What changed
AD Category-I banks can now extend export realisation periods beyond six months up to six months at a time, without the earlier USD 1 million invoice value ceiling for such extensions. Status Holder exporters can write off the higher of 5% of average annual realisations over the preceding three financial years or 10% of proceeds due in a financial year. The mandatory 30% repatriation for on-site software contracts has been removed, but profits must be repatriated after contract completion.
What it means for you
Banks get more flexibility to support exporters facing delays, reducing the need for RBI approvals. Higher write-off limits for Status Holders ease compliance burden. IT firms benefit from full retention of on-site contract earnings abroad, boosting competitiveness.
What you must do
- Update internal policies to allow export realisation extensions beyond six months up to six months at a time without invoice value cap.
- Ensure due diligence for extensions: check no investigation pending, exporter's reasons beyond control, and declaration of realisation.
- For extensions beyond one year, verify exporter's total outstanding does not exceed USD 1 million or 10% of average realisations during preceding three financial years, whichever higher.
- Apply new write-off rules for Status Holder exporters using the higher of 5% of average annual realisations over preceding three financial years or 10% of proceeds due in the financial year.
- Remove the 30% repatriation condition for on-site software contracts, but ensure profits are repatriated after contract completion; update reporting accordingly.
Who it affects
AD Category-I banks, Exporters (all categories, for extension changes), Status Holder exporters (for write-off changes), Software exporters with on-site contracts
What is the new maximum extension period for export realisation?
AD Category-I banks can now extend the period beyond six months up to six months at a time, without any invoice value limit.
How has the write-off limit changed for Status Holder exporters?
Status Holders can write off the higher of 5% of average annual realisations over the preceding three financial years or 10% of export proceeds due in the financial year.
Do software exporters still need to repatriate 30% of on-site contract value?
No, the 30% repatriation requirement for on-site contracts has been fully removed, but profits from the contract must still be repatriated after completion.