RBI Relaxes FEMA Rules for Services: Deemed EDF and ₹10 Lakh IDPMS Threshold

On 2 November 2026, the Reserve Bank of India notified the Foreign Exchange Management (Export and Import of Goods and Services) (Second Amendment) Regulations, 2026 (Notification No. FEMA 23(R)/(2)/2026-RB), known as the FEMA 23(R) second amendment 2026. It was published in the Official Gazette (Extraordinary, Part III, Section 4) and amends the principal Export and Import of Goods and Services Regulations, 2026 dated 13 January 2026.

The amendment reduces paperwork in two areas: the Export Declaration Form (EDF) for exports of services, and the reporting of imports of services in the Import Data Processing and Monitoring System (IDPMS). The regulations are stated to come into force from 1 October 2026.

The FEMA 23(R) second amendment 2026 aims to streamline the processes involved in foreign exchange management.

Key changes at a glance

Area	What the amendment provides
Definition	“Resident individual” means a person resident in India who is a natural person (new clause (da) in regulation 2(1))
EDF, resident individual exporting services	EDF is deemed submitted once payment-receipt information is given to the Authorised Dealer (AD) for crediting the account
EDF, other exporters of services	Same deemed treatment, only if the inward remittance is not more than ₹10 lakh (or foreign-currency equivalent)
IDPMS, import of services	AD must enter details only where the importer is not a resident individual and the invoice or contract value exceeds ₹10 lakh (or equivalent)
Timeline for AD entry	Five working days from receipt of details

1. New definition: “resident individual”

A new clause (da) in regulation 2(1) defines a “resident individual” as a natural person who is resident in India. The definition separates individuals, such as freelancers, consultants and professionals, from companies, LLPs, partnership firms and HUFs. The relaxations below turn on this distinction.

2. Deemed EDF for exports of services (Regulation 3(2))

Two new provisos are inserted in regulation 3(2), and the existing provisos are renumbered (a), (b), (c) to (c), (d), (e).

Resident individuals. A resident individual exporting services is deemed to have submitted the EDF when they give the AD the information required about receipt of payment, so that the AD can credit their account. The amendment sets no value limit for resident individuals.

Persons other than resident individuals. Companies, LLPs, firms and other non-individual exporters get the same deemed treatment, but only if the inward remittance for the service is not more than ₹10 lakh (or its equivalent in foreign currency). Above that value, the deemed treatment does not apply.

The provisos waive a separate EDF filing in these cases. They do not remove the need to give the AD the payment-receipt information.

3. IDPMS reporting for imports of services (Regulation 18(1)(d))

Regulation 18(1)(d) is amended on how ADs record imports of services in IDPMS. The AD now enters details as furnished by the importer (earlier: “as declared and submitted by the importer”) and within five working days of receipt of details (earlier: “of receipt of documents”).

The AD’s entry obligation now applies only where:

• the importer is a person other than a resident individual, and
• the invoice or contract value is more than ₹10 lakh (or its foreign-currency equivalent).

A resident individual importing a service, and a non-individual importer whose invoice or contract value is ₹10 lakh or less, fall outside this particular reporting requirement.

Who benefits

• Freelancers and independent professionals (IT, design, consulting, content, and similar) receiving foreign payments into their accounts.
• Small businesses and start-ups exporting services in smaller remittances, such as software support or digital services.
• Small businesses importing services such as SaaS subscriptions, foreign consulting and online tools, where invoices are modest.
• Authorised Dealers, whose IDPMS data entry shrinks for lower-value service imports.

Points to keep in mind

1. Not an exemption from FEMA. The amendment changes the EDF and IDPMS mechanics for services. Other obligations, such as realisation of export proceeds and other regulatory requirements, are not touched by this notification.
2. Threshold test. The export-side limit refers to “the value of the inward remittance”, and the import-side limit to “the invoice or the contract value”. The text does not say how split or staggered payments for one contract should be treated, so confirm the AD’s practice before structuring payments.
3. Payment information must still be provided. The deemed-EDF provisos depend on the exporter giving the AD the required payment-receipt information.
4. Effective date. The regulations state commencement from 1 October 2026, although they were notified on 2 November 2026. Check with your AD how transactions between those dates are being handled.
5. Documentation. Even where EDF or IDPMS reporting is relaxed, keep invoices, contracts, FIRCs or remittance advices, and agreements ready for GST, income tax and audit purposes.

Related FEMA and GST considerations

Service exports and imports raise issues beyond FEMA:

• Zero-rated treatment of export of services under the GST law depends on its own conditions, including receipt of payment in convertible foreign exchange or in INR where RBI permits.
• Imports of services can attract GST under the reverse charge mechanism.
• Foreign remittances can carry income tax withholding and reporting requirements, depending on the nature of the payment.

A FEMA relaxation does not automatically change the GST or income tax position, so the three should be reviewed together.

Frequently asked questions

Q1. Does a freelancer exporting services need to file a separate EDF now?
Under the new proviso, a resident individual exporter is deemed to have submitted the EDF when they give the AD the payment-receipt information needed to credit their account. No value cap is mentioned for resident individuals.

Q2. What if a company exports services and the remittance is ₹12 lakh?
The deemed-EDF relief for non-individual exporters applies only where the inward remittance is not more than ₹10 lakh. At ₹12 lakh, the relief does not apply, and the existing EDF process continues.

Q3. Does the ₹10 lakh limit apply to resident individuals?
Not for the deemed-EDF provision on exports. For IDPMS reporting of imports, resident individuals are outside the AD’s entry requirement altogether. The ₹10 lakh test applies to persons other than resident individuals.

Q4. When must the AD enter service import details in IDPMS?
For non-individual importers where the invoice or contract value exceeds ₹10 lakh, the AD enters the details within five working days of receiving them from the importer.

Q5. From which date do the changes apply?
The regulations say they come into force from 1 October 2026.

Q6. Do these changes remove other FEMA requirements for service transactions?
No. They cover only the EDF treatment for service exports and the IDPMS reporting for service imports.

Conclusion

The Second Amendment Regulations, 2026 shift the reporting burden for service transactions toward larger-value cases. Individual professionals and smaller businesses gain the most, since the EDF is deemed submitted and IDPMS reporting is limited. Exporters and importers should still check the threshold, keep documentation in order, and confirm with their Authorised Dealer how the changes are being applied.

Sagar S Gupta & Co, Chartered Accountants, Shivpur, Varanasi, advises on FEMA compliance, foreign remittances, GST on exports and imports of services, and related regulatory filings. The notification should be read in full before relying on it for a specific transaction.