What FEMA rules apply to export of services from India?

Foreign exchange rules for Indian service exporters changed more in 2026 than in the previous ten years. From 1 October 2026, a single set of RBI regulations governs both exports and imports of goods and services, and every service exporter files a declaration, where earlier only software exporters did.²⁸

This guide maps the rules in layers, from the Act down to your bank's own policy, and then walks through one export from invoice to closure. It is written for agencies, IT and SaaS companies, consultants and freelancers alike. Freelancers wanting a shorter, individual view can read FEMA rules for freelancers.

What are the FEMA rules for export of services from India?

The FEMA rules for export of services from India are the Foreign Exchange Management Act, 1999 (FEMA), the FEMA (Export and Import of Goods and Services) Regulations, 2026 (the 2026 Regulations) and RBI's directions to banks, all applying from 1 October 2026.¹²³

• Payment route: section 3(c) of FEMA bars receiving payment on behalf of a person resident outside India other than through an authorised person, unless the rules permit otherwise.¹
• Declaration: every exporter of services gives an Export Declaration Form (EDF) to the specified authority.²
• Realisation: the full export value of services must be realised and repatriated within nine months from the invoice date, or twelve months where the export is invoiced or settled in rupees; the AD bank may extend this on a request with reasons.²⁴
• Bank policy: regulation 19 of the 2026 Regulations makes each AD bank publish its policy and the main features of its standard operating procedure (SOP) on its website.²

How must payment for exported services reach India?

Payment for exported services must come through an authorised bank or an authorised person, in a currency the rules allow.¹ Regulation 4(1) of the 2026 Regulations points to the Manner of Receipt and Payment Regulations, 2023, and regulation 3 of those 2023 Regulations sets the currency.²⁵

• Clients outside the Asian Clearing Union (ACU): receipts may be in Indian rupees or any foreign currency.⁵
• ACU members other than Nepal and Bhutan: payments between participants go through the ACU mechanism or as RBI directs; other transactions follow the non-ACU rule.⁵
• Nepal and Bhutan: receipts are generally in Indian rupees.⁵
• PA-CBs: payment aggregators licensed for cross-border transactions are one authorised route; RBI's Master Direction caps a PA-CB export transaction at ₹25 lakh and requires the PA-CB to give your AD bank the documents needed to close your export entry.⁷ Compare routes in PA-CB vs OPGSP.

Can export earnings be held in foreign currency under FEMA?

Export earnings can be held in foreign currency within limits, because section 9 of FEMA lets RBI exempt foreign currency accounts from the repatriation duty.¹

• EEFC account in India: an Exchange Earners' Foreign Currency account with an AD bank. See EEFC account benefits.
• Foreign currency account abroad: regulation 5(CA) of the Foreign Currency Accounts Regulations, as substituted on 6 October 2025, lets an exporter hold an account with a bank outside India (including in an International Financial Services Centre) for export proceeds and advances. Funds must be used for imports or repatriated by the end of the next month, or three months for an IFSC bank, and the export realisation rules still apply.⁶

Note: Regulation 5(CA) still refers to the 2015 export regulations "as amended from time to time". Ask your AD bank how it applies this provision after the 2026 Regulations took effect.⁶²

Who do the FEMA rules for export of services apply to?

The FEMA rules for export of services apply to every Indian exporter of services, and the authority that receives the EDF depends on the kind of service and where the exporter sits.²

"Software" is defined broadly, covering any computer programme, database, drawing, design, audio or video signals or information on a non-physical medium.² Details are in the EDF guide.

How does one service export work under the 2026 FEMA rules?

One service export under the 2026 FEMA rules runs from invoice to EDF, receipt, realisation and, if needed, a reduction.² Say a Pune design studio invoices a London client £8,000 on 12 November 2026:²

1. Invoice: raised on 12 November 2026, in pounds.²
2. EDF: filed with the AD bank by 30 December 2026 (30 days from the end of November). Because design work may count as "software", the studio should ask the bank which category applies.²
3. Receipt: the client pays by bank transfer. The bank checks the transaction is genuine before crediting it and updates the Export Data Processing and Monitoring System (EDPMS) entry.
4. Deadline: if the client is slow, the full value must arrive by 12 August 2027, nine months from the invoice date, unless the bank extends it.²⁴
5. Shortfall: if the client pays only £7,500, the studio asks the bank to approve a reduction. Because the invoice is under ₹10 lakh equivalent, the bank may close or reduce the entry on the studio's declaration.²

What deadlines and limits apply under the FEMA rules for export of services?

The main deadlines and limits under the FEMA rules for export of services are the 30-day EDF deadline, the nine-month realisation period, the ₹25 lakh PA-CB cap and the time limits on foreign accounts.²⁴⁶⁷

What happens if you break the FEMA rules for export of services?

If you break the FEMA rules for export of services, a contravention of FEMA or the regulations can attract a penalty under section 13(1) of up to three times the sum involved, or up to ₹2 lakh where the amount cannot be quantified.¹

• Unrealised proceeds: if proceeds remain unrealised more than one year after the due date, regulation 13 limits further exports to full advance or an irrevocable letter of credit.²
• Bank charges: under regulation 19, banks must keep charges "reasonable and proportional" and must not levy charges or penalties on a customer for a regulatory delay or violation by that customer.²

The statutory provisions are explained in FEMA sections 7 and 8.

Which FEMA laws and RBI rules govern export of services?

Four layers of FEMA laws and RBI rules govern export of services, each made under the one above it.¹²³

The table above lists the instruments as RBI and India Code publish them.¹²³⁵⁶ Under regulation 18, a bank enters each services EDF in EDPMS within five working days, records inward remittances, follows up open entries and marks them off once realised.² The bank's role is explained in how AD banks monitor exports.

What are the common mistakes with FEMA rules for export of services?

The common mistakes with FEMA rules for export of services are assuming only software exporters file an EDF and leaving money abroad too long.²⁶⁸

• Skipping the EDF: from 1 October 2026 every service exporter files one.²⁸
• Guessing the category: design work may count as "software", so ask your bank which category applies.²
• Overusing PA-CBs: a PA-CB export transaction is capped at ₹25 lakh.⁷
• Leaving money abroad: funds in a foreign currency account abroad must be used or repatriated within the regulation 5(CA) time limits.⁶
• Using old rules: the 2026 Regulations superseded the 2015 ones from 1 October 2026.²

How these rules apply to your contracts, platforms and bank depends on the facts, so check unusual cases with your AD bank or a chartered accountant. For a summary of what changed when the 2026 Regulations took effect, see what changed in the FEMA export regulations.²