What is Exchange Rate?
An exchange rate tells you how many rupees one unit of a foreign currency is worth, or the other way round. Rates move constantly in the market, and different rates exist at the same moment: interbank rates, published reference rates, a bank's card or TT buying rate for converting your inward remittance, and the rate your accounting software uses for the books. The gap between the market rate and the rate your bank actually gives you is its forex markup.
Why it matters for exporters
Service exporters usually invoice in USD, EUR, GBP or another foreign currency but report in rupees, so the exchange rate turns up in several places. On the EDF, Part 2B records each invoice in its own currency and amount, while field 1.22 asks for the total value in INR, in figures and words. Our fact sheet does not specify which rate to use for that conversion, so ask your AD bank which rate it expects; keep whatever rate you use consistent and documented.
GST has its own valuation rules for foreign-currency invoices, which link the rate to the time of supply. Your CA can tell you which rate to use for GST, and it may differ from the rate on the day the money lands. The rupee amount actually credited by your bank on realisation is yet another figure, and that is what your bank statement and FIRA will show.
Example
Polaris Code LLP raises an invoice for USD 8,000 on 12 October 2026. For its October EDF it converts at the rate its bank advises, say ₹84.10, giving ₹6,72,800 for field 1.22 (rate illustrative). The client pays on 9 December, when the bank's buying rate is ₹84.60 after markup, and ₹6,76,800 is credited. Polaris records the exchange difference in its books. It writes the rupee total in words using the amount in words tool.
Common confusion
The exchange rate on the invoice date, the realisation date and the GST valuation date can all differ. Read total value in rupees on the EDF and see reference rate.