Understand RBI FEMA regulations for the return of equity investment made abroad. Learn when to use this code, what documents you need, applicable charges, and how to apply this purpose code for inward remittance.

Purpose Code P0001 is used when an Indian resident receives money from abroad as the return of an equity investment previously made in an overseas entity.

This includes situations where shares are sold, a subsidiary is closed, or a foreign company repurchases your equity.

RBI mandates that all such inward remittances must be reported using this code to ensure proper classification under FEMA. You should use this code whenever you are bringing back your original capital (not dividends or profit distributions) from an overseas equity investment

You should use P0001 when:

• You are receiving funds after selling shares in a foreign company you had earlier invested in.
• A foreign subsidiary or joint venture repurchases your equity.
• Your overseas business entity shuts down and returns your capital.
• You liquidate your equity assets abroad and bring the proceeds back to India.

These are all considered capital account returns, and RBI requires them to be reported under P0001.

Do not use this code when:

• You are sending money abroad to make a new foreign investment.
• You are receiving dividends or profit distributions (use S1302 or the applicable service code).
• You are receiving loan repayments or interest income (use P0102 or a relevant loan-related code).

Using the correct code ensures your transaction is processed smoothly and avoids unnecessary compliance queries later.

Purpose codes help banks and regulators classify the nature of foreign exchange transactions accurately.

For businesses, the right purpose code helps maintain clean compliance records and reduces the risk of delays caused by additional scrutiny.

For individuals, it ensures that remittances made under LRS or other FEMA routes are correctly categorized and do not trigger compliance red flags.

Bottom line: Choosing the correct purpose code ensures faster processing, fewer document requests, and full FEMA compliance.

1. Select P0001 – Return of Indian Investment Abroad in Equity while initiating the inward remittance on your banking or forex platform.

1. Upload supporting documents that show the sale or liquidation of your foreign equity investment. These help the bank validate the purpose of your transaction.

1. The bank will verify your documents and check for FEMA compliance.

1. Once verified, your remittance will be processed and reported to RBI under the correct category.

Additional Notes:

• PAN is mandatory for all investment-related remittances.

• A FEMA declaration may be required depending on the bank.

• KYC documents must be valid and up to date.

• Selecting the wrong purpose code, which may delay your transaction.
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• Uploading incomplete or unclear documents, leading to additional verification steps.
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Using an investment return code for dividend or interest income, which must be reported separately.

Xflow helps you move money across borders with clarity and confidence. Our team ensures that your documentation is complete and your transaction aligns with FEMA requirements, reducing back-and-forth with banks and simplifying compliance.