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What is Foreign Inward Remittance Certificate (FIRC)?

FIRC is the proof of money received from a foreign country. Learn about its importance and procurement process in this blog.

What is a foreign inward remittance certificate (FIRC)

Whether you are a business that exports goods or an individual receiving a gift from someone in a different country, you require an official credential for all the inward remittances coming into the country. Foreign Inward Remittance Certificate (FIRC) serves as a vital document in the international financial landscape, particularly for businesses and exporters who receive payments from foreign countries. Not only does it help beneficiaries keep a legalized record of their financial transactions but is also critical for regulatory bodies like the Reserve Bank of India (RBI) to keep track of the inflow of foreign exchange into the country and ensure that the funds coming in are being used for legitimate reasons.

What is Foreign Inward Remittance Certificate (FIRC)?

Foreign inward remittance certificate is a document that provides proof that an individual or business has received payment in foreign currency from outside the country. The certificate typically includes details like name and address of the sender and receiver, amount remitted, date of transaction, and the currency in which the transaction occurred. It serves as a formal acknowledgment of the receipt of foreign exchange by the beneficiary.

As per guidelines from the RBI and FEDAI (Foreign Exchange Dealers Association in India), only AD (Authorised Dealer’ Bank) Category I banks are authorized to issue an FIRC in India. The government ceased issuing physical FIRCs in 2016, except for instances involving FDI and FII. Instead, an electronic FIRC (e-FIRC) will be provided¹.

What is e-FIRC?

e-FIRC or Electronic Foreign Inward Remittance Certificate is a digital version of the traditional FIRC. It contains the same information as its paper counterpart but in an electronic format, making it easier to manage, store, and retrieve.

Importance of foreign inward remittance certificate

For Reserve Bank of India (RBI)

• For regulatory bodies like the RBI, FIRC aids in monitoring and regulating the inflow of foreign exchange, thus contributing imminently towards maintaining the country’s economic stability.
• Monitoring of funds coming into the country from overseas helps in combating money laundering and inhibiting the financing of activities that are detrimental to national interests.

For beneficiaries

• For individuals and businesses, the FIRC validates foreign income for tax purposes and allows exporters to claim tax concessions. It serves as essential evidence during tax filings; without it, tax benefits are unattainable under this category of transactions recorded.
• It protects the beneficiary’s interest by serving as a legal document for accounting and audit purposes and demonstrates to foreign importers, that a payment made by them has been received.
• The FIRC also enables ease of application when it comes to government loans and subsidies and is an essential instrument while obtaining foreign exchange for travel or investment purposes.

Uses of FIRC

Facilitating foreign trade:

Businesses often use FIRC as proof of export and as a document in the settlement process of trade activities.

Requisite for key trade programs

The FIRC is also essential for submission to the Directorate General of Foreign Trade (DGFT) to qualify for the Export Promotion Capital Goods (EPCG) program and Advance License.

Verifying inward remittances:

For freelancers and service providers, the FIRC certificate format helps in confirming the receipt of payment from overseas clients.

Process to request a foreign inward remittance certificate

The procedure to obtain a FIRC certificate involves the following steps:

Contact your bank:

As a first step, you need to submit an application to your partner bank, providing all the relevant details related to the foreign currency payment you have received. Make sure your request letter is comprehensive; otherwise, the bank might reject it.

Contact your bank:

Provide the bank with the necessary supporting documents, such as payment advice or confirmation from the sender. These documents are required to verify the legitimacy of the transaction.

Pay issuance fees:

The bank will charge a nominal fee for generating the FIRC. This fee may vary between banks and may also depend on the nature of the transaction. Make the payment using the method prescribed by the bank.

Collect the FIRC:

After the beneficiary submits the FIRC request form to the bank, the bank creates an Inward Remittance Message (IRM) in the Export and Data Monitoring Systems (EDPMS), which is the national export portal. The IRM number serves as the FIRC number. The FIRC is also known as Advice or Foreign Inward Remittance Advice (FIRA). After the FIRC is issued, you can either collect it from the bank or download the e-FIRC online, depending on the options provided. Make sure you store the FIRC securely for future reference.

Visit Exports Compliance Dashboard to meet your documentation requirements

FIRC certificate format

While drafting the letter or email the following information should be included in the letter or email:
• Beneficiary information
• Unique Transaction Reference Number (UTR): The Transaction ID or UTR is a unique number assigned to each transaction.
• Name and address of the payee
• Recipients’ name
• Account number
• Remittance Sum: Details about the payment, including the received amount in foreign currency and its equivalent value in Indian rupees.
• Date of transfer
• Purpose of the payment (purpose of payment to match with the purpose shared at the time of remittance)

It's essential to be truthful about the purpose of the remittance, as banks usually require verification for the reason provided.

Difference between FIRC and BRC

FIRC stands for Foreign Inward Remittance Certificate, while BRC stands for Bank Remittance Certificate. Both certificates are issued by banks in India to provide proof of foreign currency remittance. However, there are some key differences between the two certificates:
• FIRCs are issued for specific purposes, such as claiming tax benefits or applying for government loans and subsidies whereas BRCs are more generic certificates. BRC is more focused on outflows of money for specific trade-related activities, whereas FIRC deals with inflows of money from foreign sources for a variety of reasons.
• FIRCs must be issued on a prescribed RBI form. BRCs on the other hand are not issued on a prescribed form.
• FIRCs are authenticated by the authorized signatory of the bank. BRCs are not authenticated by the authorized signatory of the bank.

In summary, FIRCs are an important document for both beneficiaries and the RBI. Beneficiaries can use FIRCs to claim tax benefits, apply for government loans and subsidies, obtain foreign exchange, and demonstrate to foreign buyers that they have received payment. The RBI uses FIRCs to track foreign currency inflows into India and ensure that they are used for legitimate purposes.

If you are an exporter or beneficiary of a foreign currency remittance, understanding what is FIRC certificate, how to obtain FIRC, its importance, uses, and format is crucial to ensure smooth international transactions.

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Frequently Asked Questions

What is Foreign Inward Remittance Advice (FIRA)?

Foreign Inward Remittance Advice (FIRA), also referred to as Advice, is an alternative term for FIRC. It serves as an official document detailing the foreign currency payments credited to a beneficiary’s account.

What will the purpose code be displayed as on the FIRC certificates?

The Reserve Bank of India (RBI) assigns a unique Purpose Code to identify the nature of foreign currency transactions. This code is essential as the RBI restricts certain kinds of payments. The use of these codes aids the RBI in monitoring and preventing illicit transactions.

What is the expected time frame for receiving my FIRC certificates?

The time required to obtain an FIRC certificate may vary depending on the bank and the nature of the transaction. Typically, the e-FIRC will come to your account within 7-15 days of receiving the foreign currency payment².

What are the fees for the FIRC Certificate?

The fees for obtaining Foreign Inward Remittance Certificate (FIRC) varies depending upon the bank issuing the certificate.

Why is FIRC needed?

The FIRC serves as legal evidence of receiving payments in foreign currency from overseas. Therefore, if you're an exporter, it's crucial to liaise with the banks you transact with to obtain an FIRC for each inward remittance received from abroad. It's also important to provide accurate details when applying for the FIRC, particularly about the purpose of the remittance.

Published on October 15, 2023.

Sources:
1. https://www.rbi.org.in/scripts/Fema.aspx
2. https://www.rbi.org.in/upload/ecm/pdfs/chapter3.pdf

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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What is Foreign Inward Remittance Certificate (FIRC)?

What is Foreign Inward Remittance Certificate (FIRC)?

What is e-FIRC?

Importance of foreign inward remittance certificate

For Reserve Bank of India (RBI)

For beneficiaries

Uses of FIRC

Facilitating foreign trade:

Requisite for key trade programs

Verifying inward remittances:

Process to request a foreign inward remittance certificate

Contact your bank:

Contact your bank:

Pay issuance fees:

Collect the FIRC:

FIRC certificate format

Difference between FIRC and BRC

Amazon Global Selling: Your passport to easy exports and shipping from India

Frequently Asked Questions

Sell across the world with Amazon Global Selling

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