Respected Sir
We will write off an huge outstanding export Receivables and repay proportionate DBK amount/ RoDTEP.
For future legal steps against foreign buyers, should we keep Receivables amount in the books of account separately so that future litigation is not weakened. At the same time, we will clean edpms on RBI website. Pl advise wrt AS etc.
Could we write off 100% at one go with RBI approval?
Regards
Jayanta kr Bandyopadhyay
Kolkata
Hello Jayanta,
Writing off export receivables, especially large outstanding amounts, requires careful accounting and regulatory compliance. Here are some key points and suggestions relevant to your situation:
Maintain Receivables Separately:
It is advisable to continue showing the export receivables as a separate debtor or as a "doubtful debt" in your books until legal proceedings are exhausted or a final write-off decision is taken. This helps preserve evidence of the claim and strengthens your position for any future litigation.
Write-off Procedure:
As per Accounting Standard (AS) 4 - Contingencies and Events Occurring After the Balance Sheet Date and relevant Ind AS (if applicable), you can write off doubtful or bad debts after making reasonable efforts for recovery. Usually, it is done by creating a provision first and then writing off the debt against the provision.
Disclosure:
Adequate disclosure should be made in the notes to accounts about the nature and reasons for the write-off, any recoveries expected, and status of legal action.
RBI Permission:
As per RBI guidelines, exporters can write off bad debts in export receivables only after 180 days from the due date of payment and upon obtaining RBI approval (for foreign currency export bills). The write-off requires submission of necessary documents and justification.
DBK and RoDTEP Adjustments:
If you have availed Duty Drawback (DBK) or Remission of Duties or Taxes on Export Products (RoDTEP), any write-off of receivables may require proportionate repayment or adjustment since these benefits were linked to export proceeds.
EDPMS Clean-up:
After RBI approval and accounting write-off, you can clear the outstanding on the Export Data Processing and Monitoring System (EDPMS) portal. This is necessary to avoid compliance issues.
Write-off 100% at Once?
Technically yes, but only after RBI approval. Until then, it is prudent to provide for the debt as doubtful or bad debt. Sudden full write-off without approval may create regulatory complications.
Keeping the receivable in books till legal steps are concluded ensures you have an accounting record to support your claim.
| Step | Action |
|---|---|
| Maintain export receivables separately as doubtful debt until recovery efforts are exhausted | Yes |
| Obtain RBI approval for write-off of export receivables | Mandatory |
| Adjust proportionate DBK / RoDTEP benefits | Yes, ensure proper repayment or adjustment |
| Write-off amount in books after RBI permission | Yes |
| Clean up EDPMS after write-off | Yes |
| Maintain documentation and disclosure in financial statements | Yes |
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