How do you write off an unrealised export bill under FEMA?

Some foreign clients never pay. A startup shuts down, a client vanishes, or chasing $800 through a foreign court would cost more than the invoice. Under the Foreign Exchange Management Act, 1999 (FEMA), that unpaid invoice stays open with your bank until it is regularised. "Write-off" is the name exporters use for closing it.¹

What is a write-off of an unrealised export bill under FEMA?

A write-off of an unrealised export bill is the closure of an unpaid export invoice by your Authorised Dealer (AD) bank, which allows a reduction in export value under regulation 6 of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (the 2026 Regulations).¹

• Regulation 6: lets the bank allow "reduction in realisation of export value" when you cite reasons for under-realisation or non-realisation of the full export value and the bank is satisfied.¹
• Up to ₹10 lakh: the proviso says that for an invoice up to ₹10 lakh (or its foreign currency equivalent), the reduction, "including non-realisation of full export value", may be permitted based on your declaration.¹
• Wording: the 2026 Regulations do not use the word "write-off". Non-realisation is handled as a reduction of the export value to the amount actually received, which may be zero.¹

The result is that the amount due falls to what you actually received.¹

Who can have an export bill written off under regulation 6?

Any exporter whose bank is satisfied with the reasons can have an export bill reduced under regulation 6; the invoice value decides what the bank needs.¹

The table draws on regulations 5, 6 and 20 of the 2026 Regulations.¹²

How do you write off an unrealised export bill from 1 October 2026?

You write off an unrealised export bill by asking your AD bank for a reduction in export value under regulation 6, with a declaration for invoices up to ₹10 lakh or reasons and evidence above that.¹

1. Choose the route: write off when you are confident the money will not come; if there is a realistic chance of payment, ask for an extension under regulation 5 instead. See extension of export realisation period.¹
2. Check the value: for an invoice up to ₹10 lakh, a declaration in your bank's format is enough under regulation 6.¹
3. Prepare evidence: for an invoice above ₹10 lakh, give the bank the reasons and evidence.¹
4. Submit: follow the bank's published policy, which regulation 19 says must list documents, timelines and charges for "adjustment (under, over and non-realisation) of export proceeds".¹
5. Close the entry: regulation 4 lets the bank close the Export Data Processing and Monitoring System (EDPMS) entry on a declaration that the payment was realised "in full or otherwise", including in a quarterly bulk declaration.¹

What documents does a bank need to write off an export bill?

For an invoice up to ₹10 lakh, the bank needs a declaration in its format; for larger invoices, it needs evidence of why the money will not come.¹ Useful evidence includes the items below.

The old categories in paragraph C.23.2 of the Master Direction, such as the buyer's insolvency, an untraceable buyer, or legal costs disproportionate to the amount, are no longer binding, but they remain a sensible checklist of what a bank is likely to find convincing.⁴

What happens if an unrealised export bill is not written off?

If an unrealised export bill stays open more than one year after the due date (or the extended date), regulation 13 allows you to make further exports only against full advance or an irrevocable letter of credit.¹ An approved reduction under regulation 6 brings the amount due down to what you received, which closes the gap.¹

Are there cases where a bank might refuse to write off an export bill?

Regulation 6 leaves the decision to the bank's satisfaction.¹

• Old exclusions: under the old Master Direction, write-off was not available for exports to countries with externalisation problems (where the buyer paid in local currency but it could not be remitted) or for bills under investigation by agencies such as the Directorate of Enforcement or the subject of a civil or criminal suit.⁴
• 2026 position: the 2026 Regulations do not repeat these exclusions.¹ Expect a bank to be cautious in similar situations, and note that Circular No. 20 still requires banks to report doubtful transactions to the Directorate of Enforcement.³
• Appeal: if the bank refuses, regulation 19(2) requires an escalation and appeal process at a higher internal level.¹

Does a FEMA write-off of an export bill settle GST and income tax?

No. A FEMA write-off only closes the foreign exchange side.¹

• GST: if you exported under a Letter of Undertaking (LUT), rule 96A of the CGST Rules requires you to pay the tax with interest within 15 days after one year from the invoice date, or the period allowed under FEMA including any RBI-permitted extension if that is later (or a further period allowed by the Commissioner), if payment is not received in convertible foreign exchange or permitted rupees.⁵ See GST on export of services and LUT filing.
• Income tax: treatment of a bad debt is a separate question; ask your chartered accountant.

Which RBI rule governs the write-off of export bills?

Regulation 6 of the 2026 Regulations governs write-offs from 1 October 2026; until 30 September 2026, paragraph C.23 of the Master Direction on Export of Goods and Services set percentage limits.¹⁴

The table draws on the 2026 Regulations, the amendment and Circular No. 20.¹²³

What were the old write-off limits for export bills?

Until 30 September 2026, paragraph C.23 of the Master Direction set write-off limits as a percentage of total export proceeds realised in the previous calendar year:⁴

• Conditions: the limits were cumulative, and the bill had to be outstanding for more than one year, the exporter had to be a customer of the bank for at least six months, and the case had to fall in listed categories.⁴
• CA certificate: self-write-off also needed a chartered accountant's certificate.⁴
• Insurance cases: write-offs after an insurance claim settled by the Export Credit Guarantee Corporation (ECGC) or an insurer regulated by IRDA were outside the 10% limit (paragraph C.24).⁴
• Higher amounts: under paragraph C.23.10, write-offs outside the bank's limits went to the RBI Regional Office.⁴

Regulation 6 has no percentage limit, no one-year waiting period and no list of qualifying categories.¹

What are the common mistakes when writing off an export bill?

The common mistakes are applying the superseded rules and treating the FEMA write-off as the end of the matter.¹⁴⁵

• Old limits: checking the 5% or 10% limits, which no longer apply.¹⁴
• Waiting a year: delaying the request because of the old one-year condition, which regulation 6 does not have.¹⁴
• GST: assuming the write-off removes the IGST and interest payable under rule 96A for an LUT export.⁵
• Wrong route: writing off an invoice that the client may still pay, instead of asking for an extension under regulation 5.¹
• Older invoices: going to the RBI Regional Office for pre-October 2026 cases that regulation 20 sends to the bank.¹²

Write-offs depend on facts and documents, so for large amounts or disputed claims, confirm with your bank and a chartered accountant before you file the request.