RBI clears the air on new forex reporting rules: Framework does not apply to individuals

The Reserve Bank of India has clarified that individuals are not covered by the reporting requirements under the new foreign exchange reporting framework, which took effect on October 1.

The central bank now plans to issue frequently asked questions to address what officials describe as a misunderstanding about the reporting requirements under the new framework for services exports.

The new RBI rules under the Foreign Exchange Management Act, which took effect on October 1, require all services exporters to file an export declaration form (EDF), declaring the value of each export transaction.

The EDF must be submitted through the bank handling the foreign exchange transaction, generally within 30 days of the end of the month in which the invoice was issued.

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In recent days, concerns have been raised that the reporting requirements would impose an additional compliance burden on freelancers, content creators, small exporters and other individuals.

"The whole intent of bringing these new trade regulations has been to liberalise the handling of trade matters by authorised dealers, simplify the processes, promote ease of doing business. And service exports and imports have been included for reporting purposes now. But the individuals are not included with respect to the reporting requirements for the contracts of a personal nature," Rohit Jain, deputy governor of RBI, said in response to Business Today's query on the issue.

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RBI Governor Sanjay Malhotra also stressed that although doubts had been raised about the matter, individuals had no reason to worry.

"So, if you are subscribing to a TV channel or an app, or to some journals or newspapers, or you are providing services as an individual outside, could be tutoring services, could be some small software etc., and getting paid for it, those individuals are not required to report," he pointed out.

He added that even for exporters, a self-declaration would suffice if the amount was up to Rs 10 lakh per bill. Malhotra said that under the previous system, intermediaries such as banks and authorised dealers handled the reporting. Much of the information was already being provided, and only limited additional information would now be required, he noted.

"This will only improve our data reporting and availability of data with respect to services exports. So, we feel that it is not a major inconvenience or a burden," said Malhotra.

Malhotra said the new reporting norms seek to bring services trade on par with merchandise trade, for which reporting requirements were already in place.