RBI clarifies FEMA rules, exempts personal transactions and tutoring payments
RBI governor Sanjay Malhotra yesterday clarified that individuals undertaking personal‑nature transactions, overseas tutoring payments, and small software assignments are exempt from reporting under the new FEMA rules that took effect on October 1. The framework lets exporters file a self‑declaration for each export bill up to ₹10 lakh, with banks handling the reporting to the RBI.
Banks and authorised dealers will now receive the export declarations and match them with remittances, replacing the earlier SOFTEX process for software exports and the separate goods‑export declaration. The regulations introduce a single Export Declaration Form (EDF) that can cover a month’s worth of service exports, including software, allowing exporters to file one form instead of multiple. For each bill not exceeding ₹10 lakh, exporters may submit a self‑declaration to their authorised dealer, which the bank can then close in the export‑monitoring system once payment is realised. Exporters also have the option to file these self‑declarations quarterly, enabling bulk closure of eligible entries in the export‑monitoring system. The RBI said it will publish FAQs to help freelancers, creators and SaaS founders understand how the clarification applies to their specific arrangements, especially regarding overseas tutoring and small software assignments.
“From a founder's perspective, there's not a whole lot of change... what was being filed in SOFTEX, they'll go by and file it in EDF and the banks have to match,” Naganand Doraswamy, founder and managing partner at Ideaspring Capital said.
“consolidating export reporting through authorised banks could simplify compliance for software and AI startups,” Manav Garg, cofounder and managing partner at Together Fund said.
Before the change, software exporters used the SOFTEX platform for reporting, while goods exports followed a separate declaration process. Other service exports did not necessarily require equivalent declarations, although ex
What we know
The rules took effect on October 1.
Exporters can use self‑declaration for bills up to ₹10 lakh per bill.
The RBI will issue FAQs to clarify the requirements.
Established SaaS startups expect mainly procedural changes under the new framework.
The ₹10 lakh threshold applies per export bill, not to total annual earnings.