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Lesson 23 of 42 · Part H · Level 2 · Explained

Software and freelance exports by internet

Software and data services sent on a disk or flash drive follow the EXP procedure; those sent by internet do not. How banks credit payments to firms and individual freelancers who serve foreign clients online, with Form-C, the USD 20,000 rule and the other checks.

H-1H-2

In Lesson 22, Digital trade finance and its safeguards, we saw banks accept electronic invoices with care, and we learned that Part G closes by keeping the LC alive. Every export so far has been something you could drop on your foot: T-shirts, bags, machinery. Part H is different. It is about exports you cannot touch.

Meet two new exporters. Nabila owns a software firm in Dhaka. You may remember her from the import room, where she bought software licences from abroad by download. Now her firm sells software and IT services to foreign clients. And Enzo is a young freelance graphic designer in Mirpur. He designs logos and web pages for clients abroad, sitting at home with a laptop and a cup of cha, and his clients pay him by inward remittance.

Both of them walk into a bank's AD branch on the same morning with the same worried question for Eliana, the export desk officer: "Nothing of ours goes through a port. Do we still need an EXP form? And how do we get paid properly?"

Eliana has grown more confident since her first days on the desk, but she has invited a guest for this one: Rozy, a development economist at a policy research institute. Rozy smiles. "Every logo Enzo sends abroad earns foreign exchange for Bangladesh, just like a carton of T-shirts. The country needs to count it correctly. Let's see what Part H says." This lesson covers software and data services sent by internet (H-1) and services outsourced to firms and individuals (H-2).

Para H-1

Export of software and data entry/processing services

In plain words

H-1 is about foreign exchange earned from exporting computer software and data entry/data processing services through the internet or other electronic media. ADs must realise these earnings and report them to Bangladesh Bank. How they do it depends on one simple question: does the export have a physical form or not?

(a) Physical form

Sometimes software or data work is sent out on a compact disk, flash drive, tape and the like. Then it is treated just like a merchandise export. The EXP procedure described in paragraph 12, Part-A of the circular must be followed. In other words, if you can put it in a courier envelope, it gets an EXP form.

(b) Non-physical form

When the export goes by internet or other electronic media, the EXP procedure does not apply. To collect the proceeds of these exports, ADs and exporters must follow the instructions in this Part (Part H) and in Part-I of the circular. H-1 only points to Part-I; the details are there, not here.

A handy test: think of a song. Sold on a CD in a shop, it is a physical thing. Streamed on your phone, it is not. The rules for software follow the same split: the medium decides the procedure, not the product.

At the desk

Nabila's firm has two orders this month. For a client in Malaysia, it is sending a finished program on flash drives by courier; for a client in Canada, it is uploading the same kind of program to the client's server. Eliana explains that the flash drive shipment follows the EXP procedure in paragraph 12, Part-A, while the upload needs no EXP form, and its proceeds are collected under Part H and Part-I. Rozy nods. "Same product, two roads. The road decides the paperwork."

Key words
EXP form
The export declaration form. Every export, unless exempt, must have one.
Services
Work done for someone, rather than a physical product. For example, software, transport or teaching.
Non-physical export
An export sent by internet or other electronic media, with no disk, drive or other physical carrier. Under H-1, the EXP procedure does not apply to it.
Data entry/data processing services
Work such as typing, sorting, cleaning or processing data for a client, which H-1 treats like software exports.
Read the rule as written (Para H-1)

Foreign exchange earnings from export of computer software and data entry/data processing services through internet or other electronic media shall be realized and reported to Bangladesh Bank by ADs as per following counts:

(a) Where export is undertaken in physical form: As in the case of merchandise exports, EXP procedure as described in paragraph 12, Part-A of this circular shall be followed where export is undertaken in physical form, that is, where computer software and data entry/data processing services are exported in compact disk, flash drive, tape, etc.

(b) Where export is undertaken in non-physical form: EXP procedure will not be applicable for export undertaken in non-physical form such as internet or other electronic media. For collection of proceeds against exports in non-physical forms, instructions mentioned in this Part and Part-I shall have to be followed by ADs and exporters concerned.

Source: Bangladesh Bank, FEPD-1 Circular No. 26, 30 July 2026, Part H, paragraph 1 (page 32). The original circular is the authority.

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Para H-2

Business process outsourcing

In plain words

H-2 is about business process outsourcing: a non-resident hands some work to someone in Bangladesh, who does it and delivers it through the internet. H-2 says that besides firms and companies, individuals may also provide these services. That is where freelancers like Enzo come in.

Payment is normally due when the service is delivered, and there may be no documents to collect, unlike a shipment. So ADs are free to credit the service exporter's account in local currency (Taka), after keeping the allowed share in foreign currency in the exporter's ERQ account. The conditions are:

(a) Check the deal. From documents such as e-mail communication and the remittance message, the AD must be satisfied that the money came from the non-resident customer who received the service under a specific arrangement.

(b) Check the person. The AD must ensure that individual beneficiaries have the capacity to provide the service.

(c) Form-C. The AD encashes the remittance on receipt of an online Form-C (Appendix-11) filled electronically by the individual beneficiary. For ICT-related services, a separate Form-C (ICT) (Appendix-12) is used, so the purpose is coded easily and reported to Bangladesh Bank; ADs must follow the instructions written in the Form when reporting these. But: an inward remittance of up to USD 20,000 or equivalent against service exports may be credited without a Form-C. The AD then judges the transaction genuine from the remittance message and, if information is missing, e-mails the beneficiary to ask the purpose.

(d) Secure channel. ADs must have secured electronic channels for Form-C under internet banking, and act only after being satisfied with the electronic Form-C information received through those authenticated channels. After acting, the AD prints the Form-C and gets it signed within 30 days, unless it came automatically through a secure designated 'app'. The electronic Form-C data must be kept. If the beneficiary banks with a different AD, the receiving AD must transfer the money immediately through the 'FC Clearing BD-RTGS System'.

(e) Taxes: deduct applicable taxes, if any.

(f) Due diligence under foreign exchange rules, AML/CFT standards and other laws.

(g) Records must be kept and reported in the monthly schedules/statement to Bangladesh Bank.

H-2 doesn't state the ERQ share, a tax rate or what goes in the monthly statements. Note: Part L of the same circular (L-6, Lesson 33) says Form-C and Form-C (ICT) stand discontinued, and that until banks' secure digital interfaces are ready, the purpose and supporting information are collected through banks' existing digital channels. The original circular is always the final word.

At the desk

Enzo receives USD 1,200 from a client in Australia for a logo, with a remittance message that says 'logo design fee'. Eliana sees that the amount is within USD 20,000, so she can credit it without a Form-C, after keeping the ERQ share in foreign currency and crediting the rest in Taka, less any applicable tax. Later a payment of USD 22,000 arrives for a full website design, with a blank message. As it is above USD 20,000, the no-Form-C route is closed, so she asks Enzo to fill in the online Form-C (ICT) through the bank's secure channel, which also records its purpose. Rozy says, "That little purpose code is how the country knows its designers earned this money. Good data starts at your desk."

Key words
Business process outsourcing
When a client abroad hands a piece of work to a firm or person in Bangladesh, who does it and delivers it, often through the internet.
ERQ
Exporters' Retention Quota: the share of export earnings an exporter may keep in foreign currency, in an ERQ account.
Form-C
The declaration form (Appendix-11) that the beneficiary of an inward remittance fills in online; for ICT-related services, a separate Form-C (ICT) (Appendix-12) is used.
Inward remittance
Money sent into Bangladesh from abroad to a person or firm here, such as a foreign client's payment to a freelancer.
Read the rule as written (Para H-2)

Besides firms/companies, individuals may also provide services outsourced by non-residents through internet. The payment against the services is normally due on delivery of the services and it may not necessarily require documents for collection of export proceeds. In this case, ADs are free to credit to the account of the relevant service exporter in equivalent local currency after retention of foreign currency in ERQ account maintained in the name of the exporter subject to observance of the following terms and conditions:

(a) ADs shall satisfy themselves on examination of the relevant documents (such as e-mail communication) and the message relating to the inward remittance that the payment has been received from the respective non-resident customers to whom services have been delivered in accordance with specific arrangements;

(b) ADs shall ensure that the individual beneficiaries have necessary capacities to provide the underlying services;

(c) ADs shall encash the inward remittance on receipt of online Form-C (as per Appendix-

11) duly filled through electronic means from the individual beneficiaries. To mention, separate Form-C (ICT) (as per Appendix-12) shall be used for reporting inward remittance on account of ICT related services for easy codification of the purpose and usual report to Bangladesh Bank in relevant statement/schedule and online reporting module. ADs are instructed to adhere to the instructions enumerated in the Form while reporting inward remittances on account of ICT related services. However, inward remittance up to USD 20,000 (Twenty thousand) or equivalent against service exports may be credited in the respective accounts of service exporters without obtaining declaration on Form-C. In this context, ADs shall satisfy themselves of the bonafide of the transactions based on the notation of the relevant message. In case of non-availability of required information, ADs shall contact the beneficiaries through e-mail about the purpose of transactions;

(d) ADs shall have secured electronic communication channels for Form-C under internet banking network, with customers. ADs shall execute transactions after being satisfied with the electronic information received through authenticated channels regarding Form-C. Afterwards, ADs shall take a printout of Form-C and get it signed by beneficiaries within 30 days for preservation. Signature will not be required if Form-C is received automatically through designated 'app' having appropriate security/protection measures. ADs shall, however, preserve information contained in electronic Form-C. In case of inward remittances received favoring beneficiaries maintaining accounts with different ADs, remittance receiving ADs are advised to transfer the same immediately to relevant ADs through 'FC Clearing BD-RTGS System';

(e) ADs shall ensure deduction of applicable taxes, if any;

(f) ADs shall exercise due diligence in respect of the transactions and comply with foreign exchange regulations, AML/CFT standards and other relevant laws/regulations in force; and

(g) ADs shall keep records in support of the transactions and report the same in relevant monthly schedules/statement to Bangladesh Bank.

Source: Bangladesh Bank, FEPD-1 Circular No. 26, 30 July 2026, Part H, paragraph 2 (page 32). The original circular is the authority.

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Putting it together

So far: software and data entry/processing services exported on a disk, flash drive or tape follow the EXP procedure in paragraph 12, Part-A, while those sent by internet or other electronic media need no EXP form, and their proceeds are collected under Part H and Part-I. Under H-2, both firms and individuals may export outsourced services, and ADs may credit their payments in Taka after the ERQ retention, as long as they check the deal and the person, take an online Form-C or Form-C (ICT) (except for inward remittances up to USD 20,000), use secure channels, deduct any applicable tax, apply due diligence and AML/CFT checks, and keep records and report them to Bangladesh Bank.

Next: Lesson 24, Other service exports, deadlines and money kept abroad.

Check yourself

30 questions, in 3 sets of up to 10. Nobody sees your answers but you.

Set 1 of 3

1. Which exports does H-1 deal with?
2. Under H-1(a), which procedure applies when software is exported on a compact disk or flash drive?
3. Which of these is a 'physical form' export under H-1?
4. Under H-1(b), which instructions must ADs and exporters follow to collect proceeds of non-physical exports?
5. Who must realise and report the earnings covered by H-1 to Bangladesh Bank?
6. True or false: under H-1, the EXP procedure applies to software exported through the internet.
7. True or false: under H-1, data processing services exported on a flash drive are treated like merchandise exports for the EXP procedure.
8. Nabila's firm sends a finished program to a client in Malaysia on flash drives by courier. What does Eliana tell her?
9. A data entry firm uploads its finished work to a client's cloud folder abroad and asks Eliana for an EXP form. What is the right reply?
10. Under H-2, who may provide services outsourced by non-residents through the internet?

Set 2 of 3

11. According to H-2, when is payment for these services normally due?
12. Under H-2, in which currency may ADs credit the service exporter's account, after the ERQ retention?
13. Under H-2(a), which documents does the circular give as an example for checking that the payment came from the client who received the service?
14. Which appendix contains the online Form-C under H-2(c)?
15. Why does H-2(c) require a separate Form-C (ICT) for ICT-related services?
16. Up to what amount may an inward remittance against service exports be credited without a Form-C declaration?
17. Within how many days must the AD get the printed Form-C signed by the beneficiary under H-2(d)?
18. Through which system must a receiving AD transfer a remittance meant for a beneficiary who banks with another AD?
19. Which of these is NOT one of the H-2 conditions for ADs?
20. Eliana notices that a freelancer's account receives frequent payments from many unrelated senders abroad, in a pattern that looks odd. Beyond Form-C, which H-2 duty applies most directly?

Set 3 of 3

21. True or false: under H-2, a printed Form-C must be signed by the beneficiary even if it was received automatically through a designated 'app' with appropriate security.
22. True or false: under H-2(d), ADs must preserve the information contained in the electronic Form-C.
23. True or false: H-2 says only companies, not individuals, may receive payments for outsourced services through the internet.
24. Enzo receives USD 1,200 for a logo, and the remittance message says 'logo design fee'. Does Eliana need a Form-C before crediting it?
25. A payment of USD 900 arrives for Enzo with no purpose stated in the message. What should Eliana do under H-2(c)?
26. Nabila's firm receives a payment for software development services above USD 20,000. Under H-2(c), which form is used so the purpose is coded correctly?
27. A remittance for Enzo arrives at Eliana's bank, but Enzo's account is with another AD. What must Eliana's bank do?
28. A man who says he cannot use a computer starts receiving large payments described as 'web development'. Which H-2 condition should make Eliana look closer?
29. Eliana acted on an online Form-C from a customer two weeks ago through the bank's secure internet banking channel, but no 'app' was used. Under H-2(d), what still needs to be done?
30. At month end, Eliana's branch must show Bangladesh Bank its freelance and outsourcing receipts. Which H-2 condition covers this?
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