How Do You Fix Short Realisation of Export Proceeds When a Foreign Client Pays Less Than the Invoice?

Short realisation of export proceeds is a gap between the full export value you declared and the amount that actually reached India. The 2026 regulations call this under-realisation and require the full export value, or a reduced value your AD bank allows, to be realised within the set period (Regulation 5(1)).

• Full value: For services, you declare the full export value in the Export Declaration Form (EDF) within 30 days from the end of the invoice month (Regulation 3(2)). That declared amount is the figure your bank expects to see realised.
• Common causes: A client disputes part of the work, agrees a discount after invoicing, deducts its own taxes, pays in instalments, or banks along the route deduct charges before the money arrives.
• Legal duty: A person resident in India must take all reasonable steps to realise and repatriate foreign exchange due to them within the period and manner RBI specifies (FEMA section 8).
• Bank role: Your AD bank credits the receipt and closes or updates the matching entry in the Export Data Processing and Monitoring System (EDPMS) (Regulation 4(2)).

A short receipt is not a breach by itself. The gap becomes a problem only if it stays open past the realisation deadline without a reduction, extension or set-off approved by your AD bank. See export realisation period for how the 9 month clock runs.

The short realisation rules apply to every exporter of goods, software and services whose export entry is tracked by an AD bank. The 2026 regulations treat software as a service and use the same realisation period for both (Regulation 2 and Regulation 5).

You fix a short receipt by asking your AD bank to reduce the export value to the amount actually received, citing your reasons. For invoices or shipping bills up to Rs 10 lakh, a declaration from you is enough (Regulation 6). Above that, the bank must be satisfied with the reasons.

1. Compare the amount credited with the invoice value. Check the bank advice or FIRA for the foreign currency amount received, and note any charges shown as deducted.
2. Find out why the amount is short. Ask your client for a written note on any discount, dispute, withholding or instalment plan, and keep the email trail.
3. Decide if more money is coming. If the balance is still expected, you can ask the bank for an extension of the realisation period instead of a reduction (Regulation 5(1), second proviso).
4. If no more money will come, request a reduction in export value. Invoices or shipping bills up to Rs 10 lakh each can be reduced on your declaration (Regulation 6, proviso).
5. For larger invoices, send a written request with reasons and supporting documents. The AD bank may allow the reduction if it is satisfied with the reasons cited (Regulation 6).
6. Confirm the EDPMS entry is closed. For invoices up to Rs 10 lakh, the entry may be closed on your declaration that payment was realised in full or otherwise, including through a quarterly bulk declaration (Regulation 4(2), proviso).
7. Keep the bank's approval or acknowledgement with the invoice, EDF copy and client correspondence for your GST and income tax records.

The regulations do not list fixed documents for a reduction in export value. Each AD bank must publish an internal policy that lists the documents, timelines and charges for each process, including adjustment of under, over and non-realisation (Regulation 19(1)). The table below shows records banks commonly look for.

If the gap stays open beyond one year from the due date of realisation, or any extended date, you can export only against full advance payment or an irrevocable letter of credit (Regulation 13). A contravention of FEMA can also attract a monetary penalty after adjudication (FEMA section 13).

• Export restriction: Future exports need full advance or an irrevocable letter of credit once proceeds stay unrealised for more than a year past the due date (Regulation 13).
• Caution list: Exporters already on RBI's caution list as on 30 September 2026 stay governed by that order until removed (Regulation 13, proviso); this proviso was inserted by the September 2026 amendment.
• FEMA penalty: Up to three times the sum involved where quantifiable, or up to Rs 2 lakh where not, plus up to Rs 5,000 a day for a continuing contravention (FEMA section 13(1)).
• GST position: A service counts as an export only if, among other conditions, payment is received in convertible foreign exchange or in rupees where RBI permits (IGST Act section 2(6)(iv)). Check the GST treatment of any unpaid portion with a GST practitioner.
• Refund value: For refunds of input tax credit on services exported under LUT, turnover is the payments received during the period (CGST Rule 89(4)(D)), so a short receipt lowers the refund base.

Ask your AD bank for a reduction, extension or set-off before the due date. If you think the bank's decision is wrong, use its escalation process: each AD bank must have an appeal mechanism handled at a higher internal level (Regulation 19(2)). See export proceeds not realised for the full fix path.

The timeline starts from the invoice date for services and the shipment date for goods. You file the EDF for services within 30 days from the end of the invoice month, and the full or reduced value must be realised within 9 months (Regulations 3(2) and 5(1)). Ask for a reduction or extension before that date.

• Ignoring small gaps: Leaving a small shortfall open because it seems minor. The EDPMS entry stays outstanding until it is realised, reduced or closed by your bank.
• Waiting too long: Asking for a reduction only after the deadline has passed. The one-year restriction in Regulation 13 runs from the due date or extended date.
• No paper trail: Accepting a discount from a client by phone. Banks assess the reasons cited, so a written record of the agreed amount helps.
• Mixed bank routes: Receiving an advance through one bank and the balance through another without telling both banks (Regulation 10(1)).
• Wrong purpose code: Letting a part payment arrive under an unrelated purpose code, which makes matching it to the invoice harder. See correcting a purpose code.
• Relying on old limits: Applying percentage limits from the superseded Master Direction. Those directions ended on 1 October 2026 (Circular No. 20, para 4).

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 (amended up to 22 September 2026), Regulations 2, 3(2), 4(2), 5, 6, 7, 10(1), 13, 19, 20 (checked 9 Oct 2026)
2. A.P. (DIR Series) Circular No. 20 dated 16 January 2026: Export and Import of Goods and Services, Para 4 and Annex (superseded circulars) (checked 9 Oct 2026)
3. Notification FEMA 23(R)/(1)/2026-RB dated 22 September 2026 (Amendment Regulations), Amendments to Regulations 5 and 13 (checked 9 Oct 2026)
4. Foreign Exchange Management Act, 1999, Sections 8 and 13(1) (checked 9 Oct 2026)
5. IGST Act, 2017, section 2, Section 2(6)(iv) (checked 9 Oct 2026)
6. CGST Rules, 2017, Rule 89, Rule 89(4)(D) (checked 9 Oct 2026)