New Fema rules bring small service exporters into the reporting net

Last Tuesday, in my fortnightly column ‘SME Chatroom’, I had given answers to six questions on how the new Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, effective October 1, will affect the importers, exporters and entities engaged in merchanting trade.  I have received more queries from the trade on the new Regulations. I deal with some of them here. 

On October 1, the RBI updated a Master Direction consolidating various reports/ forms required to be submitted under Fema. The Export Declaration Form (EDF) and Softex form prescribed at Part IX of the Master Direction is a copy-paste of the declarations prescribed for imports and exports under the old 2015 Regulations for imports and exports. They are redundant. The exporters should be guided by the above referred 2026 Regulations (Notification No. Fema 23(R)/2026-RB dated January 13, 2026, and amended through notification Notification No. Fema 23(R)/(1)/2026-RB dated September 22, 2026) and use the EDF prescribed as Annex to the 2026 Regulations. 

The EDF will be deemed to be submitted as part of shipping bill for goods exported through Electronic Data Interchange (EDI) port. Exporters of services must furnish to the specified authority [defined at Regulation 2(f)], a declaration in EDF specifying the amount representing the full export value of services, within 30 days from the end of month in which invoice for services has been raised. An exporter of services who has exported services to one or more recipients in a month, may submit a single EDF for all such exports. However, exporters of services, other than software, may submit an EDF on or before the date of receipt of payment. The Authorised Dealer (AD) banks can extend the period on merits. 

The exporters of services, other than software, were not under the discipline of furnishing any declaration to the ADs till now. They must take note of the new compliance requirement, even if they are very small service providers like individuals engaged in online teaching of music, yoga etc. Even exporters of small value goods are not exempted from these Regulations.  However, a traveller moving personal effects (which are either accompanied or unaccompanied) from India shall not be treated as exporter for the purpose of the new regulations. 

Some exporters of services are apprehensive that they may face difficulties in generating the e-BRC (electronic bank realisation certificate) because there are many mismatches in the Director General of Foreign Trade (DGFT) website that has linked services accounting code (SAC) with the RBI purpose code.  The purpose codes given there are not in sync with SAC.  For example, bicycle repairs mapped to aircraft repairs and life insurance mapped to freight insurance. No purpose codes are mapped against the service of agreeing to do, refrain from, or tolerate an act. Pension services are mapped against freight insurance relating to imports and exports. However, e-BRC is not an essential document. Foreign Inward Remittance Certificate from AD would do, even for refunds under the GST laws. 

In fact, SAC classifies services for GST, whereas RBI purpose codes classify cross-border receipts for balance of payments statistics. The two need not correspond neatly. DGFT should delink compulsory SAC selection from purpose codes wherever its mapping cannot accommodate the actual service. Exporters should not have to change correct classifications merely to generate a certificate.

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Email: tncrajagopalan@gmail.com