Taxation & Compliance
Posted on Feb 1, 2025
Everything You Want to Know About Purpose Code P0102
International trade is one of the important sectors of the Indian economy. Cross-border transactions are made possible only if there is strict compliance with RBI regulations. Among the many aspects of compliance, the correct usage of purpose codes is important as they classify international transactions under the RBI guidelines.
In this blog, we will discuss what is the use of purpose code P0102. You will also understand where is it used, its eligibility criteria and how to file for purpose code P0102.
What is a Purpose Code?
A purpose code is a unique identifier regulated by the Reserve Bank of India (RBI) to classify foreign exchange transactions. These codes are important for:
Compliance with FEMA regulations.
Helps the banks keep track of their foreign exchange flow effectively.
Smooth payments to the exporters without facing delays or court cases.
Objective Code P0102
This objective code, P0102, is utilised specifically for all export transactions as a purpose code for filing the shipping bills. This is considered vital for trade of international goods for businesses and exporters who engage in such operations and need the proper reporting to the RBI about the transactions undertaken.
What is Purpose Code P0102?
Purpose Code P0102 is a code specified by RBI and applied by Indian exporters while receiving remittances for exporting goods to other countries. It helps in maintaining proper classification for all export transactions involving RBI as well as FEMA.
Why is Purpose Code P0102 Important?
Ensures Compliance: Proper classification avoids legal and financial issues.
Tracks Export Earnings: The RBI utilises this code to track and regulate export earnings.
Smooth Banking Operations: Allows for the transactional processing to go on as per usual with banks without intense monitoring.
Who Should Apply For Purpose Code P0102?
The following are entitled to apply for P0102:
Exporters submit shipping bills for international cargo shipments.
Cross-border trading businesses get a full payment against an invoice.
How to File a Shipping Bill Using Purpose Code P0102
To ensure hassle-free transactions, follow these steps.
Prepare Export Documentation: Collect essential documents like invoices, shipping bills, and export contracts.
Mention Purpose Code P0102: This code needs to be attached to the shipping bill at the time of submitting to Customs and to the authorised bank.
Bank Application: Your documents are submitted to your bank, which in turn will apply to the bank concerned for effecting the foreign exchange transaction.
Transaction Verification: Satisfies export documentation as well as customs declarations.
Required Documents
Shipping bill
Bill of export/packing list
Exporter's Identity proof, either GST IEC or PAN Card
RBI Norms for Purpose Code P0102
What Exporters Should Know
Compliance with FEMA: It will ensure that all transactions are conducted in accordance with India's foreign exchange regulations.
Accurate Documentation: Any discrepancies in purpose codes and shipping bill details may cause delays in payments.
Common Mistakes to Be Avoided
Incorrect Purpose Code: The use of the wrong code may invite regulatory attention and payment rejections.
Incomplete Documentation: Missing details in shipping bills, invoices, or export contracts may delay the processing.
Why use Purpose Code P0102
Streamlines Export Transactions: Using the right purpose, P0102 streamlines the whole process by avoiding delays.
Simplifies Regulatory Compliance: Using P0102 ensures that exporters remain compliant with RBI and FEMA guidelines, avoiding any legal issues.
Enhances Transparency: Filing the right purpose code, P0102, helps exporters track their earnings, making the process efficient.
Conclusion: Why is P0102 Important
As we have already learnt, the purpose code P0102 is essential for filing shipping bills for export. Using the correct purpose code ensures seamless and compliant international transactions.
Just as purpose code P0102 is important for seamless export, Infinity is important for receiving seamless international payments.
With Infinity, you receive your payments within one business day, and you get free-of-cost FIRA.
So, make your export process seamless throughout; sign up with Infinity today.
Frequently Asked Questions
1. What is the purpose of Code P0102?
P0102 is for export transactions with regard to the funds received against export from overseas buyers being classified appropriately.
2. How do I present a shipping bill with Purpose Code P0102?
You simply mention P0102 in the provided column of the shipping bill and enclose it along with appropriate documents to your respective bank.
3. Can all exporters use Purpose Code P0102?
Yes, applies to all exporters filing shipping bills for internationally exported goods.
