Lakshmi Kumaran & Sridharan Attorneys

Write-off of unrealized export bills - RBI issues new guidelines

19th March, 2013

Exporters, including status holders, have been allowed to self write-off unrealised export bills, subject to limits in terms of specified percentage of the proceeds realized during previous calendar year. As per Reserve Bank of India A.P. (DIR Series) Circular No. 88, dated 12-3-2013, while status holder exporters have been allowed to write-off up to 10% of the total export proceeds realized during the previous calendar year, other exporters can self write-off 5% of such export proceeds. Write off by authorized dealer banks, subject to conditions, though remains at 10% of such export proceeds. These limits are cumulatively available in a year.

Conditions for write-off benefit

Broad conditions as prescribed by this circular include, furnishing of documentary evidence to support that the exporter has made all efforts to realize dues; that the amount remains outstanding for more than a year; and that the case falls under one of the seven enumerated categories. The categories listed in the circular cover among others, insolvency or non-traceability of the overseas buyer, auction or destruction by the foreign authorities or when the cost of legal action is disproportionate to the unrealized amount.

Exporters are further required to surrender proportionate export incentives prior to write-off and submit to the Authorised Dealer Bank, a certificate from Chartered Accountant stating the amount realized, amount of write-off and also the details of exports, etc. The certificate may also state that proportionate export incentives have already been surrendered.

Facility not available if exports are under investigation or litigation

This facility of write-off is however not available in case the exports were made to countries having externalization problems or where the exports are under investigation by Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc. and where the outstanding bills are subject matter of civil / criminal suit.
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