Trade Policy
Write Off Export Receivable Under FEMA | Trad
Customer paid less than the invoice for a genuine reason? Don't leave the balance as an unmatched EDPMS entry. Approach your AD bank for a reduced-realisation approval under Regulation 6 — with the invoice, shipment ref, and reason documented.
Buyer paid short? The worst move is doing nothing
The customer deducts a handling fee, claims a quality discount, or simply remits less — and the invoice shows a balance that will never arrive. Many exporters leave that balance sitting as an unmatched EDPMS entry. Under FEMA 2026, live from 1 October 2026, that is the wrong play: if the customer pays less than invoice with a genuine reason, approach your AD bank for reduced-realisation approval instead of letting the entry age.
What Regulation 6 lets your AD bank do
Regulation 6 empowers your AD bank to approve a reduction in realisation — including full non-realisation — where it is satisfied with your reason and evidence. The decision sits with the bank, on your transaction and your documents. It is not automatic, and there is no fixed table of allowable deductions to hide behind.
Old caps do not govern
The old percentage-based self-write-off limits are not reproduced in Regulation 6. Do not assume the old caps still decide what you can write off — each case turns on whether the bank is satisfied.
Reduction vs extension vs small-value declaration
Pick the right route before you write to the bank. The three paths cover different situations and need different paperwork.
| Route | When to use it | What the bank needs |
|---|---|---|
| Extension | Buyer will still pay, just late — money is coming | Written request with buyer confirmation and expected collection date, before the due date lapses where possible |
| Reduction / write-off (Reg 6) | Buyer paid short for a genuine reason, or will never pay | Full request pack: invoice, shipment ref, outstanding amount, reason, supporting docs — plus written approval |
| Small-value declaration | Export up to Rs 10 lakh per shipping bill or service invoice | Declaration process per the bank's template — fastest path for qualifying bills |
The extension request anatomy — get every field right
A complete request gets answered faster. Include all seven elements every time, whether you seek an extension or a reduction:
- Invoice number and shipment reference.
- Original due date of realisation.
- Outstanding amount — exact figure and currency.
- Delay or shortfall reason in plain words.
- Supporting documents: buyer letters, deduction workings, agreements, charge advices.
- Expected collection date (for extensions) or reduced amount sought (for write-offs).
- Your written ask: extension of time or approval of reduced realisation under Regulation 6.
Applying is not approved
Sending the request changes nothing by itself. Written approval is required — treat the entry as open until the bank confirms in writing and updates EDPMS.
Evidence that satisfies a bank
Banks approve reductions they can defend on file. Match your evidence to the reason:
- Commercial deduction or discount: buyer correspondence plus the discount or deduction agreement.
- Bank and intermediary charges: charge advices showing the deducted amounts.
- Short shipment or quality claim: shipment records, inspection or claim notes, credit note.
- Full non-payment: collection attempts, buyer status, and why further pursuit is not viable.
FEMA write-off is not tax settled
A bank-approved reduction closes the FEMA question. It does not close the income-tax, GST, customs, or incentive questions — each of those regimes treats unrealised export value under its own rules. Take separate advice and keep the bank approval on file as one input, not the final answer.
Short realisation on an export bill?
Talk to trad — reduction requests, extensions, and bank coordination for exporters.
Contact us →Keep reading
Clearing small old entries fast
How the Rs 10 lakh per-bill declaration route clears EDPMS and IDPMS backlogs.
Read the cleanup guide →A note on advice
This post is general information, not legal advice. Your AD bank decides on your transaction, documents, and reasons — confirm every transaction-specific position, extension, reduction, or closure with your own AD bank in writing before acting.
Frequently asked questions
How do I write off an export receivable under FEMA 2026?
Approach your AD bank with a written reduction request: invoice number, shipment reference, original due date, outstanding amount, delay or shortfall reason, supporting documents, and expected collection date. The bank may approve the reduction — including full non-realisation — where it is satisfied, under Regulation 6 of the FEMA 2026 framework. Approval is not automatic, and applying is not the same as approved.
What is reduced realisation approval?
It is your AD bank's written acceptance that you will realise less than the invoice value for a genuine reason — for example a commercial deduction, discount, or bank charges. Once approved, the bank updates EDPMS so the balance does not sit as an unmatched outstanding entry.
Do the old percentage-based self-write-off limits still apply?
No — do not assume the old caps govern. The percentage-based self-write-off limits from the earlier regime are not reproduced in Regulation 6. Each reduction now turns on whether your AD bank is satisfied with your reason and evidence.
Does applying for a write-off mean it is approved?
No. Written approval is required. Until your AD bank confirms in writing, treat the entry as open and outstanding in EDPMS, and keep following up.
Does a FEMA write-off settle the matter for tax and customs?
No. A FEMA write-off or reduction approval is not the same as settled for income tax, GST, customs, or export incentives — those are separate questions with their own rules. Confirm each position separately.
What about small export bills up to Rs 10 lakh?
Exports up to Rs 10 lakh per shipping bill or service invoice can be closed through a simpler declaration process. Larger bills, or cases needing a formal reduction decision, go through the AD bank approval route described here.
What happens if I just leave the shortfall unmatched in EDPMS?
The balance stays outstanding against your name, the bank must follow up, and aged outstandings can restrict future shipments to advance or LC terms. A documented extension or reduction request is cheaper than an unexplained open entry.