Do we need to get FIRC for AdSense payments in India
Did you receive a notice from bank regarding Foreign Income Remittance Certificate to receive your AdSense wire transfer? Learn the rules regarding FIRC for receiving AdSense and other online income.
Starting from last month, Google has started making AdSense payments through wire transfer. I already received my first wire transfer payment last month. This month, Google paid many more publishers through wire transfer and eventually all Indian publishers are expected to be upgraded to wire transfer payment methods.
After upgraded to the new payment method, many publishers have started experiencing difficulties in receiving the payments to their bank account. While the wire transfer was a smooth process for most publishers, a few of them are receiving questions from the bank and experiencing delays in receiving the money in the bank.Do we need FIRC to receive AdSense income?
Some banks have been asking publishers if they need an FIRC for their income. Let us try to understand what is FIRC and do we need it.
FIRC stands for "Foreign Income Remittance Certificate". This is a certificate issued by the bank to the remittee (Payee/AdSense publisher), when they receive any remittance from abroad. This document will include the purpose code (a code that is mandatory to be specified to receive foreign fund).
When you receive AdSense income, you have to provide the purpose code "P1007", which includes "Advertising, trade fair, market research and public opinion polling services" according to RBI regulations. Learn more about the purpose code for Adsense income.
The FIRC document issued by the bank will include the purpose code you provided while receiving the foreign income. Is it mandatory to have FIRC?
FIRC is an optional document and most banks may issue it only if you make a request. Unless you have a current account and receive the payments through a bank account in the name of a registered business, it is a good idea to get the FIRC from the bank and save it for your records. If you receive good income from AdSense and blogging, income tax authorities may knock on your door later and ask unpleasant questions about your income. So, make sure you include the income while filing income tax and keep the FIRC documents ready in case they ask you questions about your foreign revenue.
Read do we need to pay income taxes for AdSense income.
A more important use of FIRC is, you may need to produce this document to the "Enforcement Directorate authorities", in case they come tracing your foreign transactions. Due to the abuse of foreign fund for various illegal activities like militancy and for converting black money to white, enforcement authorities trace foreign remittance and occasionally ask for source of such funds. Having proper documentation would save you from many legal hassles in case you are questioned by enforcement authorities.
Additionally, since AdSense income has service tax exception, it is a good idea to get the FIRC with the appropriate purpose code and save it as proof of service tax exception.
Keeping FIRC documents have other uses as well. In case you go abroad for studies or job in future, you may be able to convert your income back to foreign currency. At that time, you may want to show proof that your income came from abroad and the FIRC document is what you need to show.Fees for FIRC
Some banks charge a fees to issue an FIRC document. HDFC bank issues FIRC documents by default to the current account holders and charges Rs 200. Charges may vary according to the bank and also based on the type of your account, your relation with your bank etc.
Conclusion: If you are using a personal bank account and do not have a registered business to run your blogs, I strongly recommend you receive the FIRC document from the bank and keep it for your records to show proof of your foreign income.
Here is a sample document to apply for FIRC document, which you can fill with correct details and submit to your bank:
Application to get FIRC document
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Thank you Tony, helpful.