Claude, New Yorker, Bandcamp: RBI rules leave international card payments in grey area

Mumbai: Using international credit cards for instant payments to download services like Claude Pro, music from Bandcamp, or taking online subscription for New Yorker may come with the hassle of creeping compliance.

Unless authorities clear the air, beginning October 1 consumers may have to report such transaction details to banks under the new international trade payment regulations that aim, among other things, to comprehensively capture data on dollar outflows and inflows for import and export of goods, software, and services.

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This is the first time trades of services will also be reported in the Reserve Bank of India's digital platforms that till now recorded data on software trades and goods cleared through customs authorities.

The new regulations, however, do not lay down any reporting mechanism for import of services by individuals making card payments for personal consumption, or employers and proprietors using corporate credit cards for business purpose. Irrespective of whether the purchase is done by an individual or a person on behalf of a company, the transaction is categorised as import.

The ambiguity stems from the nature of card payments, where money is transferred before banks receive the trade information -- unlike regular payments where importers give the details in standard forms which are submitted to banks before the money is remitted.

According to the RBI notification, authorised dealer banks shall enter the details of import of service on the digital platform, "as declared and submitted by the importer, within 5 days working days for receipt of documents."

"However, there is no clarity on reporting personal service imports under LRS (liberalised remittance scheme), for instance Perplexity Pro subscriptions paid by credit card, which are service imports and may also attract GST. Further, since the existing framework generally contemplates submission of documents before the payment is made, it is unclear how this requirement would operate for such card-based transactions," said Harshal Bhuta, partner at the CA firm P. R. Bhuta & Co.

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All personal purchases from overseas vendors through international credit cards are part of LRS, the window allowed by RBI to let resident individuals to spend abroad or undertake capital account transactions like purchase of stocks and properties upto $250,000 a year. While many keep a track of such payments as they consume the LRS limit, hardly anybody reports the details to banks.

The questions that have cropped up are: from now on, will individuals be responsible for submitting details - amounts, names of vendors, services purchased, and date of transactions - to banks every time they use credit card for imports? If so, how?

Leading banks have no answer, admitting that the regulations, while placing the onus on importers, are silent on how the data would be collected and in what intervals.

According to Rutvik Sanghvi, partner with a firm advising on FEMA, matters, said, "The Revised 2026 Export-Import Regulations marks a sea change. While there's a welcome move to allow set-offs and third party payments, there are gaps yet to be resolved.

For instance, credit card payment mechanisms are not directly addressed. Since export and import regulations cover personal transactions, there's no clarity on purchase of software and services meant only for personal use through cards. Will buyers have to make declarations? Especially, considering there're no thresholds provided for reporting."