How Do You Write Off Unrealised Export Bills Under the FEMA Rules From 1 October 2026?

A write-off of an unrealised export bill means your AD bank accepts that part or all of the export value will never reach India and stops treating it as outstanding. From 1 October 2026 the regulations call this a reduction in export realisation, which expressly includes non-realisation of the full value (Regulation 6).

• Duty to realise: Every resident who is owed foreign exchange must take all reasonable steps to realise and repatriate it within the period RBI specifies (FEMA section 8).
• Time limit: The full export value, or the reduced value allowed under Regulation 6, must be realised within nine months of the invoice for services or shipment for goods (Regulation 5(1)).
• Rupee trade: Exports invoiced or settled in Indian rupees get twelve months (first proviso to Regulation 5(1)).
• New wording: The 2026 regulations do not use the term write-off for exports. Regulation 6 covers both under-realisation and non-realisation of the full export value (Regulation 6).
• Who decides: Your AD bank decides on the request. It may allow the reduction if it is satisfied with the reasons you cite (Regulation 6).
• Old circulars: The earlier write-off circulars, including A.P. (DIR Series) Circulars No. 30 of 2001, No. 3 of 2010 and No. 88 of 2013, were superseded from 1 October 2026 (A.P. (DIR Series) Circular No. 20, Annex A).

In practice, writing off an export bill now means asking your AD bank to reduce the export value to what you actually received, so that the entry in EDPMS can be closed. For what happens before you reach that point, see export proceeds not realised.

Any exporter of goods or services whose buyer has paid short or not at all can ask for a reduction in export value. The 2026 regulations treat software as a service, so freelancers, IT firms and goods exporters follow the same Regulation 6 process (Regulation 2(1)).

You write off an unrealised export bill by sending your AD bank a request for reduction in export value, with the reasons the money cannot be recovered. For bills up to Rs 10 lakh a declaration is enough. For larger bills the bank reviews your reasons and evidence under its internal policy.

1. List the open export entries with your AD bank. Each export stays open in EDPMS until the bank marks it off after confirming realisation (Regulation 18(1)(g)). See how to check EDPMS outstanding.
2. Separate bills that may still be paid from bills that will not. For bills still expected, ask for an extension of the realisation period instead (second proviso to Regulation 5(1)).
3. Check whether you owe the same buyer or its group for imports. A set-off of receivables against payables is a separate option (Regulation 7).
4. Read your AD bank's published export policy. Each bank must cover adjustment of under, over and non-realisation in its policy and disclose the main features on its website (Regulation 19).
5. For a shipping bill or invoice up to Rs 10 lakh, give the bank a declaration of the amount not realised (proviso to Regulation 6).
6. For a bill above Rs 10 lakh, write to the bank citing the reasons for non-realisation and attach the evidence its policy asks for (Regulation 6).
7. Once the bank allows the reduction, confirm that the EDPMS entry is closed or updated to the reduced value.
8. Deal with the GST and income tax effect of the unpaid amount for the same invoice, described in the sections below.

From 1 October 2026 the only limit in the regulation is the Rs 10 lakh per bill threshold for the declaration route (proviso to Regulation 6). Documents above that threshold are set by your AD bank's policy. The evidence the old Master Direction accepted is a useful guide to what banks may ask for.

If an unrealised export bill is never written off or otherwise settled, it stays open in EDPMS and the AD bank keeps following up. One year past the due date, further exports are allowed only against full advance or an irrevocable letter of credit (Regulation 13).

• Bank follow-up: The AD bank must monitor open EDPMS entries and follow up with the exporter (Regulation 18(1)(f)).
• Export curbs: Unrealised proceeds beyond one year from the due date or extended date restrict future exports to full advance or a letter of credit (Regulation 13). See RBI exporter caution list.
• FEMA penalty: A contravention of FEMA or its regulations can attract a penalty up to three times the sum involved, after adjudication (FEMA section 13(1)).
• GST under LUT: If payment for services exported under LUT is not received within one year, or the FEMA period with any extension, whichever is later, IGST becomes payable with interest (Rule 96A(1)(b)).
• GST refunds: A refund on exported goods must be paid back when proceeds are not realised in time, unless RBI writes off the realisation requirement on merits (Rule 96B(1)).

Raise the request with your AD bank as soon as you know a bill will not be paid. If the money may still come, ask for an extension instead; see extension of export realisation period. Keep the bank's approval with your GST and income tax records.

Regulation 6 of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 governs write-off from 1 October 2026 (Notification FEMA 23(R)/2026-RB). A.P. (DIR Series) Circular No. 20 superseded the Master Direction and the old write-off circulars from the same date (Circular No. 20).

• Old limits: Applying the 5% and 10% caps from the superseded Master Direction to bills handled from 1 October 2026 (Circular No. 20).
• No request: Writing the amount off in the books but never asking the AD bank, so the EDPMS entry stays open.
• Wrong route: Seeking a write-off when the buyer still intends to pay; an extension under Regulation 5(1) fits that case better.
• Missing GST: Forgetting that unpaid services exported under LUT can trigger IGST with interest (Rule 96A(1)(b)).
• Old section: Citing the 1961 Act for a bad debt written off on or after 1 April 2026, when the Income-tax Act, 2025 applies (Income Tax Department FAQ).
• No evidence: Keeping no record of follow-up with the buyer, which the bank may need to be satisfied of the reasons.

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, amended up to 22 September 2026), Regulations 2(1), 4(2), 5, 6, 7, 13, 18(1), 19, 20 (checked 8 Oct 2026)
2. Foreign Exchange Management (Export and Import of Goods and Services) (Amendment) Regulations, 2026 (FEMA 23(R)/(1)/2026-RB), Paras 2 to 4 (checked 8 Oct 2026)
3. RBI A.P. (DIR Series) Circular No. 20, Export and Import of Goods and Services, 16 January 2026, Para 4 and Annex A (items 4, 19, 42, 48, 61) (checked 8 Oct 2026)
4. RBI Master Direction - Export of Goods and Services (No. 16/2015-16, updated 17 July 2026), Paras C.23, C.24, C.25, C.31 (checked 8 Oct 2026)
5. Foreign Exchange Management Act, 1999 (India Code), Sections 8 and 13(1) (checked 8 Oct 2026)
6. CGST Rules, Rule 96A (CBIC), Rule 96A(1)(b) (checked 8 Oct 2026)
7. CGST Rules, Rule 96B (CBIC), Rule 96B(1) and proviso (checked 8 Oct 2026)
8. IGST Act, 2017, Section 2 (CBIC), Section 2(6)(iv) (checked 8 Oct 2026)
9. Income-tax Act, 2025, as amended by Finance Act, 2026 (Income Tax Department PDF), Section 31(2) (checked 8 Oct 2026)
10. Income Tax Department: Objective and scope of the New Act FAQ, FAQ 2 (1961 Act repealed on 01.04.2026) (checked 8 Oct 2026)