EDF for Commission Income Received From Abroad

If you earn commission from a foreign principal, for example for finding buyers in India for an overseas manufacturer or arranging sales on its behalf, you are being paid in foreign exchange for a service. For FEMA purposes, treat those commission invoices as service exports to declare on your monthly EDF, and confirm the treatment with your AD bank. The bigger trap is GST: commission agency is a textbook example of an intermediary service, which often does not qualify as a zero-rated export at all.

Key takeaways

• Commission invoices raised to a foreign principal are generally declared on the EDF in the month they are dated, like other service exports. Confirm with your bank.
• Each commission invoice must be realised within 9 months of its date (12 months if invoiced in rupees).
• Purpose codes for commission are different from consulting or IT codes. Ask your bank which code it applies and check every FIRA.
• Under GST, commission agents are frequently treated as intermediaries, with the place of supply in India, which means the supply may not be an export. Get your CA's view before using an LUT.
• Commission is not merchanting trade. If you buy and sell goods yourself, different rules apply.

Who earns commission from abroad

Typical examples:

• Indenting agents who secure orders from Indian buyers for a foreign supplier of machinery, chemicals or components, and receive a percentage of each order.
• Sales representatives of a foreign software or SaaS company who bring in Indian customers.
• Sourcing agents who help a foreign buyer find Indian suppliers and earn a commission from the buyer.
• Referral partners who introduce clients to overseas service providers.
• Booking or travel agents earning commission from foreign hotels or operators.

In each case, the foreign party pays you for arranging or facilitating a transaction. That shared feature drives both the FEMA and GST analysis.

The FEMA side: declaring commission on the EDF

Under the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, service exports are declared on one EDF per month, within 30 days from the end of the month in which the invoice was raised. Commission invoices to a foreign principal generally fit this pattern. Because commission arrangements vary, ask your AD bank to confirm it expects them on your EDF before your first filing.

How commission invoices land on the form:

Worked example. Deccan Process Agencies, a Hyderabad partnership, represents a Danish valve manufacturer in India and earns 6% commission on orders it secures. In October 2026, it raised a commission statement-cum-invoice to the principal for EUR 9,360 (6% of EUR 156,000 of orders shipped in the July to September quarter). It declared that invoice on its October EDF, due 30 November 2026, with the agency agreement as the contract reference. The principal paid on 18 November; the firm collected the FIRA and matched it to the invoice.

Purpose codes: check them every time

Commission receipts have their own purpose code classifications, distinct from the IT, consulting and engineering codes most exporters use. We do not list a specific commission code here: ask your bank which code applies to your arrangement and check each FIRA. Our purpose code finder helps you shortlist possibilities before that conversation.

If a commission receipt is coded as something unrelated, such as a personal remittance, ask for a correction promptly with your invoice and agreement attached.

The GST side: the intermediary problem

This is where commission agents most often go wrong. Under GST, an "intermediary" is broadly someone who arranges or facilitates the supply of goods or services between two or more persons, without supplying those goods or services on their own account. Commission agents and indenting agents usually fit that description closely.

For intermediary services, the place of supply rules generally point to the supplier's location. If you are in India, the place of supply may be India, which fails one of the five Section 2(6) IGST conditions for an export. The practical results can be:

• your commission may be taxable in India even though it is paid in foreign currency;
• an LUT may not cover it, because it may not be a zero-rated export;
• invoices issued as "export under LUT" could be questioned later.

There have been many disputes and changes of position around intermediary services over the years, and the outcome depends on the exact arrangement. Our article on intermediary services and GST explains the background, but your CA should review your agreement before you decide how to invoice.

The key point for this article: the EDF does not change GST treatment. Declaring commission on the EDF under FEMA does not make it a zero-rated export for GST, and GST taxability does not remove the FEMA declaration.

Commission vs merchanting trade

If you buy goods from one foreign party and sell them to another without the goods entering India, that is merchanting trade, which has its own rules. A commission agent never takes title to the goods; it earns a fee. Keep your role clear in your contracts. See merchanting trade vs export of services if your arrangement blurs the line.

Practical checklist for commission agents

• Hold a signed agency or representation agreement stating your commission rate and basis.
• Raise a proper invoice (or commission statement that doubles as an invoice) for each settlement period.
• Declare it on the EDF for the month it is dated.
• Get a FIRA for each receipt and check the purpose code.
• Ask your CA whether GST is payable and whether an LUT applies.
• Track each invoice's 9-month realisation deadline; principals sometimes pay commission only after their own customers pay.

That last point matters. If your principal pays commission only after the Indian buyer settles, your invoice timing should reflect when commission is genuinely due, so the 9-month clock does not start too early. This is general information, not legal or tax advice.

Frequently asked questions

Do commission agents need to file the EDF for commission from foreign principals?

Commission paid by a foreign principal for services is generally treated as a service export to declare on the monthly EDF. Because arrangements differ, confirm with your AD bank before you file.

Is commission from a foreign company a zero-rated export under GST?

Not necessarily. Commission agents are often treated as intermediaries, and the place of supply may then be in India, so the supply may not qualify as an export. Your CA should review your agreement.

What purpose code applies to commission income?

Commission has its own purpose code classification, different from consulting or IT codes. Ask your bank which code it applies and check each FIRA for accuracy.

When should I raise the commission invoice?

When commission is due under your agreement, often after orders are shipped or paid. Raising it too early starts the 9-month realisation clock before your principal is ready to pay.

Bottom line

Commission from abroad usually belongs on your EDF, but its GST treatment needs a careful look before you assume zero-rating. Settle both questions with your bank and CA once, then follow a monthly routine. Prepare your declaration with our free EDF form generator.