Export Realization for Rule 96(B)

[DAMINI TALWAR]

As per the provision of Rule 96B(1), where the sale proceeds, or any part thereof, in respect of such export of goods are not realised by the applicant within the period allowed under FEMA, but the RBI writes off the requirement of realisation of sales proceeds on merits, the refund paid to the applicant shall not be receovered.

Here what is the meaning of RBI writes off the requirements of realisation of sales proceeds on merits ? does it cover self-write off cases or by AD Category – I bank on behalf of the Reserve Bank,as mentioned in the RBI circular ?

[Sadanand Bulbule]

Exporters are supposed to realize and repatriate full value of services into India within 9 months from the date of rendering service under the FEMA. So  my understanding is, if the sale proceeds are not realised within 90 days from the date of export of services, RBI writes off the requirement of realisation of such sale proceeds on merits to protect the interest of exporters to safeguard the refunds due to them under Rule 96[B] of the CGST Rules.

However experts to validate.

[YAGAY andSUN]

Under Rule 96B(1) of the CGST Rules, if the sale proceeds from the export of goods are not realized within the period prescribed under FEMA, the refund granted to the exporter is generally liable to be recovered along with interest. However, if the Reserve Bank of India permits a write-off of the unrealized proceeds based on the merits of the case, such refund will not be subject to recovery. In this context, a write-off permitted by an Authorized Dealer (AD) Category – I bank under the delegated authority of the RBI is treated as a valid write-off under this rule.

This means that exporters are protected from refund recovery if their export bills are written off by their AD bank, following proper evaluation and in line with the RBI’s directions. It is important to note that self-declared write-offs by exporters without formal approval from the AD bank or the RBI are not recognized for this purpose. Therefore, to ensure compliance and safeguard against refund recovery, exporters must obtain written confirmation from their AD bank evidencing that the export proceeds have been written off under RBI’s prescribed norms.

Final Summary:

• "Write-off by RBI on merits" in Rule 96B(1)includes write-offs approved by AD Category–I banks under RBI’s delegated powers.

• It does not cover self-write-off by the exporter without AD bank’s or RBI’s formal approval.

• Hence, for protection from refund recovery under Rule 96B, ensure the AD bank issues a formal write-off letter as per FEMA.

[Shilpi Jain]

Where exporters are not able to realise their export proceeds despite best efforts, there is an option to approach the AD Bank to request for write off of such unrealisable amounts. Though this is subject to conditions put in para C.23 of Master Direction – Export of Goods and Services RBI/FED/2015-16/11 FED Master Direction No. 16/2015-16

[YAGAY andSUN]

Obtaining Insurance from ECGC may also be helpful in such cases where non realization of Export Proceeds happens.

AI Summary

Write-off of export proceeds protects GST refund when authorised bank or monetary authority grants the write-off. Rule 96B(1) links non-realisation of export sale proceeds under FEMA to potential refund recovery, but a write-off of unrealised proceeds authorised by the monetary authority or by an authorised dealer bank under delegated powers prevents recovery; self-declared write-offs do not suffice and exporters must obtain formal written confirmation from their authorised dealer bank evidencing the write-off as per FEMA norms.