What Is Virtual Account?

A virtual account is not a separate pool of money. It is a unique number that sits on top of one real account. Anything sent to the virtual number is credited to the real account, and the sender's reference can be tied to the virtual number. A business can create many virtual numbers for one real account, for example one per client. This helps with reconciliation, because each incoming payment is already labelled by the number it arrived on. The details, such as the currencies offered and whether the account details look local to the payer, depend on the provider. Always confirm with your AD bank or provider how the credit reaches an Indian bank account.

For example, a web developer in Bengaluru works for three clients abroad. She asks her provider for a separate virtual account number for each client. When a payment arrives on the second number, she knows it is from the second client, without waiting for a remittance message to match the amount.

• Reconciliation: Each client or invoice can have its own virtual number, so you can match payments to invoices without guessing from the amount.
• Bank compliance: Whatever route a payment takes, the credit in India is made by an AD bank, and the export entry is monitored under Regulation 5 of the FEMA Export and Import Regulations, 2026. Ask who the AD bank is and how it will record your payment.
• GST: A supply counts as export of services under section 2(6) of the IGST Act only if payment is received in convertible foreign exchange, or in rupees where RBI permits. Check with your tax adviser that the way you are paid meets this condition.
• Proof of receipt: Keep the remittance advice for each credit, since a virtual account number alone does not show the purpose or the sender in the form your bank or tax officer may need.
• Fees: Charges and exchange rates depend on the provider. Compare the total cost, not just the fee line.

A payer sends money to the virtual account number. The bank or provider that issued the number matches it to the real account and credits the funds.

1. You ask your bank or provider to issue a virtual account number for the currency you need.
2. You share the details with your client, with your name as beneficiary and any reference the provider asks for.
3. The client pays to those details using a local or international transfer.
4. The issuer identifies the virtual number, credits the real account behind it and tags the payment to that number.
5. The funds are converted or credited to your Indian account through an AD bank, which records the remittance and can issue an advice.

You use a virtual account by sharing its details on your invoice and by tracking each payment against the number it arrived on. Setup steps depend on your bank or provider.

1. Ask your AD bank whether it offers virtual accounts for foreign currency receipts, and which currencies it supports.
2. Check who holds the real account behind the virtual number and whether the final credit reaches an Indian AD bank.
3. Request one virtual number per client or per invoice series if you want clean reconciliation.
4. Put the account details on the invoice exactly as issued, including the beneficiary name and any reference.
5. After each payment, download the remittance advice and file it with the invoice.
6. Review fees, exchange rates and limits in writing before you rely on the account for regular income.

A virtual account is a number linked to a real account. A local collection account is a way of accepting a payment in the payer's own country using local rails. A virtual account is often the way a local collection account is offered, but the terms are not identical.

• Separate money: A virtual account does not hold funds of its own. The funds are credited to the real account behind it.
• Not regulated the same: The rules that apply depend on who issues the number. Ask whether the issuer is a bank or another regulated entity.
• No documents needed: Your AD bank can still ask for the invoice and purpose of the payment before the credit.
• Replaces FIRA: A virtual account number does not replace the remittance advice that your bank issues for the credit. See the FIRA page.
• Always cheaper: Cost depends on the fees and the exchange rate used. Compare the total amount you receive.

• Local collection account: Account details in the payer's country that let a client pay by a local transfer.
• Nostro and vostro accounts: Accounts that banks hold with each other to settle cross-border payments.
• FIRA: A bank advice confirming that a foreign payment was credited to your account.
• SWIFT code: The identifier of a bank on the SWIFT network.
• FX markup: The margin added to the exchange rate when converting foreign currency.
• EEFC account: A foreign currency account in India for eligible exporters.

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

1. RBI, Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (FEMA 23(R)/2026-RB), Regulation 2(1)(b) and Regulation 5 (checked 9 Oct 2026)
2. IGST Act, 2017, Section 2 (Definitions), Section 2(6), export of services (checked 9 Oct 2026)