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  3. Write-Off
Glossary

What is Write-Off?

A write-off, in export compliance, is the formal closure of an unrealised export receivable that cannot be recovered, done through the AD bank under RBI rules.

A write-off means accepting that an amount owed will not be collected and removing it from the books. Accountants do this for bad debts all the time. For exports, there is a second layer: the unpaid invoice is also an open entry in RBI's EDPMS, so writing it off in your accounts does not, by itself, close it on the FEMA side. That closure needs to go through your AD bank under RBI's rules.

Why it matters for exporters

Foreign clients do sometimes go bust, vanish or refuse to pay. When that happens, the invoice you declared on the EDF stays open past the realisation period (9 months from the invoice date for services, 12 months for rupee invoicing). Leaving it open indefinitely can affect your standing with the bank and other entries. RBI's framework has generally allowed write-off of unrealised export bills in defined situations, with limits, conditions and documents such as proof of recovery efforts. The specifics are in the current RBI text and bank Directions, so confirm with your AD bank.

Before reaching write-off, check whether an extension of the realisation period makes more sense. If the money is late rather than lost, ask the bank for more time using our realisation extension request letter.

Example

Lantern Games Pvt Ltd invoiced a US studio ₹6,80,000 in November 2026. The studio shut down in mid-2027 without paying. Lantern collects its emails, reminders and evidence of the closure, books a bad debt with its CA, and writes to its AD bank asking how to close the EDPMS entry under the applicable write-off provisions.

Common confusion

A write-off is not the same as a credit note. A credit note reduces the amount due by agreement; a write-off accepts that money due will not come. Tax treatment of bad debts is a separate question for your CA. See bad debts on exports for practical steps.

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