Published on: 2025-12-26
Form A2 is the standard application-cum-declaration Indian banks use when a customer buys foreign exchange or sends money abroad. It captures the remitter’s identity, the remittance purpose, and key compliance declarations so the bank can process the transaction under India’s foreign exchange rules.
Indian banks ask for Form A2 because cross-border payments are regulated under the Foreign Exchange Management Act, 1999 (FEMA), and banks must satisfy themselves that a transaction is genuine and permitted.
Reserve Bank of India (RBI) instructions also require Form A2 collection across outward remittance workflows, including digital channels, which is why it appears even for routine transfers such as overseas education fees or family support.
Form A2 functions as a written declaration from the customer about why foreign exchange is being drawn and how the transaction fits within FEMA rules.
Banks, acting as Authorised Dealers (ADs), are expected to obtain declarations and information that reasonably satisfy them the remittance is not meant to contravene FEMA.
RBI has directed that ADs should obtain Form A2 in physical or digital form for all cross-border remittances irrespective of transaction value. This single change explains why many customers now see Form A2 even for smaller outward transfers that earlier used simpler documentation.
Banks must classify remittances using purpose codes (Balance of Payments reporting categories). Form A2 is where the purpose is declared and mapped to the correct code, which is essential for consistent reporting across banks.
Banks are required to follow RBI’s KYC framework and monitor transactions based on customer risk. Form A2 supports this by forcing a clear statement of purpose and funding source, which can be matched against the customer profile and supporting documents. [1]
For many resident individual remittances, banks must also consider Tax Collected at Source (TCS) under section 206C(1G) of the Income-tax Act, 1961. Form A2 helps the bank apply the correct treatment by capturing purpose (education, medical, other), and linking it to thresholds and exemptions introduced by later Finance Acts.
Form A2 is titled “Application Cum Declaration” and is used for drawal of foreign exchange. In plain terms, it is the customer’s request plus a compliance declaration that the information is correct and the remittance is permitted.
The RBI format includes applicant details, remittance details, and declarations for the authorised dealer to rely on while processing the transaction. [2]
Banks use Form A2 to standardize outward remittance processing across channels: branch, online banking, and remittance platforms. RBI has explicitly allowed online submission of Form A2 (and related documents where needed), removing earlier limits for online Form A2-based remittances.
A common confusion is treating Form A2 and the Liberalised Remittance Scheme (LRS) declaration as the same document. LRS is a scheme that allows resident individuals (including minors) to remit up to $250,000 per financial year for permitted current and capital account transactions, subject to conditions.
Banks often take Form A2 plus an LRS-specific declaration (sometimes combined into one form in bank formats). [3]
Form A2 is commonly requested whenever a customer initiates a cross-border payment or purchase of foreign exchange through a bank or authorised entity.
These are the most frequent triggers:
International wire transfers (SWIFT) from an Indian bank account
Overseas education payments (tuition, hostel, living expenses)
Medical treatment abroad (treatment costs, travel, attendant expenses)
Family maintenance / gifts / donations to people abroad
Business travel and other travel-related forex
Payments for services to overseas vendors (where permitted)
Purpose categories and travel/education/medical purpose codes are standardized in RBI’s purpose code lists used by banks.
When a resident individual remits under LRS, the bank needs to track the yearly limit, the purpose, and whether the remittance falls under a permitted category.
RBI’s LRS FAQs also list prohibited items under the scheme and clarify eligibility (for example, LRS is not available to corporates, partnership firms, HUFs, trusts, and similar entities).
Form A2 looks simple, but each section answers a compliance question a bank must resolve before it releases foreign exchange.
A useful way to read the form is “field → bank’s reason.”
| Form A2 Section | What The Bank Is Verifying |
|---|---|
| Applicant name, address, account details | Identity link to the funding account and customer profile |
| Amount and currency | Transaction size, conversion, and reporting classification |
| Beneficiary and destination | Who receives funds and which jurisdiction is involved |
| Purpose of remittance | FEMA permissibility, purpose code selection, and reporting |
| Declarations | Customer attestation to reduce mis-declaration risk |
| PAN / identifiers (as requested) | Regulatory and tax requirements tied to the remittance |
Bank versions may add fields for intermediary bank details, SWIFT code, relationship with beneficiary, and “source of funds” explanation, especially for larger amounts or higher-risk corridors.
Banks do not treat “purpose” as a casual description. For outward remittance reporting, purpose must map to a formal RBI purpose code.
Below are illustrative examples commonly seen in retail remittances:
| Purpose | Example Purpose Code (RBI Lists) |
|---|---|
| Travel for education | S0305 |
| Travel for medical treatment | S0304 |
| Business travel | S0301 |
| Pilgrimage travel | S0303 |
| Other travel (incl. international credit cards, as classified) | S0306 |
The exact code set used can vary by reporting format and bank annexures, but RBI purpose-code lists clearly define travel and related categories, which is why banks insist the Form A2 purpose matches the supporting documents.
Banks typically run Form A2 through a short compliance checklist. The customer sees “document collection,” but internally it is a risk and eligibility screen.
Banks match Form A2 details with KYC records, transaction history, and the customer’s expected profile (student fees vs. salary profile, for example). RBI’s KYC directions require a risk-based approach and ongoing monitoring, which is why additional questions can appear even when the form is filled correctly.
For resident individuals using LRS, banks may check cumulative remittances against the LRS ceiling, confirm the category is permitted, and verify that the remittance does not fall under prohibited uses. RBI’s LRS framework is explicit about the annual limit and scheme scope.
Banks can accept Form A2 through online channels and may allow remittances based on online/physical submission, subject to FEMA section 10(5) compliance and internal board-approved guidelines. This is one reason Form A2 has become a routine digital step in outward remittance journeys.
Authorised dealers may need to collect TCS on certain remittances under LRS, depending on the purpose and annual thresholds.
Finance Act changes have adjusted the threshold for TCS collection under section 206C(1G) to ₹10 lakh and also provided that authorised dealers should not collect TCS on remittances in foreign currency from an education loan covered under section 80E(3)(b). [4]
Rates and applicability depend on the category (education, medical, other) and the structure laid down in law and clarifications. Finance Act, 2023 amended section 206C(1G) by substituting the rate to 20% for covered cases, with carve-outs for education and medical treatment within the statute’s framework. [5]
Some outward remittances also require tax documentation under the Income-tax Rules, 1962 (Rule 37BB). The rule provides that Form 15CA may need to be furnished electronically and a signed printout submitted to the authorised dealer before remittance, and it also outlines the electronic filing of Form 15CB and quarterly statements by authorised dealers. [6]
A practical way to think about it:
Form A2 = FEMA/forex declaration for the bank to release foreign exchange
Form 15CA/15CB (when applicable) = income-tax compliance for payments to non-residents
Form A2 errors usually fall into “wrong purpose” or “missing linkage” between purpose and documents. A clean approach helps.
Use the same spelling and address format as your bank KYC.
The beneficiary name should match the overseas bank account name. Add the correct country and bank identifiers.
Do not reverse this. If the purpose is “overseas education,” align it to the education-related travel/education category used by the bank’s purpose code list.
If your bank asks for both, keep numbers consistent with the remittance request.
Examples include university invoice, admission letter, hospital estimate, travel booking, gift declaration, or agreement for services.
If a declaration asks whether the remittance is under LRS, answer consistently with the transaction type.
RBI permits physical or digital Form A2 collection for cross-border remittances.
Delays are often preventable. The most common causes are:
Purpose chosen does not match the documents (education claimed, but no fee demand)
Beneficiary name mismatch with overseas account records
Missing PAN or inconsistent identifiers where the bank requires them for the transaction type
Vague purpose like “personal” instead of a defined category with proof
LRS tracking issues when remittances are split across banks
Tax documents (15CA/15CB) missing when the payment is to a non-resident and triggers Rule 37BB workflows
RBI directions require authorised dealers to obtain Form A2 in physical or digital form for all cross-border remittances, irrespective of value. Banks may still ask for additional forms depending on purpose, amount, and whether tax documentation is required.
Form A2 is the declaration used to buy/remit foreign exchange. LRS is the RBI scheme that allows resident individuals to remit up to $250,000 per financial year for permitted transactions. Many banks collect both Form A2 and an LRS declaration.
Yes, banks typically ask for Form A2 for outward remittance for education-related payments. The bank will also classify the transaction with an appropriate purpose code and may ask for fee demand documents and admission proof for validation.
It helps. Form A2 captures purpose and basic transaction facts, which banks use along with internal LRS tracking to apply TCS rules. Finance Act changes raised the TCS threshold to ₹10 lakh and provided an education-loan-linked exemption for certain remittances.
No. Form A2 is for FEMA and banking compliance to release foreign exchange. Form 15CA/15CB relates to income-tax compliance for payments to non-residents under Rule 37BB, and banks may require it in addition to Form A2 for certain remittances.
Form A2 (A2 Form) is the backbone document behind most outward remittances from India because it turns a cross-border transfer into a clearly declared, purpose-tagged, and auditable transaction. That structure helps banks meet FEMA duties, apply RBI reporting standards, and maintain a consistent compliance trail.
The practical takeaway is simple: choose the correct purpose, align it to the right purpose code, and keep supporting documents ready. As tax thresholds and remittance workflows evolve, Form A2 remains the form banks rely on to process foreign exchange safely and consistently.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
[1] https://www.rbi.org.in/commonman/English/scripts/notification.aspx?id=2607
[2] https://www.rbi.org.in/upload/ECM/pdfs/a2.pdf
[3] https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=1834
[4] https://incometaxindia.gov.in/Lists/Latest%20News/Attachments/708/Highlights-to-Finance-Act-2025.pdf
[5] https://incometaxindia.gov.in/Documents/Act/Finance-Act-2023.pdf
[6] https://incometaxindia.gov.in/Rules/Income-Tax%20Rules/103120000000007406.htm
