Banks are applying India’s new service-export reporting rules unevenly, leaving freelancers and small exporters unsure whether they must file an Export Declaration Form despite the RBI saying individuals are exempt.
The Reserve Bank of India’s new foreign exchange reporting rules have left a growing number of freelancers, creators and small service exporters uncertain about what they must file, even after the central bank said individuals were outside the scope of the new Export Declaration Form requirement. Business Today reported that the confusion was revived when an individual exporter said their bank had asked for paperwork, only for the bank to later concede that the request had been sent in error.
The uncertainty stems from regulations that took effect on October 1 and expanded reporting requirements for service exports. Under the revised framework, exporters of services are expected to submit an export declaration form through their bank, generally within 30 days after the end of the month in which the invoice was raised. The change brought service exports closer to the treatment long applied to goods exports, although software exports had already sat under a separate reporting regime, according to Business Today and Business Standard.
That has created friction for individuals who work directly with overseas clients. In remarks reported by Business Standard and Business Today, RBI governor Sanjay Malhotra said personal service transactions, including tutoring or small software work, do not need to be reported under the new rules. He also said that for bills of up to 10 lakh rupees, a self-declaration would be enough for exporters covered by the framework. Even so, banks appear to be applying the rules unevenly while they wait for formal FAQs from the central bank, leaving freelancers unsure whether their own transactions need to be logged.
Industry voices say the lack of a single, published operating procedure is worsening the problem. Business Today reported that Kotak Mahindra Bank’s group chief financial officer, Devang Gheewalla, said the bank does not currently insist on the documentation from individuals and is discussing the issue with the Foreign Exchange Dealers’ Association. The India SME Forum has called for a 90-day relaxation in filing requirements until a simpler compliance mechanism is finalised, while separate guidance sites tracking the issue say sole proprietors, partnerships, LLPs and companies should continue to assume they fall under the new system until the RBI issues a clearer explanation.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
