What Are the RBI Rules on Third-Party Payments for Exports?
- Author:
- Manoj Sharma
- Verified by:
- Editorial team
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Short answer
RBI rules allow third-party payments for exports when your AD bank is satisfied the transaction is genuine. A third party is anyone other than the exporter and the foreign buyer. From 1 October 2026, Regulation 8 of the FEMA export and import regulations sets this rule. The detailed 2013 conditions no longer apply.
| Applies to | Governed by | Deadline | Penalty | Last verified |
|---|---|---|---|---|
| Exporters of goods, software and services from India, including freelancers, whose payment comes from someone other than the overseas buyer | Regulation 8, Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (in force 1 October 2026) | No separate deadline; the third-party receipt must still meet the export realisation period of 9 months (12 months if invoiced or settled in rupees) | AD bank may decline the payment; a FEMA contravention can attract a penalty of up to three times the sum involved under section 13 | 8 Oct 2026 |
What is a third-party payment for an export under RBI rules?
A third-party payment for an export is a receipt that comes from a person other than the overseas buyer named in your export documents. RBI's 2026 regulations describe the third party as anyone other than the parties undertaking the export and import.
- Current rule: An AD bank may permit third-party receipts and payments for export and import transactions if it is satisfied with the bona fides of the transactions (Regulation 8).
- Start date: The 2026 regulations came into force on 1 October 2026 and replaced the 2015 export regulations (Regulation 1(2)).
- Older circulars: The 2013 and 2014 circulars that first allowed third-party payments were superseded from the same date (A.P. (DIR Series) Circular No. 20, para 4 and Annex).
- Bank channel: Unless provided otherwise, any receipt from a person outside India must still come through an authorised bank or authorised person (Manner of Receipt and Payment Regulations, 2023, Regulation 3(2)).
- Genuineness: The AD bank credits an export receipt only after it is satisfied the transaction is genuine, and then updates EDPMS (Regulation 4(2)).
- Why it happens: For example, a buyer's parent company, a group treasury or a distributor may pay the invoice on the buyer's behalf. The 2013 circular said RBI allowed such payments in view of evolving international trade practices (A.P. (DIR Series) Circular No. 70).
In short, a third-party payment is allowed when your AD bank accepts it as genuine, and the payment still counts toward realising the full export value on time.
Who does the RBI third-party payment rule for exports apply to?
The RBI third-party payment rule applies to any exporter of goods, software or services whose payment comes from someone other than the overseas buyer. The 2026 regulations treat software as a service, so freelancers, agencies and goods exporters are all covered by the same Regulation 8.
| Entity type | Applicable | Why | Best for |
|---|---|---|---|
| Freelancer or consultant | Yes | Services are exports under the 2026 regulations, and Regulation 8 covers all export transactions (Regulation 2(1) Explanation and Regulation 8) | Individuals paid by a client's parent company or agency |
| Software or IT services company | Yes | Software is included in services (Regulation 2(1) Explanation) | Firms billing one group entity and paid by another |
| Goods exporter | Yes | Regulation 8 covers export of goods | Manufacturers paid by a buyer's bank, distributor or affiliate |
| Merchanting trader | Yes, under a separate clause | Receipts should come from the overseas buyer, but the AD bank may allow a third party on request (Regulation 16(1)(b)) | Traders buying abroad and selling abroad |
| Exporter netting dues with a group company | Different rule | Set-off with the buyer's overseas group or associate companies falls under Regulation 7 | Exporters who also import from the same group; see set-off of export receivables |
How does an exporter get a third-party payment accepted by the AD bank?
An exporter gets a third-party payment accepted by showing the AD bank why someone other than the buyer is paying and how the payment links to the export. The bank decides under Regulation 8 after checking the bona fides of the transaction.
- Before invoicing, agree with the buyer who will pay and record it in the contract, purchase order or invoice. The older RBI guidance treated the third party's name in the order or invoice as acceptable evidence (A.P. (DIR Series) Circular No. 100, para 2).
- Read your AD bank's published export policy. Each AD bank's policy must list documents, timelines and charges, and the bank must disclose the policy and the main features of its SOP on its website (Regulation 19(1)(a) and 19(4)).
- File your EDF as usual. Service exporters file within 30 days from the end of the invoice month, and one EDF can cover a month's exports (Regulation 3(2)). See EDF form for exports.
- Ask the third party to pay through the banking channel to your account with the AD bank, quoting your invoice number (Manner of Receipt and Payment Regulations, 2023, Regulation 3(2)).
- When the bank asks, give it the documents that explain the third-party payment. The bank credits the money only after it is satisfied the transaction is genuine (Regulation 4(2)). See bank asking for an invoice on an inward remittance.
- Check that the bank has closed the export entry in EDPMS once the full value is received (Regulation 18(1)(g)). See what is EDPMS.
When does an AD bank allow a third-party payment for an export?
An AD bank allows a third-party payment for an export when it is satisfied with the bona fides of the transaction (Regulation 8). The 2026 regulations do not list fixed conditions, so the decision rests on the bank's internal policy and the evidence you give.
- The bank must have a documented internal policy and SOP for export transactions, with responsibility for approving transactions clearly delegated across internal levels (Regulation 19(1) and 19(2)).
- The SOP must include an escalation process for grievances and an appeal handled at a higher internal level (Regulation 19(2)).
- AD banks must inform the Directorate of Enforcement of any doubtful transaction (A.P. (DIR Series) Circular No. 20, para 3).
What conditions applied to third-party export payments before 1 October 2026?
Before 1 October 2026, RBI set specific conditions in A.P. (DIR Series) Circular No. 70, as relaxed by Circular No. 100 and consolidated in the Master Direction, para A.3(v). Many banks may still use these as a reference.
- A firm irrevocable order backed by a tripartite agreement, or documentary evidence of the circumstances, or the third party named in the order or invoice.
- The AD bank had to be satisfied with the bona fides of the transaction and export documents, such as the invoice or FIRC, and consider FATF statements.
- Payment through the banking channel only.
- The exporter declared the third-party remittance in the EDF and remained responsible for realising the proceeds from that named third party.
- Any outstanding amount was reported against the exporter, with the declared third party's name in place of the buyer.
- For shipments to a Group II Restricted Cover Country, payment could come from an Open Cover Country.
Is a third-party payment for an export the same as set-off with a group company?
No. A third-party payment brings money into India from another payer. Set-off adjusts export receivables against import payables with the same overseas buyer, supplier or their group or associate companies, and needs AD bank approval under Regulation 7. Set-off counts as realisation under Regulation 5(1).
What documents does an AD bank ask for before accepting a third-party payment for an export?
The documents an AD bank asks for depend on its own policy, because the 2026 regulations leave the list to each bank under Regulation 19(1)(a). The items below link the payer to the export and match the evidence RBI accepted under the older circulars. Check your bank's published list before the payment arrives.
| Document | What it shows | Rule basis | Best for |
|---|---|---|---|
| Export invoice naming the third-party payer | Who will pay and for which export | Third party named in the order or invoice was accepted evidence (Circular No. 100, para 2) | All exporters; see export invoice format |
| Contract, purchase order or tripartite agreement | The buyer, exporter and payer agreed to the arrangement | Earlier default condition (Circular No. 70, para 2(i)) | Large or repeat contracts |
| Letter or email from the buyer | Why someone else is paying, such as a group treasury | Documentary evidence of the circumstances (Circular No. 100, para 2) | Freelancers paid by a client's parent or agency |
| EDF (or shipping bill for goods) | The full export value declared to the specified authority | Regulation 3; the old rule required the third party to be declared in the EDF (Master Direction, paras A.3(v) and B.8) | Every export |
| Inward remittance details or FIRC | The payer, amount and currency received | Invoice and FIRC were cited as export documents the bank checks (Circular No. 100, para 2(i)) | Matching the receipt to the invoice; see FIRC vs FIRA vs e-BRC |
What happens if an AD bank does not accept a third-party payment for an export?
If an AD bank does not accept a third-party payment, it may not credit the money to your account or close the export entry in EDPMS. The export then remains unrealised, and the normal realisation deadlines and FEMA consequences continue to run.
- No credit: The bank credits an export receipt only after it is satisfied the transaction is genuine (Regulation 4(2)). See why banks return inward remittances.
- Open EDPMS: The export stays outstanding until the full value is realised, normally within nine months of the invoice or shipment (Regulation 5(1)). See export realisation period.
- Advance only: If proceeds stay unrealised for more than one year beyond the due or extended date, further exports need full advance or an irrevocable letter of credit (Regulation 13).
- FEMA penalty: A contravention can attract a penalty of up to three times the sum involved, or up to ₹2 lakh where it cannot be quantified (RBI Master Circular on Compounding, para 1.1, restating FEMA section 13(1)).
- GST status: Export of services requires payment received by the supplier in convertible foreign exchange, or in rupees where RBI permits (IGST Act section 2(6)(iv)). Keep records that tie the third-party receipt to your invoice. See GST on export of services.
Ask the bank which document it needs and supply it, such as a buyer letter naming the payer. If the bank still declines, use the appeal route in its SOP under Regulation 19(2), or ask the buyer to pay directly. If the delay risks the realisation deadline, request an extension from the AD bank under Regulation 5(1).
Which RBI rule governs third-party payments for exports?
Regulation 8 of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 governs third-party payments for exports from 1 October 2026. Before that date, A.P. (DIR Series) Circulars No. 70 and No. 100 and the Master Direction on Export of Goods and Services set the conditions.
| Circular or regulation | Clause | Date | Plain meaning | Best for |
|---|---|---|---|---|
| FEMA (Export and Import of Goods and Services) Regulations, 2026, FEMA 23(R)/2026-RB | Regulation 8 | 13 January 2026; in force 1 October 2026 | AD bank may permit third-party receipts if satisfied with bona fides | Every exporter from 1 October 2026 |
| FEMA (Export and Import of Goods and Services) Regulations, 2026 | Regulation 16(1)(b) | In force 1 October 2026 | AD bank may allow third-party receipts in merchanting trade on request with reasons | Merchanting traders |
| FEMA (Export and Import of Goods and Services) Regulations, 2026 | Regulation 19 | In force 1 October 2026 | Each AD bank sets and publishes its own documents list, SOP and appeal route | Exporters preparing documents for their bank |
| Manner of Receipt and Payment Regulations, 2023, FEMA 14(R)/2023-RB | Regulation 3(2) | 20 December 2023, amended 10 February 2025 | Receipts from abroad must come through an authorised bank or authorised person | Checking the payment route |
| A.P. (DIR Series) Circular No. 20, RBI/2025-26/194 | Para 4 and Annex items 70 and 71 | 16 January 2026; effective 1 October 2026 | Supersedes the 2013 and 2014 third-party payment circulars and the old Master Direction | Readers checking which rules still apply |
| A.P. (DIR Series) Circular No. 70, RBI/2013-14/364 | Para 2(i) | 8 November 2013; superseded 1 October 2026 | First allowed third-party export receipts with a tripartite agreement, FATF and EDF conditions | Understanding past practice |
| A.P. (DIR Series) Circular No. 100, RBI/2013-14/479 | Para 2 | 4 February 2014; superseded 1 October 2026 | Tripartite agreement not insisted on if other documentary evidence was produced | Exporters without a three-way agreement |
| Master Direction: Export of Goods and Services | Paras A.3(v) and B.8 | 1 January 2016; superseded 1 October 2026 | Consolidated the third-party conditions and the EDF declaration rule | Comparing old and new rules; see RBI Master Direction on exports |
What are the common mistakes with third-party payments for exports?
- No paper trail: Letting a different company pay without any invoice note, contract term or buyer letter that explains why.
- Old checklist: Assuming the 2013 conditions are still the law after 1 October 2026, or assuming no bank checks apply because Regulation 8 is shorter.
- Informal routes: Accepting money outside the banking channel, which the Manner of Receipt and Payment Regulations do not allow.
- Late explanation: Waiting until the bank queries the remittance before collecting documents, which can delay the credit.
- Wrong rule: Treating a group netting arrangement as a third-party payment when it needs set-off approval under Regulation 7.
- Short receipt: Ignoring a shortfall when the third party pays less than the invoice; ask the AD bank for a reduction under Regulation 6.
How did we verify this?
Every rule, deadline and form on this page is linked to its official source, checked on the dates below.
- Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB dated 13 January 2026, amended up to 22 September 2026, Regulations 1(2), 2(1) Explanation, 3, 4(2), 5(1), 6, 7, 8, 13, 16(1)(b), 18(1)(g), 19 (checked 8 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 20, RBI/2025-26/194: Export and Import of Goods and Services, 16 January 2026, Paras 3, 4 and 7; Annex A items 70 and 71 (Circulars No. 70 and No. 100 superseded) (checked 8 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 70, RBI/2013-14/364: Third party payments for export / import transactions, 8 November 2013, Paras 1 and 2(i), export transactions (checked 8 Oct 2026)
- RBI A.P. (DIR Series) Circular No. 100, RBI/2013-14/479: Third party payments for export / import transactions, 4 February 2014, Para 2 (tripartite agreement relaxation, bona fides and FATF conditions) (checked 8 Oct 2026)
- RBI Master Direction: Export of Goods and Services (FED Master Direction No. 16/2015-16, updated as on 17 July 2026), superseded from 1 October 2026, Para A.3(v) (third party payments for export / import transactions) and para B.8 (third party export proceeds) (checked 8 Oct 2026)
- Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, Notification FEMA 14(R)/2023-RB, amended by FEMA 14(R)(1)/2025-RB, Regulation 3(1) and 3(2) (checked 8 Oct 2026)
- RBI Master Circular on Compounding of Contraventions under FEMA, 1999 (1 July 2014), Para 1.1, restating FEMA section 13(1) penalties (checked 8 Oct 2026)
- Integrated Goods and Services Tax Act, 2017: Section 2 (Definitions), Section 2(6)(iv), export of services payment condition (checked 8 Oct 2026)
Frequently asked questions
Is a tripartite agreement still required for a third-party export payment in 2026?
Regulation 8 of the 2026 regulations does not mention a tripartite agreement. It lets the AD bank permit a third-party receipt if satisfied with the bona fides. A tripartite agreement was the default condition under the 2013 circular, relaxed in 2014. Your bank may still ask for one under its own policy.
Can a freelancer accept a third-party payment from a client's parent company under FEMA?
Yes, if the AD bank accepts it as genuine under Regulation 8. Services, including software, are exports under the 2026 regulations. Keep an invoice or client email naming the parent company as payer, and make sure the money arrives through the banking channel into your account.
Does the FATF condition still apply to third-party export payments after 1 October 2026?
The FATF condition appeared in Circulars No. 70 and No. 100, which were superseded on 1 October 2026. Regulation 8 does not repeat it. AD banks still apply their own checks and must inform the Directorate of Enforcement of doubtful transactions under Circular No. 20, so check how your bank treats the payer's country.
Does a third-party payment change the export realisation period?
No. Regulation 8 does not change the export realisation period. The full export value must still be realised within nine months of the invoice or shipment date, or twelve months if invoiced or settled in rupees, under Regulation 5. The AD bank may extend the period if you give reasons.
Should the third-party payer be named in the EDF for an export?
Under the old Master Direction, paras A.3(v) and B.8, the exporter had to declare the third-party remittance in the EDF. The 2026 regulations do not say this directly, and the EDF format is set in their Annex. Ask your AD bank whether its EDF process records the third-party payer.
Can an AD bank refuse a third-party export payment under Regulation 8?
Yes. Regulation 8 says an AD bank may permit third-party receipts, so the bank decides case by case. Under Regulation 19, each bank's policy must include an escalation process and an appeal at a higher internal level. You can use that appeal if you believe the transaction is genuine.
Where can an exporter find an AD bank's policy on third-party export payments?
Regulation 19(4) of the 2026 regulations requires each AD bank to disclose its export and import policy and the main features of its SOP on its website. Regulation 19(1)(a) says the policy must list documents, timelines and charges. Check that page, or ask your branch, before a third party pays.