What is purpose code P1501?

Purpose code P1501 is the first code in RBI's group P15, Others. P1501 covers refunds or rebates received on account of imports.⁴⁵

P1501 is a reversal code: money comes in because an earlier payment out of India is partly or fully returned. Service exporters need P1501 only on the occasions they get a refund on something they imported.⁴

What does the P1501 purpose code cover?

The P1501 purpose code covers "Refunds / rebates on account of imports", in RBI's receipt purpose code list.⁴⁵ P1501 sits in group P15, "Others".⁴

• Source of the list: A.P. (DIR Series) Circular No. 84 dated 29 February 2012 told banks to report all foreign exchange transactions under a revised purpose code list from April 2012.¹
• Source of the wording: RBI's annex PDF showed a captcha page when this page was checked, so the wording is quoted from the HDFC Bank and DBS Bank India reproductions, which match each other word for word.⁴⁵
• Nature: a refund or rebate returns part or all of an earlier import payment.⁴

When should you use the P1501 purpose code?

Use the P1501 purpose code when a foreign supplier sends money back to you as a refund or rebate on something you imported.⁴

• Refund: a supplier returns part or all of the price of imported goods.⁴
• Rebate: a supplier pays back a discount on imports already paid for.⁴
• Non-imports: if the refunded payment was not for an import, P1502 is the closer description.⁴

Who uses the P1501 purpose code?

Indian importers who receive a refund or rebate on an import use the P1501 purpose code.⁴

• Trading businesses: firms that import goods and receive supplier rebates.
• Service businesses that import equipment: studios, agencies or IT firms that buy equipment from abroad and receive a refund.

A freelancer or agency paid by a foreign client uses the code for the service invoiced.⁴

What transactions are covered under P1501?

Transactions covered under P1501 are refunds and rebates on account of imports.⁴

• For example, a design studio that imported a camera receives a partial refund from the foreign supplier for a defect.
• For example, a trading business receives a volume rebate from an overseas supplier.
• For example, an IT firm that imported servers receives a refund for units returned to the supplier.
• For example, a manufacturer receives a price adjustment from a foreign supplier after a shipment was overbilled.

Each of these returns money paid for an import, which is what the P1501 description names.⁴

When should you not use the P1501 purpose code?

Do not use the P1501 purpose code for client income, refunds of non-import payments or deemed exports, because other codes in RBI's list describe those.⁴

The descriptions are from RBI's receipt list.⁴⁵ DGFT says P1505 is the only purpose code permitted for creating an e-BRC in the case of deemed exports.³⁴

What documents are required for P1501?

The documents a bank asks for with an import refund are set by that bank, so ask it before the money arrives. Records that link the refund to the import help.

• Original import payment: the remittance reference of the payment you made abroad.
• Supplier's refund note: the credit note or letter that explains the refund or rebate.
• Import invoice: the supplier's invoice for the goods.

How do you declare the P1501 purpose code?

You declare the P1501 purpose code by telling the bank that credits the money that it is a refund or rebate on an import, before the credit.³⁴

1. Link the money to an import: find the original import payment.
2. Compare the P15 descriptions: check P1501 against P1502.⁴
3. Tell the bank before the credit: ask the bank to report the import refund code.
4. Check the credit advice: confirm the code shown matches what you agreed.
5. Ask for an amendment if wrong: DGFT's eBRC FAQs say purpose code changes are requested through the bank, and banks can amend the inward remittance message (IRM) they report to DGFT.³

How does P1501 affect FIRA, GST and income tax?

P1501 links to no GST service code, because DGFT's purpose code to SAC mapping (Version 1.0, 10 November 2023) has no entry for P1501.²

• e-BRC and SAC: DGFT links purpose codes to Services Accounting Codes (SAC) so that exporters can generate an electronic Bank Realisation Certificate (e-BRC), and says the exporter must choose the SAC that corresponds to the purpose code.³ With no mapping entry, the mapping suggests no SAC for P1501.²
• Export evidence: P1501, P1502 and P1503 do not describe exports.⁴
• Tax treatment: how an import refund is treated for GST and income tax depends on the original import and your books, so confirm with a chartered accountant.

What are the common mistakes with the P1501 purpose code?

The common mistakes with the P1501 purpose code confuse import refunds with other money coming in.⁴

• Client fees under P1501: a client payment for work is coded by the service invoiced.⁴
• Non-import refunds under P1501: a refund of something sent abroad that was not an import fits P1502.⁴
• Subscription refunds: the RBI list does not say whether a refund of a foreign software subscription counts as an import for P1501, so ask your bank.⁴
• Late correction: ask the bank that credited the payment to correct it. DGFT says exporters contact the bank to request a purpose code change.³ See how to correct a purpose code after payment.

Which purpose codes are related to P1501?

The purpose codes related to P1501 are the other codes in group P15.⁴⁵

To compare P1501 with every other receipt code, see the RBI purpose codes list for exporters, or shortlist codes with the purpose code finder. Where a payment could fit more than one description, confirm the code with your bank or a chartered accountant before the money is credited.⁴