S1505 Purpose Code: Deemed Imports (exports between SEZ, EPZs and Domestic tariff areas)

Purpose code S1505 is used when an Indian business pays a counterparty in a Special Economic Zone (SEZ), Export Processing Zone (EPZ) or Domestic Tariff Area (DTA) abroad for a deemed import transaction.

What is the S1505 purpose code?

Purpose code S1505 is used when an Indian business sends money abroad for a deemed import transaction involving Special Economic Zones (SEZ), Export Processing Zones (EPZs) and Domestic Tariff Areas (DTA). This typically covers cross-border payments linked to supplies that are treated as imports under Indian regulations even though they involve SEZ, EPZ or DTA units, such as offshore components or services tied to those movements. It is not used for regular physical import of goods that are directly shipped into India under standard import documentation, which fall under the specific import of goods codes. Under RBI FEMA guidelines, this outward payment is classified under the Others group and reported accordingly.

When to use S1505 purpose code?

Use S1505 when you are paying an overseas counterparty for a transaction that is classified as a deemed import between SEZ, EPZs and Domestic Tariff Areas under Indian regulations. It is the correct RBI purpose code for such cross-border payments where the underlying supply is treated as an import due to SEZ or EPZ rules, even if the commercial arrangement looks like a domestic movement. S1505 is specific to deemed imports and should match how your contract and shipping or supply documents describe the transaction.

When to use a different code:

• Use the regular import of goods code when the payment is for a straightforward physical import into India that is not treated as a deemed import
• Use the relevant service import code when the payment is for standalone services unrelated to a deemed import arrangement
• Use the matching P code when you are receiving money rather than paying

Who typically uses S1505 purpose code?

Indian importers, manufacturing units and traders that deal with SEZ or EPZ units and make cross-border payments for supplies classified as deemed imports between SEZ, EPZs and Domestic Tariff Areas. It applies to private limited companies, LLPs, partnerships and proprietorships that have such arrangements with overseas counterparties tied to SEZ or EPZ linked flows.

Examples of transactions covered

• Payment to an overseas supplier for components shipped under a contract where the final delivery involves an SEZ unit and is classified as a deemed import.
• Settlement to a foreign vendor for machinery linked to a project in an EPZ where the movement between zones and DTA is treated as a deemed import.
• Advance payment to an overseas party under a tripartite agreement involving an SEZ unit, where the supply into DTA is recognised as a deemed import.
• Balance payment to a foreign contractor for goods or services bundled into a SEZ to DTA supply that qualifies as a deemed import under Indian rules.

When NOT to use S1505 purpose code

• The payment is for a straightforward physical import of goods into India that is not treated as a deemed import under SEZ or EPZ rules.
• The payment is for standalone services such as consultancy, IT, legal or marketing that are not linked to a deemed import arrangement.
• The payment is for domestic transactions entirely within India that do not involve any cross-border remittance.
• You are receiving money rather than paying (use the matching P code).

Documents required

To send a payment under S1505, keep the following documents ready so your authorised dealer bank can verify the transaction and report it correctly under FEMA.

How is a S1505 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 counterparty issues an invoice that clearly describes the deemed import linked to SEZ, EPZ or DTA movement.
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 S1505 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 deemed import with regular import: Tagging a standard physical import or a simple service import as deemed import when it should use a more specific import or service code.
2. Code and invoice mismatch: The code not matching how your vendor invoice and contract describe the transaction, which can flag the payment for review.
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 everything is provided.
5. Missing PAN or KYC: Incomplete KYC or PAN details can stop the bank from releasing the payment.
6. Using an outward code for an inward receipt: Applying S1505 to money coming in instead of using the matching P code for receipts.

How Skydo helps with payments under S1505 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 S1505 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.