If you’re a business owner dealing with international payments, staying compliant must be at the top of your to-do list. You might have come across requirements like the FIRC and BRC. If you want more clarity, you’re in the right place.

In this article, we will walk you through what these documents are, their importance, and how they can protect you from unruly delays and penalties. We’ll also discuss how to obtain both documents, and close with the most common mistakes business owners make.

FIRC is a “Foreign Inward Remittance Certificate”, issued by banks as a proof of an international transaction. In India, FIRCs are issued by authorised banks (Authorised Dealer Category I institutions) for any and all remittances entering India.

Another way to think of an FIRC is as a receipt for the international payment. It can be presented to regulatory authorities to validate the legitimacy of the payment. FIRC will contain information about the sender and receiver, the bank involved, forex rates, and other details pertaining to the transaction.

Apart from its role as a receipt, FIRC also provides you with GST benefits, legal compliance, and export benefits from the DGFT (Directorate General of Foreign Trade).

Since 2016, the FIRC’s role has been limited to capital account transactions. e-FIRC has gained popularity instead.

A BRC, or a “Bank Realisation Certificate”, connects the payment received with an export transaction. Businesses that export across the border require a BRC to verify their export activities.

The DGFT uses a BRC to validate claims for GST benefits and RoDTEP (Remission of Duties and Taxes on Exported Products). In 2012, DGFT introduced the e-BRC. For exporters that had to manually apply for the BRC, this was a welcome change.

Both FIRC and BRC are critical to receiving international payments. But there are noteworthy differences, which we will discuss in the next section.

While both FIRC and BRC are required to legitimise your inward remittance, only the BRC links the transaction to a specific instance of export. Let’s simplify the differences here:

1. First, FIRC stands for “Foreign Inward Remittance Certificate”. BRC stands for “Bank Realisation Certificate.
2. An FIRC is issued on receiving foreign remittance. The BRC is issued after a link between export invoice and remittance has been established.
3. Another difference is in the purpose each document serves. An FIRC proves that you have received international funds. A BRC proves that you have completed an export.

Now that we have covered the key differences, we’ll contrast them in more detail here:

After understanding the meaning and purpose of both documents, you will want to know when you need FIRC vs BRC. It simply depends on which stage of the transaction process you are in.

• You will need the FIRC if you have made an international payment. It is the confirmation that you have received funds from a foreign entity, and you’ll need it for GST refunds, EDPMS, and other compliance activities in the future. Today, FIRA has replaced FIRC for export transactions.
• You will need the BRC if you want to establish a link between payment and export obligations. BRC will be issued after the transaction has been matched with shipping bills, invoices, SOFTEX forms, and other accepted proofs of export.

Next, let’s see how your business can obtain both documents.

You can obtain an FIRC for your international transactions through your bank or through a payment gateway. Let’s look at both methods:

Through bank

To get FIRC through a bank, you must:

1. Contact your bank,
2. Fill out an FIRC application,
3. Provide all the requested details (UTR number, sender and receiver details, purpose code, amount and date of remittance),
4. Pay the issuance fee,
5. And receive the FIRC within 7-15 days of application.

Through payment gateway

When using a modern payment platform or gateway, you’ll find that e-FIRC generation is an automated process. The certificate will be generated and made available on your dashboard to download and use. 

Platforms like Xflow are favoured, as they can simplify obtaining e-FIRC, through automation.

When running an exporting business, you will need to download your e-BRC from the DGFT portal. Here’s a walkthrough of how to obtain it:

1. Request the foreign payment sender to mention the proper purpose code, along with the purpose of the transaction.
2. Next, your bank will take a look at the incoming payment using the IRM number. It will be sourced from your shipping bill or a SOFTEX form.
3. When the bank has verified the incoming payment, it will generate the e-BRC. This certificate will be available on the DGFT portal.

Log in to the DGFT website. You can then check, track, and download the e-BRC.

What can the FIRC and BRC do for your business? They can get you access to incentives, GST refunds, and help you stay compliant.

Get your GST refunds

You need FIRC or BRC as proof of payment from abroad, and BRC in particular to link the payment to export activities. Without it, your GST refunds can get stuck.

Claim export incentives

Export schemes like RoDTEP require these documents, without which, you cannot claim lucrative export incentives.

Stay RBI compliant

Next, both documents are needed to stay compliant and conduct your business under FEMA guidelines.

Handle audits easily

Lastly, during tax assessments or audits, FIRC and BRC will function as your primary line of defence. Without them, you might have to face unnecessary (and easily avoidable) penalties and delays.

To apply for FIRC and BRC effectively, beware of the common mistakes listed in the next section.

When it comes to applying for and using FIRC and BRC effectively, there are common pitfalls — but it’s easy enough to avoid them. Here’s a few:

Not applying, or late applying

Simply not requesting FIRC and BRC on time is a common mistake. Staying proactive and applying for the necessary documents, in parallel with your export activities, is the best step in ensuring your compliance.

Providing incorrect information

Having incorrect information across invoices, shipping bills, and remittances can create problems. Check closely to make sure the information is accurate.

Confusing the two documents

FIRC is a confirmation of inward remittance. BRC links the remittance to your goods or service export activity. Not knowing when you need which document can affect your compliance processes. It can also block your business off from GST refunds and export incentives.

Not checking DGFT

When applying for e-BRC, check the DGFT portal regularly. It’s the central source of information for all e-BRC related updates.

Not tracking the documents

It’s a good idea to make a spreadsheet or a tracker for your certificate applications and approvals.

Running a business internationally is not easy. Keeping track of forex rates, remittances, compliance, and payment security can quickly get overwhelming.

If you wish to simplify your international transactions, consider partnering with a payment platform like Xflow.

With over 12,000 customers across 140 countries in the world, Xflow is a trusted partner for cross-border business payments. Here’s how Xflow can ease your burdens:

• Xflow provides eFIRA in just 24 hours, no manual effort required, simplifying compliance.
• It is certified with ISO 27001 and SOC2, keeping your transactions safe.
• Transactions are finalised in just one working day., with the option to collect payments on a single invoice.
• Xflow provides transparent pricing, no hidden fees, and no hidden FX markups, letting you save up to 50% on your FX costs.
• It provides APIs to quickly integrate into your accounting ecosystem.

Visit Xflowpay today to find out how you can simplify your cross-border transactions.