this certificate acts as evidence for the same. If you are trading in different currencies and receiving money from abroad then getting this certificate is important as it will enable regulatory authorities like the Directorate General of Foreign Trade or DGFT to keep a track of all the transactions that take place in your name.
The FIRC will ensure that the money you received is not part of any money laundering activity or any other criminal activity.
Ways to Get FIRC in India
The FIRC certificate was issued in the physical format but for the present-day users, the service is only available online. The method of getting FIRC in India is as follows:
Physical FIRC in India
It should be made clear in the beginning that getting a physical copy of FIRC is no longer possible. This is because the service was discontinued in 2016 by the Indian Government. But this should not be a deterring factor as it was a tedious process for a merchant to get FIRC. According to the RBI guidelines, only banking channels can issue FIRC. Moreover, physical FIRC could only be issued for inward remittance that covers Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII).
The steps to get the FIRC certificate are as follows:
● Details of the beneficiary in India
● Details of the overseas buyers including his identity
● Details of the amount in foreign currency converted into Indian rupees.
● The Unique Transaction Number or UTR
● The purpose of remittance.
Once the recipient Indian bank is satisfied with all the details they will issue an IRM. It is known as the Indian Remittance Message (IRM). The IRM is issued on the government portal that goes by the name Export Data Processing and Monitoring System or EDPMS. Henceforward, IRM is known as FIRC.
e-FIRC in India
Getting the e-FIRC is much easier than the physical FIRC. Also, the value and relevance of e-FIRC are just as much as the physical FIRC. And now that the physical FIRC has been terminated, Indian sellers can only access e-FIRC.
As already mentioned, getting the e-FIRC might be a bit tedious but with the online technology, the dynamics change totally. With the help of third-party companies like Cashfree payments, the beneficiary can easily get an e-FIRC in India.
For instance, if you are a Cashfree merchant, all you have to do is attach the email ID of the beneficiary with the bank during the time of transfer. Once that is done, the bank partners will issue the e-FIRC and send it directly to the beneficiary’s email ID. Interestingly, through this method, you can issue the e-FIRC for every transaction made to the beneficiary’s email address.
The Need for FIRC
While the process of getting FIRC and e-FIRC has been established, it is important to note why someone would need this in the first place. There are several advantages of getting FIRC in India. Some of them are as follows:
A Legal Evidence
For those who receive payments from abroad in India, FIRC is almost indispensable. It acts as evidence that you have received an international payment. Without FIRC, your beneficiary might not have any legal proof to show whether the payout he received is from a genuine source or not. This can land into legal trouble and if things are out of hand, the trouble can be an unwelcome intrusion in your business as well. Hence, it is always better for the beneficiary to get a FIRC and you should also make it a point that your beneficiary receives it.
FIRC or e-FIRC serves as a legal document that the beneficiary in India has received payment from abroad.
Proof for Shares
Another area where FIRC becomes almost indispensable is in the matter of shares. If you have purchased shares in the name of a person who is not a resident of the country you are in, then he will need a FIRC as evidence for the share purchased instead of just the share applications. Also, when an Indian citizen sells his shares in the name of an NRI then the FIRC will also be needed to stand as proof that the seller has given his shares to an NRI.
GST Deduction
Goods and Services Tax or GST is not levied on exported services. But in order to show that the service you gave was exported or for foreign consumers, you have to get a FIRC in India. Only this way will be able to save the expenses made on GST.
Therefore, FIRC is an extremely important document and can save you from many legal troubles. With some third parties offering FIRC services as well, as a merchant make sure to get hold of these services and continue with your business in a smooth yet legal manner.
