Expert opinion · Exports

Export realisation: the clock, the extension and the write-off

The day the goods leave, a clock starts on the export proceeds. Knowing where every Shipping Bill stands on that clock is the difference between a routine extension and a caution-list letter.

FxLayer compliance deskFEMA, RBI reporting and cross-border tax 6 min read Updated
  1. ShippedShipping Bill date
  2. LodgedDocuments with the bank
  3. Part paidFirst remittance
  4. Follow upAsk for an extension
  5. DueRealise or regularise

Nine months from the date of export

One Shipping Bill, from export to due date

Key points

  • Export value should generally be realised within nine months of the date of export.
  • Ask your AD bank for an extension before the period ends, with reasons and evidence.
  • Write-offs are allowed within limits tied to the previous year's realisations, with incentives surrendered.
  • Goods should normally be shipped within one year of receiving an export advance.

The realisation period

Under the FEMA rules for exports, the full value of goods and software exported should be realised and repatriated within nine months of the date of export. RBI has varied the period for particular exporters and situations, so confirm the current position with your AD bank.

Asking for an extension

If the buyer will pay later than the period allows, ask the AD bank for an extension before the due date. The request should explain why payment is delayed, show that you have followed up with the buyer and confirm the amount still expected. Banks can grant extensions within the limits RBI delegates to them, usually in steps, and may ask for a declaration on your total outstanding export bills.

Reductions and write-offs

When the buyer pays less than the invoice, because of quality claims, discounts or charges, the bank can approve a reduction in invoice value with supporting documents. When part of the value will never be received, it can be written off: by the exporter itself within a small percentage of the previous year's realisations, or by the AD bank within a higher limit, subject to conditions such as surrendering export incentives on the unrealised part.

Export advances

An advance received from a buyer (purpose P0103) creates an obligation to ship. Goods should normally be shipped within one year of receiving the advance, and the advance is then adjusted against the Shipping Bill. If shipment is not possible, the advance is refunded to the buyer through the bank.

Keeping ahead of the clock

FxLayer shows the days left on every Shipping Bill and export advance, groups them by due date and prepares the extension request and the closure letter from the record.

Questions

No. It runs from the date of export, which is generally the Shipping Bill date.
Document the insolvency and any recovery steps, claim on export credit insurance if you hold it, and ask the bank about write-off. Keep the bank informed before the due date.

This article is general information on Indian foreign exchange and tax rules as they stood on the date shown. It is not legal or tax advice. Rules and limits change; confirm the current position with your AD bank, the relevant RBI Master Direction or your adviser before acting.

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