Collecting from US clients by ACH into a virtual US account is convenient, but for the EDF it is just another payment route: you still declare each invoice on your monthly EDF, and the Indian bank that finally receives the money is normally your AD bank. The key is the second leg, from the virtual account to India, because that is where realisation happens and where your FIRA or payment advice comes from. Understand that leg before you rely on the route.
Key takeaways
- An ACH payment into a virtual US account is not yet money in India; realisation happens when the funds reach your Indian bank.
- Your AD bank for the EDF is normally the Indian bank where the provider delivers the funds.
- Payment evidence may come from your bank, the provider's Indian partner, or both; check your provider's current India help pages and ask your bank.
- Provider fees and conversion spreads reduce what arrives, which matters for net realisable value in Part 2B.
- ACH references are short, so set a clear invoice-numbering convention for clients to use.
How the virtual account route works
Several payment providers give Indian exporters a US account number and routing number held in their name through a partner bank in the US. Your client pays that account by ACH, which is a domestic US transfer and usually cheaper and simpler for them than an international wire. The provider then converts the dollars and sends the money to India, either into your Indian bank account directly or through an Indian partner bank.
Each provider structures this differently: who the US partner bank is, how often funds are swept to India, whether conversion happens in the US or India, and what documents you get. Those details are set by the provider and can change, so check your provider's current India help pages and its terms. Our glossary entries on virtual accounts and ACH transfers explain the terms.
The two legs, and why the second one matters
| Leg | From and to | What it means for you |
|---|---|---|
| Leg 1 | US client to your virtual US account by ACH | The client has paid, but the money is still outside India |
| Leg 2 | Virtual account to your Indian bank | The export is realised in India; payment evidence is generated |
The EDF regime cares about realisation, which must happen within 9 months from each invoice date for foreign-currency services invoices. If funds sit in the virtual account for weeks before reaching India, your realisation date is when they arrive in India, not when the client pressed send. Most providers move money promptly, but check how your account is configured, especially if you can hold balances.
Which bank is your AD bank?
For services exporters outside SEZs, the EDF goes to the AD bank, normally the Indian bank where export proceeds land. In the virtual account model, that is the Indian account that receives leg 2.
Where a provider routes funds through its own Indian partner bank before crediting your account, ask both the provider and your bank which institution will report the receipt and issue the payment evidence. Get the answer in writing. If you receive some payments by direct wire and others through a provider, you may also need to agree which bank receives which EDF.
FIRA, advice and purpose codes
Your bank needs evidence to match payments to your EDF entries, particularly for invoices above ₹10 lakh, where the invoice, payment evidence and matching instructions are needed. For invoices up to ₹10 lakh, the bank may close entries on your periodic declaration of realisation, but you should still hold evidence for each payment.
Some providers arrange a FIRA or equivalent advice through their Indian banking partner; others rely on your bank to issue one. Ask:
- Who issues the FIRA or advice for each payout, and how do I get it?
- Does it show my US client as the remitter, or the provider?
- Which purpose code is applied, and can I specify it?
- Will one payout covering several client payments be broken down by client?
A purpose code that fits your service matters. Software development, for example, would typically sit under a software code such as P0807, while consultancy might fall under P1006; confirm with your bank.
Fees, conversion and NRV
Virtual account providers usually charge a fee, a conversion spread, or both. Part 2B of the EDF asks for the invoice amount and the net realisable value. If you expect the provider's charges to reduce what you receive, reflect that in the NRV and keep the fee breakdown.
Compare the all-in cost across routes rather than the headline fee alone; our guide to forex markup shows how spreads hide inside the rate. Exchange differences between the invoice date and the payout date are normal and do not require changes to the EDF.
A worked example
Quillstone Software Pvt Ltd, a Noida firm, bills two US clients monthly. In January 2027 it raises QS/045 for USD 9,500 to a client in Chicago and QS/046 for USD 13,200 to a client in Seattle, both asking for payment by ACH to Quillstone's virtual US account, with the invoice number in the payment description.
The January EDF, due by 2 March 2027, lists both invoices in Part 2B with "Payment via ACH to virtual account" in the remarks. Both clients pay in February. The provider sweeps the funds to Quillstone's Indian current account three days later, and its Indian partner provides an advice for each payout showing the client names and a software purpose code.
QS/046 is above ₹10 lakh at Quillstone's book rate, so the finance team sends the bank the invoice, advice and a matching instruction. QS/045 goes on the quarterly realisation declaration. One snag: the Chicago client's ACH description was truncated to "QS04", so Quillstone now asks clients to put only the invoice number, nothing else, in that field.
Practical tips
- Keep a short invoice-number format that survives truncated ACH descriptions.
- Ask clients to pay each invoice separately, or to email a remittance note listing invoice numbers.
- Download provider statements monthly and reconcile them with your bank credits and invoices.
- Understand whether ACH payments can be reversed or returned in your provider's model, and what happens if they are.
- Read our guide to EDF and Skydo payments if you use a similar collection service.
If you work as an individual rather than through a business, note RBI's 7 October 2026 statement that individuals providing services abroad are not required to report, and check with your bank until FAQs are issued. This is general information, not legal or tax advice.
Frequently asked questions
Is an ACH payment into my virtual US account the same as realisation?
No. The money is still outside India at that point. Realisation happens when the funds reach your Indian bank, and that must be within 9 months from the invoice date for foreign-currency services invoices.
Which bank do I file the EDF with if I use a virtual account?
Normally the Indian bank where the provider delivers the funds. If the provider routes money through its own Indian partner bank first, ask both the provider and your bank who reports the receipt, and agree the filing bank in writing.
Will I get a FIRA for ACH payments?
That depends on the provider and your bank. Some providers arrange an advice or FIRA through an Indian partner; others leave it to your bank. Check your provider's current India help pages and ask your bank before relying on the route.
Does the provider's fee change my EDF?
It affects the net realisable value you show in Part 2B, since that should reflect what you expect to receive. The invoice amount itself stays the same.
Can one payout to India cover several invoices?
Yes, but it makes matching harder. Ask for a breakdown by client and invoice from the provider, and give your bank clear matching instructions for any invoice above ₹10 lakh.
Bottom line
US ACH through virtual accounts is a sound collection route, as long as you track the leg into India and secure proper payment evidence. Keep your declarations on schedule with our free EDF form generator.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.