Export proceeds realisation
This query is : Resolved
20 November 2010
Need to know procedure for ealisation of outstanding export bills
Is authorised banker's approval is compulsory for set off.
Is authorised banker's approval is compulsory for set off.
20 November 2010
you ask that need to procedure for realisation of outstanding export bills ,as per rbi guidelines realisation of export of bills is mandatory.
refer:-
Notification No. FEMA 23/ 2000-RB dated 3rd May, 2000, issued by Reserve Bank in exercise of the powers conferred by clause (a) of sub-section (1), sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), under which the "Foreign Exchange Management (Export of Goods and Services) Regulations, 2000"
http://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5885&Mode=0
refer:-
Notification No. FEMA 23/ 2000-RB dated 3rd May, 2000, issued by Reserve Bank in exercise of the powers conferred by clause (a) of sub-section (1), sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), under which the "Foreign Exchange Management (Export of Goods and Services) Regulations, 2000"
http://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5885&Mode=0
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22 November 2010
Dear Sir,
Can u also tell me if my export proceeds are beyond 10%and the same is not realisable due to rejection of goods. and the cost of taking material back is more than amount to be received.
In above circumstances do i neeed to follow the procedure defined in Rules.
As i understand, if outstanding export bills is less than 10% of exports during the financial year, then we can without AD approval, can write off in the books of account. and if the amount of outstanding exports is more than 10% of Export of that financial year, then i have to take approval of AD for write off.
I just wanted to confirm whether my interpretation is right or wrong?
Can u also tell me if my export proceeds are beyond 10%and the same is not realisable due to rejection of goods. and the cost of taking material back is more than amount to be received.
In above circumstances do i neeed to follow the procedure defined in Rules.
As i understand, if outstanding export bills is less than 10% of exports during the financial year, then we can without AD approval, can write off in the books of account. and if the amount of outstanding exports is more than 10% of Export of that financial year, then i have to take approval of AD for write off.
I just wanted to confirm whether my interpretation is right or wrong?
24 July 2024
Your interpretation regarding the procedure for realization of outstanding export bills and the role of Authorized Dealers (ADs) is partially correct. Let me clarify the procedure based on the guidelines and rules:
1. **Realization of Outstanding Export Bills**:
- As an exporter, you need to ensure that the proceeds from your exports are realized within a specified period from the date of shipment. The period for realization varies depending on the type of export and can range from 180 days to 12 months from the date of export.
- If the export proceeds are not realized within the prescribed period, you are required to take necessary steps to realize the payment.
2. **Role of Authorized Dealer (AD)**:
- An Authorized Dealer (usually a bank authorized by the RBI) plays a crucial role in facilitating the realization of export proceeds. They verify the export documents, confirm the receipt of payment from the foreign buyer, and ensure compliance with foreign exchange regulations.
- For exports where the payment is not received within the stipulated period, AD approval may be required for further actions, such as write-offs or adjustments.
3. **Threshold for AD Approval**:
- According to RBI guidelines, if the amount of outstanding export proceeds exceeds 10% of the average annual export earnings during the preceding three financial years, AD approval is required for any write-off or adjustment.
- If the outstanding amount is within this 10% threshold, you may be able to write off or adjust the amount without AD approval, subject to internal accounting policies and provisions.
4. **Procedure for Write-off**:
- If the export proceeds become irrecoverable due to reasons like rejection of goods or inability to recover the amount, you need to initiate the process for write-off.
- For amounts exceeding the 10% threshold, you should approach the AD with a request for write-off, providing necessary documentation and justification.
- For amounts within the 10% threshold, you may follow internal procedures for accounting write-offs, ensuring proper documentation and compliance with internal controls.
**Conclusion**:
Your understanding that AD approval is required for write-offs exceeding 10% of average annual export earnings is correct. It's crucial to maintain proper records, documentations, and comply with RBI regulations regarding the realization of export proceeds and write-off procedures. If you encounter situations where export proceeds are not realizable due to rejection or other reasons, engage with your AD to understand the specific requirements and steps needed for resolution.
1. **Realization of Outstanding Export Bills**:
- As an exporter, you need to ensure that the proceeds from your exports are realized within a specified period from the date of shipment. The period for realization varies depending on the type of export and can range from 180 days to 12 months from the date of export.
- If the export proceeds are not realized within the prescribed period, you are required to take necessary steps to realize the payment.
2. **Role of Authorized Dealer (AD)**:
- An Authorized Dealer (usually a bank authorized by the RBI) plays a crucial role in facilitating the realization of export proceeds. They verify the export documents, confirm the receipt of payment from the foreign buyer, and ensure compliance with foreign exchange regulations.
- For exports where the payment is not received within the stipulated period, AD approval may be required for further actions, such as write-offs or adjustments.
3. **Threshold for AD Approval**:
- According to RBI guidelines, if the amount of outstanding export proceeds exceeds 10% of the average annual export earnings during the preceding three financial years, AD approval is required for any write-off or adjustment.
- If the outstanding amount is within this 10% threshold, you may be able to write off or adjust the amount without AD approval, subject to internal accounting policies and provisions.
4. **Procedure for Write-off**:
- If the export proceeds become irrecoverable due to reasons like rejection of goods or inability to recover the amount, you need to initiate the process for write-off.
- For amounts exceeding the 10% threshold, you should approach the AD with a request for write-off, providing necessary documentation and justification.
- For amounts within the 10% threshold, you may follow internal procedures for accounting write-offs, ensuring proper documentation and compliance with internal controls.
**Conclusion**:
Your understanding that AD approval is required for write-offs exceeding 10% of average annual export earnings is correct. It's crucial to maintain proper records, documentations, and comply with RBI regulations regarding the realization of export proceeds and write-off procedures. If you encounter situations where export proceeds are not realizable due to rejection or other reasons, engage with your AD to understand the specific requirements and steps needed for resolution.
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