Revision in the Limits for write off of export proceeds

As per the current regulation on export of goods and services, Every Indian exporter is required to get its proceeds realized within 12 months from the date of export.

Indian foreign trade policy provides relaxation to the exporters saying that realization of export proceeds shall not be insisted under any of the export promotion schemes under this Foreign Trade Realization Policy, if the Reserve Bank of India (RBI) writes off the requirement of realization of export proceeds on merits.

Mr. Manoj Kumar
Vice President
+919910688433
manoj@indiacp.com
For write-off of unrealised export bills, Reserve Bank of India has stipulated different limits which have been revised by the RBI vide its circular No. 88 dated March 12, 2013 given as follows:



Exporter
Previous Limits
Amended Limits
Self write-off by an exporter.
Not exceeding 10% of the export proceeds due during the financial year.
5% of total export proceeds realized during the previous calendar year.
Write-off by Authorised dealer bank.
Not exceeding 10% of the export proceeds due during the financial year.
10% of total export proceeds realized during the previous calendar year.
Self write-off by status holder exporters.

Not exceeding 5% of their average annual realization during the preceding three financial years

or

10% of the export proceeds due during the financial year, whichever is higher.
10% of total export proceeds realized during the previous calendar year.

The above write-off will be subject to the following condition: 
    A. The relevant amount has remained outstanding for more than one year 
    B. Satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realize the dues;
    C. The case falls under any of the undernoted categories
    • The overseas buyer has been declared insolvent and a certificate from the official liquidator indicating that there is no possibility of recovery.
    • The overseas buyer is not traceable.
    • The goods exported have been auctioned or destroyed by the Port/Customs/Health authorities in the importing country.
    • The unrealized amount represents the balance due in a case settled through the intervention of the Indian Embassy, foreign chamber of commerce or other such organisations.
    • The unrealized amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remaining outstanding and turned out to be unrealizable despite all efforts made by the exporter;
    • Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges and the amount remains unrealised and there are no prospects of any realisation.
    • The cost of resorting to legal action would be disproportionate to the unrealized amount of the export bill or where the exporter could not execute the court decree, due to the reasons beyond his control, even after winning the court case. 
    D. The exporter has surrendered proportionate export incentives. 
    E. In case of self write-off, the exporter should submit to the concerned AD bank, a Chartered Accountant’s certificate. 
The above revision in the limits is done with the view to simplify and liberalize the procedure and for providing greater flexibility to all exporters as well as the Authorised Dealer Banks.


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RBI CIRCULAR DATED 12.03.2013

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