The objective of this article is to help global eCommerce sellers to comprehend the FIRC process.
What is FRIC?
FIRC is a document issued by the bank on pre-printed security stationery at the request of the beneficiary of the money received. It acts as evidence for receipt of foreign funds in convertible foreign exchange. In layman terms, it is a document issued by the remitter bank to prove that the funds got paid from outside of India in a foreign currency and the value of the same. This document helps in establishing that the underlying transaction is an export transaction and is eligible for any benefits arising out of an export transaction from the government.
As per guidelines from the Reserve Bank of India (‘RBI’) and letters circulated by Foreign Exchange Dealers Association in India (‘FEDAI’), the following two documents can be issued by Authorised Dealer (‘AD’) Banks in India, or in your case by your remitter bank as proof of foreign funds transfers into India:
- Physical FIRC. Formally discontinued as of 2016, from 2016 onwards remitter banks issue an alternative document called an advice, a statement or a NOC for your home bank to complete the E-FIRC process.
- E-FIRC. This process is completed by your home bank when they receive an advice, statement or NOC from the remitter bank and when they collect additional required documents as explained below. Typically, the home bank, when satisfied with the documents, generate an Inward Remittance (IRM) on the government export portal (EDPMS), and the IRM number is referred to further as E-FIRC number.
Issuance of FIRC by AD Banks
- RBI has its AP (DIR) Circular no. 74 and as of May 26th, 2016 has expanded the scope of the Export Data Processing & Monitoring System (EDPMS) wherein modules for caution listing of exporters and reporting of advance remittance for exports has been added to EDPMS. All AD banks have to report the inward remittances including advances as well as old outstanding inward remittances received for the export of goods/software to EDPMS. Furthermore, AD banks need to report the electronic FIRC (e-FIRC) to EDPMS wherever such FIRCs are issued against inward remittances.
- Accordingly, FIRCs are issued for inward remittances covering Foreign Direct Investment or Foreign Institutional Investment (FDI/FII) only. As per the directions, no physical FIRC is issued for exports related remittances post 20 June 2016.
Issuance of e-FIRC
- When the export proceeds for an export of goods and services is received by a bank other than the bank through which documents are submitted, the recipient bank issues an e-FIRC to connect the two. Typically, when the home bank is satisfied with the documents will generate an Inward remittance (IRM) on the government export portal (EDPMS), and the IRM number is referred to further as E-FIRC number.
Meaning of FIRS
- FIRS is a document issued on the bank’s letterhead which includes the details of the inward remittance received through the bank.
|Document provided||Advance against export||Other export related remittances||Remittance covering FDI / FII||Other Remittances|
Notifications issued by any regulatory bodies related to the recent process changes for issuance of FIRC
Please find below the list of circulars issued by FEDAI and RBI along with links:
- FEDAI circular SPL-04/2016 dated April 21, 2016.
- RBI circular RBI/2015-16/414 A.P. (DIR Series) Circular number 74 dated May 26, 2016.
- FEDAI circular SPL-09/2016 dated June 08, 2016.
- FEDAI circular Letter number 16/2016 dated October 17, 2016.
Requirement of FIRC in case of export of services from GST perspective
One of the conditions for a service to qualify as export of service is that service consideration should be received in convertible foreign exchange. Accordingly, FIRS/FIRA/NOC is considered sufficient for the purpose of substantiating the said fact. Please check with your chartered accountant for more details.
Payoneer assists our customers with the process of receiving their FIRS/FIRA/NOC for free.
We use multiple banking partners to process and remit the funds for our Indian customers, to receive these documents, please contact our customer care department. They will be able to guide and provide you with details regarding which bank was used to process and remit your funds.
- For transactions conducted through ICICI from December 2018, you will receive a soft copy of the FIRS, available on request.
- For transactions conducted through IndusInd, we will request an FIRA (hard copy). ETA for these is 3-4 weeks.
- For transactions conducted through Deutsche Bank, Payoneer provides all the transaction details which the customer’s bank sends to Deutsche Bank on the bank letterhead. Deutsche furnishes the FIRA and couriers it to the seller or seller’s bank