Personal service transactions need no reporting under new forex rules

RBI to issue FAQ document to clarify reporting needs

Individuals undertaking transactions of a personal nature will not have to report them under the Reserve Bank of India’s (RBI’s) new Foreign Exchange Management (Export and Import of Goods and Services) Regulations, RBI Governor Sanjay Malhotra said on Wednesday.

 

Malhotra said there was some misunderstanding around the reporting obligations. Individuals paying for a television channel, an app, journals or newspapers, or earning from services such as tutoring or small software work from abroad, do not have to report these transactions, irrespective of the amount, he said.

 

For small exporters, a self-declaration can be submitted instead of uploading an invoice for transactions of up to ₹10 lakh per bill. Malhotra clarified that this is an alternative to an invoice and not an exemption from reporting. The central bank will soon issue a frequently asked questions (FAQ) document to clarify the reporting requirements, after concerns emerged over the scope of the new export declaration form and whether individuals would have to report small-value service transactions.

 

He said reporting on the RBI’s Import Export Data Processing and Monitoring System would be done by banks and authorised dealers (ADs), rather than individual exporters and importers. Exporters and importers would only need to provide the required information to their banks.

 

The regulations, which came into effect on October 1, have drawn concerns that the new export declaration form could increase the compliance burden for small freelancers and content creators. At the post-policy press conference, RBI Deputy Governor Rohit Jain said the regulations had been issued in January.

 

Jain said the changes were aimed at liberalising the handling of trade transactions by ADs, simplifying processes and reducing the burden on ADs, exporters and importers.

 

Some of the information, including the purpose code at the time of payment, was already being provided, while the additional details would improve the availability of data on services exports, Malhotra said.

 

The changes are aimed at bringing reporting of services exports in line with merchandise trade, where a similar reporting framework already exists, he said.