Test the original value before choosing the declaration route
From 1 October 2026, regulation 6 of the FEMA Export and Import of Goods and Services Regulations, 2026 allows an Authorised Dealer to permit reduced or non-realisation of export value on the exporter’s reasoned request. Where export value is up to ₹10 lakh or its foreign-currency equivalent per shipping bill for goods or invoice for services, reduction may be permitted on an exporter declaration. The threshold is not a ₹10 lakh allowance for every unpaid balance irrespective of the original export value.
Read reduction and monitoring closure as connected but separate steps
The RBI regulations, consolidated through 22 September 2026 expressly commence on 1 October 2026. Regulation 6 addresses under-realisation and non-realisation. Regulation 4 requires the bank to satisfy itself about transaction genuineness and close or update the relevant EDPMS entry alongside handling the receipt. Its export proviso permits closure for documents up to ₹10 lakh on a declaration that payment has been realised in full or otherwise; it also permits quarterly declarations for bulk closure. These are permissions exercised through the bank, not a self-operated closure in the exporter’s ledger.
The RBI A.P. (DIR Series) Circular 20 dated 16 January 2026 gives the associated directions effect from 1 October 2026 and supersedes the identified earlier export/import directions and circulars. This article applies the new framework to post-commencement examples and was checked on 22 October 2026. It does not assume that every historical delay, contravention or closed-file dispute disappears under a new declaration. Older-period cases need a transition and bank review.
Construct a gross-value, receipt and shortfall bridge
For each shipping bill or service invoice, record its original value and currency, bank-accepted INR equivalent for the threshold test, the amount actually realised and any balance requiring reduction permission. Explain whether the difference reflects an agreed commercial reduction, a genuine dispute, non-payment, bank charges or an allocation problem. The reason matters even when the amount is small. Retain the original export evidence and contract correspondence; do not replace the original value with a reduced accounting balance merely to qualify for the declaration threshold.
Where a foreign-currency document is involved, confirm with the Authorised Dealer the applicable conversion basis for its assessment. The examples use expressly assumed bank-accepted rates solely for arithmetic; they do not prescribe a universal notification rate or valuation date. A reporting-currency figure in the financial statements, a receipt-date conversion and a bank’s threshold assessment need not be identical. Reconcile differences rather than choosing the lowest number.
Above ₹10 lakh is a different evidentiary route, not an automatic prohibition
Regulation 6 begins with a general permission for the bank to consider a reasoned request where satisfied with the reasons. Its small-document proviso provides the declaration route. A document above ₹10 lakh is not automatically ineligible for all reduction, but a small unpaid portion does not move that larger document into the proviso. Present the full case, supporting reasons and evidence for the bank’s assessment.
Do not automatically apply an older percentage ceiling or a self-write-off certificate template as though it were the wording of regulation 6. Equally, absence of a stated percentage in the new provision is not an unconditional right to write off any amount. Banks must comply with FEMA, relevant rules and directions, the foreign trade framework and their transaction-genuineness checks. A request, an accounting write-off and bank acceptance are three different pieces of evidence.
Bulk declarations preserve the individual document test
The quarterly bulk-closure option reduces repeated submissions; it does not turn the quarterly total into the document-level ceiling. Keep a line for each shipping bill or service invoice, original value, realised amount, permitted reduction and monitoring reference. Several genuine documents below the individual ceiling may form a larger batch. Artificially dividing one original export document to fit the threshold is not supported by the proviso.
For a declaration describing realisation “in full or otherwise,” give the true amount and nature of the shortfall. Do not declare an unpaid export as fully received or use a generic certificate that contradicts the bank evidence. Regulation 6 expressly includes non-realisation of full value within its stated reduction mechanism; that still needs the bank’s permitted handling and accurate closure classification.
Closure does not settle every other legal or accounting issue
Regulation 5 separately governs realisation periods and possible bank extensions. Assess an outstanding receipt against its own clock; submission of a reduction request is not itself an extension approval. Nor does a customer credit note by itself prove regulatory closure. Obtain bank confirmation and reconcile the EDPMS reference to the ledger and the export document.
A bank-permitted reduction does not by itself establish an income-tax bad-debt deduction, GST refund entitlement, export-incentive retention or a particular financial-reporting entry. Preserve separate analyses where those questions arise. Conversely, a provision for a doubtful receivable in the accounts need not mean that collection efforts ended or that regulatory permission to reduce has already been obtained.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: ordinary shortfall on an eligible-value document
Assume an export shipping bill with original value ₹8,00,000 and verified receipt ₹6,40,000. Shortfall is ₹1,60,000, or 20% of the original value. The document is within the ₹10 lakh proviso because of its ₹8,00,000 original value, not because the shortfall is below that threshold. State the actual receipt and supported reason in the declaration for bank consideration; the arithmetic alone does not close EDPMS.
Illustrative example 2: the threshold includes exactly ₹10 lakh
A service invoice has original export value ₹10,00,000 and realised amount ₹7,50,000, leaving ₹2,50,000. “Up to” includes the original ₹10,00,000 value. Subject to accurate documentation and bank handling, the small-document declaration route can be considered. No assumption is made that the ₹2,50,000 is automatically deductible for income-tax.
Illustrative example 3: a very small shortfall on a larger invoice
Original service invoice is ₹10,10,000 and receipts total ₹9,90,000. Only ₹20,000 remains unpaid. The document exceeds the threshold by ₹10,000 and does not enter the proviso just because the unpaid amount is ₹20,000. Submit the supported request under regulation 6’s general permission route for the bank’s assessment.
Illustrative example 4: foreign-currency original value controls
Assume a USD 12,000 service invoice and, solely for this example, a bank-accepted threshold conversion of ₹85 per USD. Original equivalent is ₹10,20,000. A USD 10,000 receipt leaves USD 2,000, equivalent to ₹1,70,000 at that assumed rate. It is the ₹10,20,000 original value that fails the small-document threshold. Using only the ₹1,70,000 shortfall to claim the proviso would be incorrect.
Illustrative example 5: two genuine documents are not one quarterly cap
Two separate genuine shipping bills each have original value ₹6,00,000. Receipts are ₹5,70,000 and ₹5,40,000, leaving ₹30,000 and ₹60,000. The combined original value is ₹12,00,000 and total shortfall ₹90,000. Each bill independently meets the value test; a batch exceeding ₹10 lakh does not alone disqualify them. Retain the two authentic original documents and individual reconciliation.
Illustrative example 6: quarterly reconciliation includes a wholly unpaid document
Assume three genuine service invoices of ₹8,00,000, ₹9,00,000 and ₹10,00,000, all in the post-commencement framework. Actual realisations are ₹7,60,000, nil and ₹9,50,000. Original values total ₹27,00,000; receipts total ₹17,10,000; shortfalls total ₹9,90,000. Each document is within the individual value threshold. A proposed bulk declaration must disclose ₹40,000, ₹9,00,000 and ₹50,000 of under/non-realisation, with reasons, rather than claiming that all ₹27,00,000 was received. Bank-permitted reduction and closure remain necessary.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Determine the period and applicable regulatory version. | Export dates and transition note. |
| 2 | Identify the original shipping bill or service invoice. | Authentic document and monitoring reference. |
| 3 | Record gross value and currency before any reduction. | Original contract and declaration. |
| 4 | Confirm the bank’s INR-equivalent assessment where needed. | Documented conversion basis. |
| 5 | Reconcile all receipts and allocations. | Bank statements and remittance evidence. |
| 6 | Explain each shortfall or non-realisation. | Buyer correspondence and commercial evidence. |
| 7 | Choose the document-level declaration or general request route. | Regulation 6 eligibility working. |
| 8 | Check the separate realisation clock and extensions. | Due-date and approval register. |
| 9 | Retain bank acceptance and EDPMS closure/update proof. | Bank communication and document-level status. |
| 10 | Review accounting, GST, tax and incentive effects separately. | Linked but independent conclusion notes. |
Sixteen practitioner FAQs
1. Does the ₹10 lakh test apply only to the unpaid amount?
No. The proviso tests export value per original shipping bill or service invoice.
2. Is an original document of exactly ₹10 lakh included?
Yes. The wording is up to ₹10 lakh or its foreign-currency equivalent.
3. Can an original invoice above ₹10 lakh still be considered for reduction?
Yes, under the bank’s general regulation 6 assessment; it does not qualify for the stated small-document proviso.
4. Does an accounting write-off close EDPMS automatically?
No. Obtain the bank’s permitted closure or update and reconcile its reference.
5. Can a wholly unpaid eligible-value document be considered?
Regulation 6 expressly addresses non-realisation; disclose the true position and obtain bank handling.
6. Does a declaration remove the bank’s genuineness checks?
No. Read it with regulation 4 and the bank’s obligations under the directions.
7. Which foreign-exchange rate must these examples be taken to prescribe?
None. Their rate is assumed; confirm the bank-accepted basis for the real threshold assessment.
8. Is the quarterly batch total itself capped at ₹10 lakh?
The stated threshold is per document; preserve individual eligibility in a bulk declaration.
9. Can one original invoice be artificially split?
The proviso does not authorise replacing the original document’s value through artificial splitting.
10. Must an eligible-value document be declared fully received?
No. The declaration must reflect realisation in full or otherwise accurately.
11. Does sending the request extend the realisation deadline?
No. Regulation 5’s timing and bank-extension permission require a separate check.
12. Do the examples apply old percentage write-off caps automatically?
No. They apply the current regulation 6 wording to the specified post-commencement cases.
13. Does closure establish an income-tax bad-debt deduction?
No. The income-tax conditions need an independent analysis.
14. Does it resolve all GST refund or export-incentive issues?
No. Relevant conditions under those frameworks remain separately applicable.
15. Is a bank’s request for supporting reasons inconsistent with declaration-based handling?
No. Maintain truthful evidence and meet the bank’s applicable checks.
16. What should a complete closure working demonstrate?
Original value, currency assessment, actual receipts, explained reduction, bank permission and matching monitoring status.
Working-paper organisation
Keep the source documents, calculation and final conclusion together for the same entity and period. If using assurePractice or other assureOffice tools, use only confirmed available functions and retain this evidence with the output.
Conclusion
Use the original export document as the unit of review. A transparent value-to-receipt reconciliation lets the bank consider the right route without confusing a small shortfall, an accounting write-off and an actual EDPMS closure.