What is Purpose Code P0001?
P0001 is the RBI purpose code your bank uses when you bring money back to India after selling your stake in a foreign company or liquidating overseas shares. Think of it as the label that tells the Indian banking system: this is capital returning home, not regular income.
It applies to Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI) exits — whether you are a startup founder winding down a foreign subsidiary, an individual investor selling US stocks, or a VC firm divesting a cross-border stake. The key is that the original investment was in equity (shares), not debt.
See all RBI purpose codes
When to Use P0001
Use P0001 when you are receiving money from abroad that represents the return of capital you originally invested outside India in equity — not earnings, dividends, or loans. Common scenarios:
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- An Indian company closing its foreign subsidiary and repatriating the share capital back to India
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An individual investor who sold US or UK shares via a platform like Interactive Brokers or Vested
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- A VC or angel investor exiting a foreign startup through a secondary sale or buyback
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- A co-founder who sold their stake in an overseas holding company or operating entity
- A corporate that divested its equity stake in a foreign joint venture and is receiving sale proceeds
- A co-founder who sold their stake in an overseas holding company or operating entity
Quick check: If the money is from selling the shares themselves (return of principal/capital), it’s P0001. If it’s dividend income from those same shares, use P1407 instead.
Wrong Code? Use These Instead
P0001 is specifically for equity. Here’s where people commonly mix things up:
| If your money is from… | Correct code to use |
|---|---|
| Dividends on foreign shares | P1407 |
| Returning capital from foreign bonds / debt securities | P0002 |
| Returning capital from a foreign branch | P0003 |
| Returning capital from a foreign subsidiary (as entity, not equity sale) | P0004 |
| Selling a foreign property | P0005 |
Documents to Keep Ready
Your bank will ask for some or all of these when processing a P0001 remittance:
| Document | Why you need it |
|---|---|
| Share transfer / buyback agreement | Confirms the equity transaction that triggered the remittance |
| Invoice or valuation statement | Shows the amount being repatriated and the basis of valuation |
| Bank credit advice / SWIFT confirmation | Confirms the funds arrived in your Indian account |
| e-FIRA | Official RBI-recognized proof of inward foreign remittance |
| Original ODI / OPI filing acknowledgement | Shows the RBI was notified of the original outward investment |
| KYC documents | Standard bank requirement — PAN, Aadhaar, or business registration |
What is an e-FIRA — and Why Does It Matter?
An e-FIRA (Electronic Foreign Inward Remittance Advice) is the official proof that foreign money entered India. It confirms the nature and purpose of the inflow, which matters for tax treatment, FEMA compliance, and audit trails.
Your bank generates it automatically once the funds land. You can usually download it from your internet banking portal or request it at your Forex desk. The e-FIRA will reflect the correct purpose code, which your CA or accounts team will reference during filings.
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Frequently Asked Questions
Q: What is RBI purpose code P0001?
P0001 is used when an Indian resident or company brings back capital from selling, liquidating, or exiting a foreign equity investment. It tells your bank and the RBI that this is a capital return — not business revenue or dividend income.
Q: Can I use P0001 if I'm selling US stocks as an individual?
Yes. If you invested in overseas shares through a platform like Vested or Interactive Brokers and are now selling them and bringing the proceeds back to India, P0001 applies. The key is that the original investment was in equity and you are repatriating the capital.
Q: Do I need a CA to process a P0001 remittance?
Your bank handles the remittance processing — a CA is not required for the bank transaction itself. However, a CA is strongly advisable for computing capital gains, handling the tax side correctly, and ensuring your ODI/OPI records with the RBI are updated to reflect the exit.
Q: Is the returned principal under P0001 taxable in India?
The principal return itself is generally not treated as income, but capital gains may apply depending on your holding period, the type of investment, and applicable tax treaties. Short-term and long-term capital gains rates differ. Consult your CA for your specific situation.
Q: Do I need to update my RBI ODI filing after exiting a foreign investment under P0001?
Yes. If your original overseas investment was made under the ODI framework (as a direct investment), you are required to report the disinvestment to the RBI through your Authorised Dealer bank, typically via an updated Form ODI. Your AD bank will guide you through this.
Q: What if I receive the equity exit proceeds in foreign currency and want to keep it in an EEFC account?
You can retain a portion of inward remittances in an Exchange Earner's Foreign Currency (EEFC) account, subject to current RBI limits. However, the purpose code P0001 must still be correctly applied to the inflow regardless of which account the funds ultimately settle in.
