New FEMA Rules: What Service Exporters Need to Do
The new FEMA rules took effect on October 1, bringing goods and services trade under a unified framework. The RBI has clarified that individuals undertaking transactions of a personal nature do not have to report them, including overseas tutoring and small software assignments.
What changed under the new FEMA rules
The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 prescribe an Export Declaration Form, or EDF, for services including software. A single declaration can cover a month’s service exports.
Banks and authorised dealers will handle reporting to the RBI. Exporters can use self-declaration for bills up to ₹10 Lakh, with the threshold applying per bill rather than to annual export earnings.
The ₹10 Lakh route does not remove every obligation to provide information to banks or create a blanket FEMA exemption. Banks may close export-monitoring entries for bills up to ₹10 Lakh based on an exporter’s declaration that payment has been realised in full or otherwise. Exporters may also submit these declarations quarterly for bulk closure.
Who the clarification affects
Individuals receiving payments for overseas tutoring or small software assignments do not have to report those transactions. Personal transactions, such as subscriptions to apps, television channels, journals, and newspapers, do not require reporting irrespective of the amount.
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Established SaaS startups that already report software exports may see mainly changes to forms and procedures. Software exporters previously used SOFTEX, while the regulations prescribe EDF for services, including software.
What reconciliation issues could arise?
Reconciliation challenges can arise where platform charges or deductions leave service providers receiving less than they invoiced, including through platforms such as PayPal. Similar questions arise for YouTube creators and influencers earning from overseas platforms.
What about the nine-month deadline?
Service export proceeds generally must be realised and repatriated within nine months of the invoice date, while a 12-month period applies where exports are invoiced or settled in rupees. Authorised dealers may grant extensions on satisfactory grounds.
For bills up to ₹10 Lakh, authorised dealers may approve reduced realisation on satisfactory grounds, potentially based on self-declaration.
The RBI is expected to issue FAQs explaining how the clarification applies across different freelance and creator business arrangements.
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