Field 1.12 of the EDF asks how you will be paid: by letter of credit (L/C), against a bank guarantee (BG), or "Others". Most service exporters should tick Others, because their clients pay by ordinary bank transfer, either in advance or after the invoice. Pick L/C or BG only when one of those instruments genuinely backs the deal.
Key takeaways
- "Mode of realisation" means the payment mechanism that brings your export money into India.
- L/C and BG are bank-backed instruments common in goods trade and rare in services.
- Wire transfers, SEPA or ACH payments, platform payouts and advances all fall under Others.
- If you tick L/C or BG, field 1.19 asks for the bank handling that instrument.
- Whatever you tick should match how the money actually arrives, so your bank can match it later.
What field 1.12 is asking
The EDF is built around one question: how will the full export value reach India? Field 1.12 narrows that down to the mechanism. The form offers three choices, and you pick one for the form.
| Option | What it means | Typical in services? |
|---|---|---|
| L/C (letter of credit) | The client's bank promises to pay you once you present specified documents | Rare |
| BG (bank guarantee) | A bank guarantees payment if the client defaults | Rare |
| Others | Any other route: advance, direct transfer, platform payout | The usual answer |
The word "realisation" just means getting paid. Under the 2026 Regulations, full export value for services must be realised within nine months from the invoice date (twelve months where you invoice and settle in rupees). The mode tells your bank which kind of evidence to expect when that money lands.
Why Others is right for most service businesses
Letters of credit evolved for goods. A buyer in Rotterdam opens an L/C, the seller ships, presents a bill of lading and gets paid. Services rarely produce documents of that kind, so clients almost never bother with an L/C for a software sprint or a marketing retainer.
Bank guarantees appear occasionally in large government or infrastructure contracts abroad, but they are usually performance guarantees given by you, not payment guarantees protecting you. A performance guarantee does not change how your fee is paid, so it does not make BG the right tick.
What service exporters actually see is one of these:
- a SWIFT wire from the client's bank
- a SEPA transfer from a European client
- a US ACH payment received through a virtual account
- a payout from a payment platform or aggregator
- an advance paid before work starts
Every one of these is "Others".
Advance versus post-delivery payment
Ticking Others does not end the thinking. Part 4 of the EDF, the declaration, asks you to strike out alternatives such as "will be received" or "has been received". That is where timing shows up.
Advance received. Asha Design Studio, a Bengaluru proprietorship, invoices a Canadian client CAD 4,000 on 3 November 2026. The client paid the full amount on 1 November. On the EDF, Asha ticks Others in 1.12 and, in Part 4, keeps "has been received". The remarks column in Part 2B can note "Advance received 01-11-2026".
Paid after delivery. Nimbus Labs Pvt Ltd invoices a US client USD 9,500 on 20 November 2026, payable in 30 days. Nimbus ticks Others and keeps "will be received", then enters the expected date in the declaration. That date must sit within nine months of the invoice date.
| Scenario | Field 1.12 | Part 4 wording to keep |
|---|---|---|
| Full advance before invoice | Others | has been received |
| Invoice first, payment later | Others | will be received |
| Part advance, balance later | Others | depends on the invoice; explain in remarks |
| Payment under a confirmed L/C | L/C | will be received, plus field 1.19 |
Advance payments also have their own article: see EDF for advance payments for the timing detail.
When L/C or BG is the honest answer
Some exporters do get paid under an L/C. A firm supplying engineering design services for a Gulf construction project might be paid under a documentary credit tied to milestone certificates. In that case:
- Tick L/C in field 1.12.
- Fill field 1.19 with the name of the AD bank handling the L/C (often your own bank as advising or negotiating bank).
- Keep the L/C reference in the Part 2B remarks or contract column.
- Tell your bank in advance so the documents and the EDF tie up.
The same logic applies to BG if a bank guarantee genuinely secures payment to you. If you are not sure what instrument you hold, send a copy to your bank's trade desk and ask. Do not tick L/C just because the contract mentions one that was never opened. Our glossary entries on letter of credit and mode of realisation give the short definitions.
One form, mixed modes
One EDF can cover every service invoice you raised in a month, but field 1.12 is a single answer for the form. What if one client pays under an L/C and five pay by wire?
The Regulations do not spell out a split. Practical options include filing the L/C invoice on a separate EDF for that month, or ticking Others and explaining the L/C invoice in its remarks. Banks publish their own EDF acceptance policies, so ask yours which it prefers before you file. This is general information, not legal or tax advice.
Getting it right first time
A wrong tick rarely causes a disaster, but it creates noise. Your bank enters the EDF into EDPMS within five working days, and each invoice waits there to be matched with incoming money. If you declared L/C and the money arrives as a plain wire, someone at the bank will ask why. That costs you a few emails at best and a delayed closure at worst.
Before you file, check three things:
- Does the tick in 1.12 reflect how the client actually pays?
- Does Part 4 say "has been received" only for invoices already paid in full?
- Is the expected payment date inside the realisation window?
The EDF form generator sets Others by default and lets you change it, then fills the declaration wording to match.
Frequently asked questions
What does mode of realisation mean in the EDF?
It is the method by which your export proceeds will reach India. The EDF offers three options: letter of credit, bank guarantee, or Others. Most service exporters paid by bank transfer or platform payout select Others.
Is a PayPal or platform payout an L/C?
No. Platform payouts, wires, SEPA and ACH transfers are direct payments, not letters of credit. Tick Others and make sure the payment evidence your bank receives can be matched to the invoice.
Should I tick BG if I gave the client a performance guarantee?
Usually not. A performance guarantee protects your client if you fail to deliver; it does not secure your payment. Field 1.12 is about how you get paid, so Others is normally correct. Confirm with your bank if the guarantee structure is unusual.
What is field 1.19 for?
Field 1.19 asks for the AD bank handling the L/C or BG. You fill it only if you ticked L/C or BG in field 1.12. Exporters who tick Others can leave it blank or mark it not applicable, as their bank prefers.
Does an advance payment change the mode of realisation?
No, an advance is still Others. The difference shows in the Part 4 declaration, where you keep "has been received" rather than "will be received", and in the remarks column, where you can record the advance date.
Bottom line
For almost every service exporter, field 1.12 is a quick tick: Others. Spend your attention on the declaration wording and the expected payment date instead. When you are ready, the free EDF form generator fills these fields for you, and the EDF guide explains the rest of Part 1.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.