Taxation & Compliance
Posted on Aug 21, 2025
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Imagine this: If you are working abroad, and you are sending a part of your income every month back home. It could be for supporting your family expenses, supporting your parents, or simply adding to family savings.
While this looks like a simple transfer of sending money to India, every international payment entering India needs to be tagged with a purpose code.
Purpose code is used as a classification, required by the Reserve Bank of India, to identify why the money is being sent to India.
There are quite a number of purpose codes for different purposes, amongst which is one of the most widely used purpose codes 1301, also referred to as P1301. This code is especially meant for the NRIs sending money to their families in India for savings and maintenance.
If you have ever wondered why your bank or payment providers ask for a purpose code while sending money home, or what exactly a purpose code is while making any international transaction, or a purpose code for family maintenance and savings, this blog will clear all your doubts.
What is a Purpose Code?
A purpose code is a unique classification system, introduced by the RBI, to regulate and monitor international payments. Every international payment, whether the money is being sent out of India (outward remittance) or received in India (inward remittance), it must carry a valid purpose code.
Why are purpose codes important?
Purpose codes ensure compliance with the Foreign Exchange Management Act (FEMA).
Purpose codes help RBI track the nature of foreign inflows and outflows for foreign policy and regulatory purposes.
Purpose code helps in distinguishing between personal, business, investment, and other types of international transactions.
Purpose codes are broadly categorised into areas such as:
Personal transactions like education, family savings, travel, etc.
Business transactions like payments made for imports, exports, or professional services.
Investments like purchase of foreign shares or properties.
If you want to explore a list of purpose codes for inward remittance, then you can check out our detailed blog on- List of purpose codes for inward remittance.
What does the purpose code P1301 mean?
Purpose code P1301 is for inward remittance from NRIs to family and friends for maintenance and savings.
In simpler words, whenever any NRI is sending money to India to help their family members, the transfer is reported under Purpose code 1301.
For example- A member of a family sends $1000 monthly to their family members in India to support their monthly expenses.
These kinds of transactions fall under purpose code P1301. It is not meant for any business transaction or any transaction related to investments or freelancing income, it is strictly personal remittances made by the NRIs for their family and friends' maintenance and savings.
Why is purpose code P1301 important?
The correct use of purpose code p1301 plays a big role in making international payments smooth. Here is why it matters:
Regulatory compliance: The RBI has made it mandatory that all the inward and outward remittances made from India, must be tagged under the correct purpose code. Using the wrong purpose code can lead to delays and compliance issues.
Smooth process: Entering the right purpose code makes the whole process of transferring international payments smooth. It reduces the chance of delays and queries.
Tax clarity: Money received under purpose code P1301 is categorised under family support, and it is not taxable for the recipient in India. This distinction is important for financial transparency.
If you choose the wrong purpose code, the transaction might get flagged, delayed, or in rare cases, it might also get rejected.
How do you use purpose code P1301?
When making the transfer to India, the sender (NRI) selects the purpose code through their bank or payment service provider. If you are making the payment to your family for maintenance or savings, the right option is to select purpose code P1301.
Sometimes, the receiving bank in India may also request confirmation of the purpose code. To avoid confusion and delay, it is best to always be clear about the intent of the payment and select P1301 when sending money for family support.
Infinity: Receive International Payments Seamlessly
At Infinity, we understand how important it is to receive international payments seamlessly without facing the hassle of compliance related to purpose codes. That is why our platform ensures that receiving international payments in India is smooth, hassle-free, and fully compliant with RBI guidelines.
By automatically tagging payments with the correct purpose code, for example, Purpose code P1007, which is used for ads, research, and trade fairs, or purpose code P0802, which is used for IT services and software consultancy, Infinity eliminates the stress of compliance issues. We provide:
Fastest settlement: You receive money within 24 hours, ensuring funds are received without any delays.
Transparent pricing: We charge a flat fee of 0.5%(Inclusive of all), without any other hidden charges. This ensures transparency and no surprise deductions.
Multi-currency account: Infinity provides you with a multi-currency account. This ensures receiving payments from across the globe in 50+ currencies.
End-to-end compliance: Infinity ensures alignment with RBI and FEMA regulations. We provide you with free and instant FIRA after every transaction is made.
With Infinity, you can receive international payments hassle-free, without worrying about compliance and regulations.
FAQs
What is the purpose code for making an international transfer to family for expenses and savings?
Purpose code P1301 is used for making international transfers to family for maintenance and saving purposes.
Is the purpose code for family maintenance and savings the same as P1301?
Yes, Purpose code for family maintenance and savings is another way of referring to P1301.
Can we select P1301 for freelancing payments?
No, the funds transferred under P1301 are considered for family expenses and savings. For freelancing, different payments have different purpose codes.
