What Is Advance Remittance?

An advance is payment in whole or part before the work or shipment is done. It reduces the buyer's risk of a delayed order only for the seller, since the seller holds the money first. The exporter then has to complete the export. Rules require the advance and the later proceeds to go through the same AD bank, so records stay in one place. If the export does not take place, the money may need to go back to the buyer. Exporters usually discuss refunds and timelines with the bank before taking large advances.

For example, a design studio asks a client in the UK for 50 percent of a USD 4,000 project up front. The USD 2,000 is an advance remittance, and the balance is paid on delivery.

• Bank compliance: Regulation 10(1) says an exporter routes the advance amount, and any export proceeds, through the same AD bank.
• Interest: For advances paid abroad on imports, Regulation 10(4) says interest payable should not exceed the all-in-cost ceiling of trade credit. Check with your AD bank whether it applies to your case.
• Purpose code: The payment is reported with a purpose code, and the code differs between goods and services. See the purpose code guide for advance payment against exports.
• GST: The timing of GST liability on advances depends on the facts. Confirm with a GST professional.

An advance moves through the AD bank before the export is completed. The bank records the receipt and links it to the later export.

1. The exporter and buyer agree the amount to be paid in advance.
2. The buyer sends the advance to the exporter's account with the AD bank.
3. The bank records the receipt with the purpose of the payment.
4. The exporter ships the goods or delivers the service.
5. Later proceeds, if any, are routed through the same bank under Regulation 10(1).
6. The bank matches the advance and the export when it updates its records.

Agree the terms in writing, use one AD bank, and keep records that tie the advance to the export. The steps below are practical suggestions, not a bank checklist.

1. State the advance amount and the delivery date in the contract or invoice.
2. Give the buyer your account details and ask for the invoice number as the payment reference.
3. Route the advance and the balance through the same AD bank as Regulation 10(1) provides.
4. Ask the bank how it records the advance and what it needs when you export.
5. If the export may not happen, speak to the bank about a refund, see how to refund an advance.
6. Read the RBI advance payment guide for timelines.

• Free money: An advance is a liability until the export is completed or the money is returned.
• Any bank works: Regulation 10(1) expects the advance and later proceeds to go through the same AD bank.
• Same as final payment: The advance is only part of the export value unless the buyer pays in full up front.
• No reporting: Advances are still reported by the bank with a purpose code.

• Inward remittance: Money received in India from abroad.
• Export realisation: Receipt of export payment through an AD bank.
• Letter of credit: A bank undertaking to pay the seller on conditions.
• EDPMS: The AD bank system that matches receipts to exports.

Every rule and definition on this page is linked to its official source, checked on the dates below.

1. FEMA (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB, Regulation 10(1) and 10(4) (checked 9 Oct 2026)