 S1410 to money coming in instead of the matching P code.

How Skydo helps Indian businesses with cross-border payments

S1410 covers income repatriation, which sit outside the PA-CB framework and which Skydo does not process. If you also invoice foreign clients or pay overseas vendors, here is where Skydo fits.

1. Complete onboarding: Share PAN, Aadhaar and business details. Setup is fully online and takes about five minutes.
2. Get virtual account details: Receive from international clients in USD, GBP, EUR and other currencies they already pay in.
3. Pay your overseas vendors: Send payments to foreign suppliers, software platforms and service providers under Skydo's outward approval.
4. Documentation in one place: Your invoices, remittance records and payment proofs stay together for your CA and your AD bank.
5. A rate you can see: The live mid-market rate with a transparent fee, instead of a markup hidden inside the bank's rate.