Purpose Code Search Tool

Overview

For facilitating international transactions safe and secure from India, the RBI has initiated the special code for cross-border transactions known as the purpose code. There are around 190 purpose codes in India for which the code is used for transactions, out of which 97 codes are for inward remittances and the remaining for outwards. The purpose code is used by exporters when receiving inward remittances and making international payments.

In this blog we have provided you some insights on how to get the purpose code in the right way and hassle-free without much effort to find.

What is the Purpose Code?

The purpose code is an alphanumeric code, which is assigned when a transaction take place. This purpose code is used by exporters when receiving inward remittances and making international payments. By using the purpose code in transactions, exporters can clarify the funds, help regulatory authorities, and aid in cross-border transactions.

Common Category Under Purpose Code

Here are some common types of purpose codes, which are as follows:

1. Capital Account:

The capital account is mainly used for foreign direct investment in India, foreign investment in equity shares, debt securities, real estate, and the return of capital investment in equity shares, subsidiaries and associate units.

2. Export of Goods:

This purpose code covers transactions such as realization of export bills, advance receipts against consignments, export bills, Value of export bills negotiated/ purchased at discounts, etc.

3. Import of Goods:

This purpose code for import covers advance bills against payment of imports, receipts of shipping companies, and intermediary trade.

4. Transportation:

This implementation purpose code covers freight of imports/exports and sea/air/charter, shipping companies, etc.

5. Travel:

The travel-related purpose code covers transactions and purchases towards travel agents and travelers.

6. Business services:

This includes services for purpose code cover transactions such as technical services, trade related services, advertising, trade fairs, markets, etc.

7. Personal, cultural and Recreational Services:

This type of purpose code group covers services related to social gatherings, movies, advertisements, etc.

8. Communication service:

Under this communication service, purpose codes cover communication such as postal services, courier services, telecommunication services, and satellite services.

9. Construction service:

This service transaction such as receipts for cost of construction of service projects in India.

10. Insurance services:

This service includes transactions such as receipts of life insurance premium, freight insurance, and account of auxiliary services, etc.

11. Financial services:

This service transaction includes investment banking, auxiliary services, financial intermediation, etc.

12. Computer & Information Services:

This service transaction includes transactions such as hardware/software consultancy, news agency, repair of maintenance of software/hardware of computers, etc.

13. Royalties and License Fees:

This transaction involves payment such as license services, licensing arrangements, production, etc.

14. Transfer:

This transaction involves payments or receipts such as Remittance by non-residents towards family maintenance and savings, personal remittance towards grants on Christmas/birthday by the Government to international institutions.

15. Deposits and trade-related borrowing / Gifts & Donation:

This group includes purpose codes such as deposits and donations received by Indian corporates and outward remittance for personal and financial non-resident.

16. Other Receipts:

This purpose group involves transactions such as refundable Cancel export, receipt against loss/damage in transit, etc. Receipts of storage orders, refunds of amount paid for non-receipt of goods/services.

Need for Purpose Code Search Tool

There is a big need to get the purpose code search tool for transactions. Here are the top 4 reasons why purpose code search tool, which are as follows:

• To prevent money laundering and fraud:

  To check whether money, which is used for transactions, isn’t found in money laundering, fraud, and other unlawful activities. The movement of money is regularly checked and monitored by the RBI to adhere to Indian financial rules.

• Transparent purpose code:

  For maintaining transparency from both sender and receiver, the purpose code is important for fund auditing and financial planning.

• Making efficient processing of transactions:

  By using the correct purpose code, banks and financial institutions can quickly identify the nature of transactions, which makes efficient processing for remittance.

• Reporting of accurate foreign funds in India:

  This code plays a transparent role in informing both senders and receivers of transactions in a transparent way. This helps in accurate tracking and reporting of accurate foreign funds.

How to Find the Right Purpose Code

Identifying the correct purpose code for outward remittance is crucial for ensuring compliance with RBI regulations. It facilitates smooth financial transactions. In order to choose the right purpose code, you can follow these steps:

Step 01: Understand the reason:

Before starting the transaction, you need to consider the reason, whether it's personal, business, investment, or other.

Step 02: Enter the Required Details:

Choose the code that fits best with your transaction; for that, you can use the Bizfoc Purpose Code Search Tool. You just need to search your required purpose code by using the purpose code, its group/category, or simply by searching inward or outward.

Step 03: Final Review:

It is important to cross-check the chosen purpose code to ensure it perfectly fits with your purpose. It should reflect the nature of remittance accurately. Selection of the wrong code can result in delays, additional scrutiny, or even rejection of the transaction.

Conclusion

The purpose code search tool is an important tool to find the right code that is as efficient to transact the money based on business services. There are around 190 purpose codes, which are mentioned in our tool, out of which some codes are used in making inward transactions and the rest of the codes are for outward.

Frequently Asked Questions