What Are the RBI Payment Rules for Exports to Nepal and Bhutan?

The RBI payment rules for exports to Nepal and Bhutan say that receipts for eligible goods and services are made in Indian rupees through an authorised bank or authorised person. Nepal has one foreign currency exception, and the Asian Clearing Union (ACU) rule for other member countries does not cover these two countries.

• Rupees: Receipts for exports to Nepal and Bhutan are made in Indian rupees (Regulation 3(2)(I)(a)(i)).
• Nepal exception: Where Nepal Rastra Bank has permitted the importer in Nepal to pay in foreign currency, the receipt for that export may be in foreign currency (proviso in Regulation 3(2)(I)(a)(i)).
• Bank channel: Receipts and payments between a resident of India and a person resident outside India go through an authorised bank or authorised person, unless the rules provide otherwise (Regulation 3(2)).
• ACU: The ACU clause applies to member countries of the ACU other than Nepal and Bhutan, so these two countries follow the rupee rule instead (Regulation 3(2)(I)(a)(ii)). See ACU payments.
• Non-trade: Payments with Nepal and Bhutan that are not trade transactions are also in rupees, with foreign currency allowed for overseas investment in Bhutan (Regulation 3(2)(II)(i)).
• FTP route: Receipts and payments may also be made in a manner provided in the Foreign Trade Policy (Regulation 3(2)(I)(b)).

The new export rules point back to this currency rule. Regulation 4(1) of the 2026 export regulations says receipts for exports of goods and services follow the Manner of Receipt and Payment Regulations, 2023, so the rupee rule for Nepal and Bhutan continues after 1 October 2026. For the wider changes, see the new FEMA export and import regulations.

The Nepal and Bhutan payment rules cover any person resident in India who exports goods, software or services to a buyer in Nepal or Bhutan. The allowed currency depends on the country and, for Nepal, on whether Nepal Rastra Bank has permitted the importer to pay in foreign currency.

An Indian exporter receives payment for an export to Nepal or Bhutan by invoicing the buyer, filing the export declaration, and having the buyer pay rupees through the banking channel to the exporter's AD bank. The AD bank checks the transaction and updates the EDPMS entry when it credits the money.

1. Agree the currency with the buyer before you quote. Use Indian rupees unless the buyer is in Nepal and holds Nepal Rastra Bank permission to pay in foreign currency (Regulation 3(2)(I)(a)(i)).
2. Raise the invoice. For services, the realisation period runs from the invoice date, and for goods from the shipment date (Regulation 5(1)(a)).
3. File the Export Declaration Form (EDF). For goods, it is furnished at the time of export and is deemed part of the shipping bill at an EDI port. For services, it is due within 30 days from the end of the invoice month (Regulation 3). See EDF form for exports.
4. Ask the buyer to pay through its bank so that the money reaches your authorised dealer (AD) bank in India (Regulation 3(2)).
5. Your AD bank credits your account once it is satisfied the transaction is genuine, and closes or updates the EDPMS entry at the same time (Regulation 4(2)).
6. For a shipping bill or invoice up to Rs 10 lakh, give your AD bank a declaration that payment is realised, either per invoice or quarterly in bulk (first proviso to Regulation 4(2)). See EDPMS closure.
7. Keep the contract, invoice, EDF and bank credit advice together, because your AD bank, GST records and income tax records may all need them.

Exports to Nepal and Bhutan need the same documents and meet the same deadlines as other exports under the 2026 regulations, with a twelve-month realisation period where the export is invoiced or settled in rupees. The table below lists each requirement in force from 1 October 2026.

If payment for an export to Nepal or Bhutan is not received on time, the EDPMS entry stays open and the exporter is outside the FEMA realisation period unless the AD bank extends it. Long delays restrict future exports to full advance or an irrevocable letter of credit.

• Extension: Your AD bank may extend the realisation period if it accepts the reasons for delay (second proviso to Regulation 5(1)).
• Full advance: If proceeds stay unrealised for more than one year after the due or extended date, further exports are allowed only against full advance or an irrevocable letter of credit (Regulation 13).
• Reduced value: Where the buyer pays less, the AD bank may allow a reduction in export value, and up to Rs 10 lakh this can rest on your declaration (Regulation 6). See reduction in export invoice value.
• FTP benefits: An exporter who fails to realise proceeds within the time RBI specifies must return benefits or incentives availed against those exports (FTP 2023, para 2.54(a)).
• GST refund: For zero-rated goods, a refund received must be paid back with interest within 30 days after the FEMA time limit expires if sale proceeds are not realised (proviso to IGST Act section 16(3)).

Talk to your AD bank before the deadline passes. Give the reasons for the delay in writing, ask for an extension or a reduction in value, and keep the buyer correspondence. See export payment not received and extension of the realisation period.

The main rule is Regulation 3(2)(I)(a)(i) of the FEMA (Manner of Receipt and Payment) Regulations, 2023, which names Indian rupees for trade with Nepal and Bhutan. The 2026 export regulations add the declaration, realisation and EDPMS rules, and Circular No. 20 supersedes the old Master Direction from 1 October 2026.

• Wrong currency: Asking a Nepali buyer for US dollars without checking that Nepal Rastra Bank has permitted that importer to pay in foreign currency. For Bhutan, the trade rule names rupees only.
• ACU assumption: Expecting settlement through the Asian Clearing Union because both countries are in South Asia. The ACU clause excludes Nepal and Bhutan.
• Skipping EDF: Treating rupee sales to Nepal or Bhutan as domestic sales and skipping the EDF and EDPMS steps, which apply to exports in general.
• Old GST view: Relying on the 2017 IGST exemption for rupee-paid services to Nepal and Bhutan, which was rescinded in February 2019.
• Wrong deadline: Applying nine months to a rupee-invoiced export, or twelve months to an export invoiced and paid in foreign currency.
• Informal channels: Accepting money outside the banking channel. Receipts go through an authorised bank or authorised person unless the rules provide otherwise.
• Old guidance: Following the Master Direction on Export of Goods and Services after 1 October 2026, when Circular No. 20 superseded it.

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

1. Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, Notification No. FEMA 14(R)/2023-RB, amended up to 12 February 2025, Regulation 3(2)(I)(a)(i) to (iii), 3(2)(I)(b), 3(2)(II)(i); footnote 1 (substitution of item (ii) by FEMA 14(R)(1)/2025-RB) (checked 8 Oct 2026)
2. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification No. FEMA 23(R)/2026-RB, amended up to 22 September 2026, Regulations 3, 4(1), 4(2) and proviso, 5(1) and provisos, 6, 10(1), 10(4), 13, 18(2); footnotes 2 to 4 (checked 8 Oct 2026)
3. RBI A.P. (DIR Series) Circular No. 20, Export and Import of Goods and Services, RBI/2025-26/194, 16 January 2026, Paras 4 and 7, and Annex (checked 8 Oct 2026)
4. RBI A.P. (DIR Series) Circular No. 10, International Trade Settlement in Indian Rupees (INR), 11 July 2022, General SRVA framework (checked 8 Oct 2026)
5. Integrated Goods and Services Tax Act, 2017, section 2 (CBIC tax information portal), Section 2(5) export of goods; section 2(6) export of services, clause (iv) and footnote 1 (checked 8 Oct 2026)
6. Integrated Goods and Services Tax Act, 2017, section 16 (CBIC tax information portal), Section 16(1)(a), 16(3) and proviso (checked 8 Oct 2026)
7. Notification No. 42/2017-Integrated Tax (Rate), 27 October 2017, Entry 10D inserted in Notification No. 9/2017-Integrated Tax (Rate) (checked 8 Oct 2026)
8. CBIC, Integrated Tax (Rate) Notifications listing, Entry for Notification No. 02/2019-Integrated Tax (Rate) dated 04-02-2019 rescinding Sl. No. 10D (checked 8 Oct 2026)
9. Foreign Trade Policy 2023, Chapter 2, General Provisions Regarding Imports and Exports (DGFT), Paras 2.52(b) and 2.54(a) (checked 8 Oct 2026)