My foreign client never paid. How do I close the invoice with my bank?
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Short answer
Ask your Authorised Dealer bank to allow a reduction in export value "including non-realisation of full export value" under regulation 6 of the FEMA (Export and Import of Goods and Services) Regulations, 2026, citing your reasons.1 For an invoice up to ₹10 lakh or its foreign currency equivalent, your declaration is enough; above that, the bank decides on the evidence.1 Do it before the unpaid amount runs more than one year past its due date, when regulation 13 limits further exports to full advance or an irrevocable letter of credit.1
When a foreign client disappears, the invoice still sits in your bank's export records until you close it. From 1 October 2026 the tool for that is a reduction in export value granted by your bank, not a write-off under the old RBI limits.12
What is the rule now?
Regulation 6 of the FEMA (Export and Import of Goods and Services) Regulations, 2026 (the 2026 Regulations) lets the Authorised Dealer (AD) bank, on your request citing reasons for under-realisation or non-realisation, allow a reduction in export value, including non-realisation of the full export value, if it is satisfied with the reasons.1 Its proviso lets the bank permit this on your declaration where the export value is up to ₹10 lakh per invoice.1
How do you ask the bank to close an unpaid invoice?
Follow your bank's published procedure; a typical request has five parts.1
- The invoice number, date, amount and currency, and the Export Declaration Form (EDF) it was declared on.
- The client's name and country.
- The reason for non-payment, for example the client's insolvency, a dispute you could not resolve, or the client going silent.
- Evidence of your efforts: reminders, emails, a demand letter or a collection agency's report.
- For an invoice up to ₹10 lakh, a signed declaration that the amount has not been and will not be realised.1
A freelance copywriter owed $800 by a closed US start-up can use the declaration route, because the invoice is under ₹10 lakh.1 A software firm owed $60,000 by a German client in insolvency should expect the bank to want documents, and may first ask for an extension in case the administrator pays. See extension of export realisation period.
Why not just leave it open?
An open invoice has a cost. Under regulation 13, if proceeds stay unrealised for more than one year after the due date of realisation or any extended date, you can make further exports only against full advance or an irrevocable letter of credit.1 For a designer or agency that bills on credit, that is a serious restriction.
What can the bank charge?
Regulation 19(3) requires charges to be reasonable and proportional, and bars any charge or penalty for a regulatory delay or violation on your part.1 Check the bank's published charges.
The full process, including treatment of older invoices, is in writing off export bills. For recovery options before you give up, see foreign client not paying. Take advice from a chartered accountant on the GST and income tax effects.
How did we verify this?
We checked this page against the sources below on 28 October 2026. Read our methodology or report an error.
- [1]RBI: 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 4, 5, 6, 13 and 19)
- [2]RBI: A.P. (DIR Series) Circular No. 20 dated 16 January 2026, Export and Import of Goods and Services (paragraph 4 and Annex)
Frequently asked questions
Can I write off the invoice myself?+
The 2026 Regulations do not provide a self-write-off. The bank allows the reduction, though for invoices up to ₹10 lakh it can do so on your declaration alone.1
Do the old 5% and 10% write-off limits still apply?+
No. Those limits were in the RBI Master Direction on export, which Circular No. 20 superseded from 1 October 2026.2 Regulation 6 sets no percentage limit.1
Does closing the invoice under FEMA settle GST and income tax?+
No. GST and income tax have their own rules for unpaid export invoices. Ask a chartered accountant how to treat the bad debt in your books and returns.
This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.
Keep reading
How do you write off an unrealised export bill under FEMA?
How a service exporter closes an export invoice that will never be paid under regulation 6 of the 2026 FEMA rules, and what replaced the old 5% and 10% limits.
RBI and FEMAHow do you reduce the value of an export invoice under FEMA?
When a foreign client pays less than the invoice, your AD bank can allow a reduction in export value under regulation 6. Up to ₹10 lakh, your declaration is enough.
RBI and FEMAWhat happens if export proceeds are not realised on time?
What happens under FEMA when a foreign client does not pay a service export invoice within nine months, and how to fix it with an extension, reduction or set-off.
InvoicingWhat can an Indian service exporter do when a foreign client does not pay?
What to do when a foreign client does not pay an export invoice: follow-up, the nine-month realisation deadline, AD bank extensions, reductions and GST under LUT.