In international transactions, the sender is required to mention the purpose of the payment while making the transfer.
This purpose is specified using a purpose code, which tells the banks involved why the money is being sent.
Different countries maintain their own lists of purpose codes to classify international money transfers and ensure compliance with local rules.
To make sure the transfer is processed correctly, the sender usually asks the receiver to provide the relevant code.
The P0103 purpose code falls under the category “Exports (of Goods)”. It is specifically used to receive advance payment against export contracts, which will later be settled through GR (Goods Receipt), PP (Provisional Payment), SOFTEX (for software exports), or SDF (Service Data Form) depending on the type of export.
This means that if you receive an advance payment for exporting goods, you must use P0103 as the purpose code.
In this blog, you will get a clear understanding of when and how to use P0103, the types of exports it covers, and how it differs from other purpose codes for goods.
What is P0103 Purpose Code?
P0103 is an RBI-approved purpose code for advance payments received from foreign buyers for goods yet to be shipped.
• Category: Exports (of Goods)
• Purpose: Receipts of advance payment for export contracts
• Settlement: Funds are later matched against GR/PP/SOFTEX/SDF
Who Should Use P0103 Purpose Code?
The code is applicable for:
• Exporters of physical goods receiving pre-shipment advances.
• SMEs who sell products internationally and receive advance payments.
• Businesses that will later settle the advance through Goods Receipt (GR), Provisional Payment (PP), SOFTEX, or Service Data Form (SDF).
It is not for consultancy, management, or software services.
When to Use and When Not to Use P0103 Purpose Code
Even within the “Exports of Goods” category, exporters sometimes get confused about which purpose code to use. Here’s how P0103 fits among related codes:
Use P0103 when:
• A client in the US sends an advance payment for 1,000 units of apparel that will ship next month. Since this is an advance against a confirmed export contract, P0103 is the correct code.
• An overseas buyer pays 50% upfront for electronics components, and the remaining will be regularized through GR/PP once the shipment is complete. Again, P0103 applies because it covers advance receipts.
Do NOT use P0103 when:
• You are receiving payment for goods already shipped and invoiced—these fall under P0101 (negotiated/purchased/discounted export bills) or P0102 (realisation of export bills sent on collection).
• Receiving money for goods without a GR/PP/SOFTEX/EC copy, where the shipment details are not yet linked—use P0104 instead.
• Converting overdue export bills from NPD to collection mode or realizing full NPD export bills—these are P0106 and P0107, respectively, and should not use P0103.
Key takeaway: P0103 is specifically for advance receipts against export contracts and should only be used when the payment is a pre-shipment advance that will later be regularized.
Documents Required to Prove P0103 Purpose Code
When you receive an advance payment for exports under P0103, your bank will often ask for supporting documents to ensure the purpose code matches RBI regulations.
- Proforma Invoice / Advance Invoice
• This shows the value of the goods to be exported and confirms the agreed advance payment.
• Must clearly indicate that it’s an advance against future shipment. - Sales Contract / Export Agreement
• The contract with your overseas buyer specifying the goods, quantity, price, and payment terms.
• Shows that the advance is legitimately tied to a future export. - Bank Payment Advice / SWIFT Copy
• Proof of the actual payment received from the buyer.
• Confirms the transaction value matches the purpose code declaration. - Declaration Form (if requested by the bank)
• Some banks ask exporters to fill a form declaring that the received amount is an advance for goods to be exported.
• Helps banks report the transaction correctly to RBI under P0103.
Important note: Since the goods are yet to be shipped, documents like GR (Goods Receipt), SOFTEX, or shipping bills are not applicable at this stage.
Once the shipment occurs, the advance will be regularized using GR/PP/SOFTEX/SDF as per RBI rules.
How and Where to Declare P0103?
Declaring the correct purpose code is as important as using the right one. There are two stages where you/the sender will be asked for the purpose code:
1. During remittance setup
The sender must specify the purpose when initiating the transfer, usually in SWIFT field 70/72. As the exporter, share the exact P0103 code with your buyer beforehand. Using the wrong code can delay the transfer or result in funds being returned. For example, HDFC Bank’s wire transfer form from the US asks for the purpose of remittance and provides RBI-approved codes.
2. If the bank asks later
Sometimes, the receiving bank may request confirmation. You might need to submit a declaration form and provide supporting documents like invoices, contracts, or proof of the advance to align with RBI reporting.
This ensures your advance payment under P0103 is processed smoothly and without compliance issues.
FAQs on P0103 Purpose Code
Q1. Can I use P0103 for consultancy services?
No, P0103 is strictly for advance receipts against goods exports. Services have separate purpose codes.
Q2. Where can I find the official list of purpose codes?
RBI’s Annexure II (Receipt Codes) provides the official codes.
Q3. Who declares the purpose code in international transactions?
The sender enters the purpose code during remittance, but they usually request the correct code from the Indian exporter.
Q4. What documents are needed to support P0103?
Contracts, purchase orders, invoices, shipping bills, GR forms, SOFTEX/SDF forms, or any proof of advance against goods exports.
Q5. What happens if the wrong purpose code is used?
The bank may delay the transfer, return funds, or require additional verification. It can also affect RBI reporting compliance.
