How Do RBI Rules Handle a Reduction in Export Invoice Value?

A reduction in export invoice value is your AD bank's approval to treat a lower amount as the full export value. It covers under-realisation and non-realisation of the declared value. Once approved, you only need to realise the reduced value within the realisation period.

• Legal basis: An AD bank may, on your request citing reasons for under-realisation or non-realisation, allow a reduction in realisation of export value if satisfied with those reasons (Regulation 6).
• Small invoices: Where the export value is up to ₹10 lakh or its foreign currency equivalent per shipping bill or invoice, the reduction, including non-realisation, may be permitted on your declaration (proviso to Regulation 6).
• Realisation duty: The duty to realise and repatriate applies to the full export value, or the reduced value allowed under Regulation 6 (Regulation 5(1)).
• Declared value: Goods exporters declare the full export value on the EDF or shipping bill, and service exporters declare it on the EDF within 30 days from the end of the invoice month (Regulation 3).
• Bank policy: Each AD bank must cover adjustment of export proceeds for under, over and non-realisation in its internal policy and SOP (Regulation 19(1)(c)).

Common reasons include a discount agreed after shipment, a quality or quantity claim, a buyer default or a short payment. The bank decides whether your reasons are genuine.

Any exporter whose realised amount is lower than the value declared on the shipping bill or EDF can ask the AD bank for a reduction. That includes goods exporters, service exporters, software exporters and freelancers who file an EDF. The route depends on the value of each shipping bill or invoice.

You get a reduction approved by writing to the AD bank that holds the EDPMS entry, stating the reason for the lower payment and the reduced amount. For entries up to ₹10 lakh per shipping bill or invoice, a declaration is enough. Above that, the bank reviews your reasons and evidence before approving.

1. Confirm the gap. Compare the amount credited with the value on the shipping bill or EDF. You can ask the bank for your open entries; see how to check EDPMS outstanding.
2. Collect the reason in writing. Keep the buyer's email, credit note, settlement letter or claim report that explains why less was paid.
3. Check the value per shipping bill or invoice. If it is ₹10 lakh or less, prepare a declaration in your bank's format (proviso to Regulation 6).
4. For larger values, submit a written request citing the reasons for under-realisation or non-realisation, with the supporting papers (Regulation 6).
5. Ask the bank to record the reduced value against the entry and close it once the reduced amount is credited (Regulations 4(2) and 18(1)(g)).
6. If the bank refuses, use the escalation and appeal process in its SOP (Regulation 19(2)).
7. Keep the approval or acknowledgement with the export invoice, EDF and payment advice.

Under the 2026 regulations, the conditions depend on the value per shipping bill or invoice, not on the reason for the cut. The table shows common reasons, what banks usually ask for and the rule that applies. Exact document lists vary, so check your bank's published SOP.

If the reduction is not approved, the declared value stays as the amount you must realise. The shortfall shows as unrealised export proceeds in EDPMS, and the AD bank must follow up with you for it.

• Open entry: The bank marks off an EDPMS entry only after ensuring the export value has been realised (Regulation 18(1)(g)) and must follow up on open entries (Regulation 18(1)(f)).
• Advance only: If proceeds stay unrealised for more than one year beyond the due date or extended date, further exports are allowed only against full advance or an irrevocable letter of credit (Regulation 13).
• GST under LUT: For services exported under bond or LUT, tax with interest becomes payable if payment is not received within 15 days after one year, or the FEMA period with any extension, whichever is later, from the invoice date (CGST Rule 96A(1)(b)).
• Bank charges: The AD bank may not levy any charges or penalty on you for a regulatory delay or violation (Regulation 19(3)). FEMA penalties are a separate matter; see FEMA penalties and compounding.

Ask the bank for its reasons in writing, add any missing evidence and resubmit. If it still refuses, escalate through the appeal process in its SOP under Regulation 19(2). If payment is only delayed, ask for an extension; see extension of export realisation period and export proceeds not realised.

From 1 October 2026, Regulation 6 of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 governs reductions. A.P. (DIR Series) Circular No. 20 superseded the old Master Direction, including the 25 per cent cap in para C.17, from the same date.

• Silent shortfall: Accepting a lower payment and never telling the bank, which leaves the EDPMS entry open.
• No paper trail: Agreeing a discount or claim on a call without written confirmation from the buyer.
• Wrong threshold: Testing the ₹10 lakh limit on the reduction amount instead of on the shipping bill or invoice value.
• Old caps: Applying the 25 per cent cap from the superseded para C.17 instead of Regulation 6.
• Extension mix-up: Asking for a reduction when the buyer will still pay in full later, where an extension fits better.
• GST records: Not issuing a credit note or updating GST returns when the invoice value changes.

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), 3, 4(2), 5, 6, 7, 13, 18(1), 19 and 20 (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; Annex A item 13 (Circular No. 38, 12 April 2002, Reduction in value) (checked 8 Oct 2026)
3. RBI A.P. (DIR Series) Circular No. 12, RBI/2025-26/89: EDPMS and IDPMS reconciliation, review of guidelines, 1 October 2025, Para 3 (checked 8 Oct 2026)
4. RBI Master Direction: Export of Goods and Services (FED Master Direction No. 16/2015-16), superseded from 1 October 2026, Paras C.16, C.17, C.18, C.22 and C.23 (checked 8 Oct 2026)
5. Central Goods and Services Tax Act, 2017: Section 34, Credit and debit notes, Section 34(1) and 34(2) (checked 8 Oct 2026)
6. Central Goods and Services Tax Act, 2017: Section 15, Value of taxable supply, Section 15(3)(b) and footnote 1 (Finance Act, 2026 substitution, date yet to be notified) (checked 8 Oct 2026)
7. Central Goods and Services Tax Rules, 2017: Rule 96A, Rule 96A(1)(b) (checked 8 Oct 2026)