What Happens When Export Proceeds Are Not Realised Within the Deadline?

Export proceeds not realised means the full export value has not reached India within the period FEMA allows. From 1 October 2026 that period is nine months, or twelve months for exports invoiced or settled in rupees, under Regulation 5(1).

• Full value: The exporter must realise and repatriate the full export value, or a reduced value the AD bank has allowed, within the set period (Regulation 5(1)).
• Services: The nine months run from the date of the invoice (Regulation 5(1)(a)).
• Goods: The nine months run from the date of shipment, or from the date of sale for goods sent to a warehouse abroad (Regulation 5(1)(a) and (b)).
• Rupee trade: Exports invoiced or settled in Indian rupees get twelve months (first proviso to Regulation 5(1)).
• Set-off: Realisation includes a set-off of export receivables against import payables that the AD bank has allowed (Regulations 5(1) and 7).
• EDPMS entry: Each export stays as an open entry in EDPMS until the AD bank marks it off after confirming realisation (Regulation 18(1)(g)).

An unpaid export is therefore a FEMA compliance issue for the exporter and a follow-up item for the AD bank, even when the buyer is the one at fault. For the timelines in detail, see export realisation period.

Any exporter of goods or services whose buyer has not paid within the realisation period is affected. The 2026 regulations treat software as a service and use one framework for goods, software and services, so freelancers and large exporters follow the same rules (Regulation 2(1)).

You deal with unrealised export proceeds through your AD bank. The bank can extend the time, allow a reduction in export value, allow a set-off, or close small entries on your declaration, if it is satisfied with the reasons you give.

1. Check which invoices or shipping bills are still open in EDPMS. Your AD bank must monitor open entries and follow up with you (Regulation 18(1)(f)). See how to check EDPMS outstanding.
2. Work out the due date for each open entry: nine months from invoice or shipment, or twelve months for rupee trade (Regulation 5(1)).
3. Gather evidence of the delay, such as emails with the buyer, payment reminders, dispute records or proof of the buyer's insolvency.
4. If payment is still expected, ask the AD bank for an extension before the due date, citing reasons for the delay (second proviso to Regulation 5(1)).
5. If the buyer has paid less or will not pay, ask the AD bank to allow a reduction in export value (Regulation 6).
6. If you also owe the same buyer or its group for imports, ask whether a set-off is possible (Regulation 7).
7. Once the bank grants a request, confirm that the EDPMS entry has been updated or closed.
8. Check the GST position on the same invoice, since an unpaid export under LUT can become taxable (Rule 96A(1)(b)).

The deadlines depend on the type of export, the invoice currency and whether GST was paid or an LUT was used. The table below lists each trigger and the rule behind it. Documents beyond the regulations are set by each AD bank's policy, so check with your AD bank.

The consequences of export proceeds not being realised build up over time. First the AD bank follows up, then GST liability can arise, and after one year past the due date future exports need full advance or a letter of credit. A FEMA penalty is also possible.

• Bank follow-up: AD banks must have systems to monitor and follow up with exporters to realise proceeds on time (Regulation 5(2)).
• Advance only: If proceeds stay unrealised for more than one year after the due date or extended date, further exports are allowed only against full advance or an irrevocable letter of credit (Regulation 13).
• FEMA penalty: A contravention can attract a penalty of up to three times the sum involved, or up to ₹2 lakh where it cannot be quantified, plus up to ₹5,000 a day if it continues (RBI Master Circular on Compounding, para 1.1, restating FEMA section 13(1)). See FEMA compounding for export delays.
• GST on services: Payment in convertible foreign exchange, or in rupees where RBI permits, is one of the conditions for a supply to count as an export of services (IGST Act section 2(6)). Under LUT, unpaid invoices can make IGST payable with interest (Rule 96A(1)(b)).
• GST refund: Goods exporters who received a refund of unused input tax credit must deposit it back with interest within 30 days after the FEMA time limit (IGST Act section 16(3)).
• No bank penalty: An AD bank may not levy charges or a penalty on an exporter for the exporter's own regulatory delay or violation (Regulation 19(3)).

Act before the due date. Ask your AD bank for an extension with reasons and buyer correspondence, or for a reduction in export value if the money will never arrive. For invoices up to ₹10 lakh, use the declaration route. Then review the GST position on the same invoices.

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 govern export proceeds not realised from 1 October 2026. Regulations 5, 6, 7 and 13 cover the deadline, reductions, set-off and long-unrealised exports. A.P. (DIR Series) Circular No. 20 superseded the old Master Direction and the write-off circulars.

• Waiting too long: Asking the AD bank for an extension only after the due date has passed, with no record of buyer follow-up.
• Old write-off limits: Applying the 5 and 10 percent write-off limits from the superseded Master Direction instead of the reduction route in Regulation 6.
• Ignoring EDPMS: Assuming an unpaid invoice disappears on its own, when it stays open in EDPMS until the AD bank closes it.
• GST overlooked: Forgetting that unpaid service invoices issued under LUT can make IGST payable with interest under Rule 96A.
• Split banks: Receiving an advance through one AD bank and the balance through another without telling both, as Regulation 10(1) requires.
• Small invoices: Not using the declaration route for invoices up to ₹10 lakh, under which the AD bank may close the EDPMS entry or allow a reduction based on the exporter's declaration (Regulations 4(2) and 6).

Every rule, deadline and form on this page is linked to its official source, checked on the dates below.

1. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB dated 13 January 2026, amended up to 22 September 2026, Regulations 2(1), 4(2), 5, 6, 7, 10(1), 13, 18(1)(f)-(g), 19, 20; footnotes on FEMA 23(R)/(1)/2026-RB dated 22 September 2026 (checked 8 Oct 2026)
2. RBI A.P. (DIR Series) Circular No. 20, RBI/2025-26/194: Export and Import of Goods and Services, 16 January 2026, Para 4 and Annex (supersession of Master Direction and circulars including write-off circulars), para 7 (effective 1 October 2026) (checked 8 Oct 2026)
3. RBI Master Direction: Export of Goods and Services (FED Master Direction No. 16/2015-16), superseded from 1 October 2026, Paras C.20 (extension), C.23 (write-off limits), C.28 (exporters' caution list) (checked 8 Oct 2026)
4. RBI Master Circular No. 9/2014-15 on Compounding of Contraventions under FEMA, 1999 (1 July 2014, as updated on 16 October 2014), Para 1.1, restating FEMA section 13(1) penalties (checked 8 Oct 2026)
5. Central Goods and Services Tax Rules, 2017: Rule 96A (CBIC tax information portal), Rule 96A(1)(b) as substituted by Notification 12/2024-CT (checked 8 Oct 2026)
6. Integrated Goods and Services Tax Act, 2017: Section 16 (CBIC tax information portal), Section 16(3), proviso on non-realisation of sale proceeds (checked 8 Oct 2026)
7. Integrated Goods and Services Tax Act, 2017: Section 2 (CBIC tax information portal), Section 2(6)(iv), definition of export of services (checked 8 Oct 2026)