What is Virtual Account?
A virtual account gives you local banking details abroad without opening a real bank account there. A platform or bank issues you, say, a US account number and routing number, a UK sort code and account number, or a European IBAN. Your client pays to those details using its normal local method, an ACH transfer in the US or a SEPA transfer in Europe, as though paying a domestic supplier. The provider then forwards the money to your Indian bank account, usually after converting it to rupees.
For the client, this is often cheaper and simpler than sending an international wire. For you, it can mean fewer intermediary deductions and faster receipt.
Why it matters for exporters
A virtual account changes the route of the money but not your obligations. The service is still an export, and the invoice still belongs on your EDF in Part 2B, with the client as the service recipient and the invoice currency and amount. Realisation happens when the money is received in India in a form your AD bank can match.
Because the inward credit in India comes from the provider rather than directly from your client, the remitter name on your bank's record may be the provider's. Keep the provider's statements and payment advices linking each credit to the client and invoice, and ask your bank how it wants these presented when closing EDPMS entries. Check that the provider is properly authorised for cross-border collections.
Example
Clearwave Analytics Pvt Ltd gets a US virtual account from its payment provider. A Chicago client pays USD 7,500 by ACH to those details. Three working days later, Clearwave's current account in India receives ₹6,26,000 with an advice naming the client and invoice CW/091. Clearwave already listed CW/091 on its monthly EDF, so matching is straightforward.
Common confusion
A virtual account is not an account in your name at a foreign bank, and it is not an EEFC account. Read EDF when you get paid through US ACH via virtual accounts.