From SOFTEX to EDF, the form has changed. The compliance responsibility has not.
By CA Surekha S Ahuja
Export invoice → EDF → EDPMS → receipt →
reconciliation → mark-off → closure
The 30/10 quick reference
|
Number |
What the exporter should remember |
|
1 October 2026 |
New export framework comes into force |
|
30 days |
Applicable monthly EDF filing period for software and
services |
|
5 working days |
AD bank EDPMS entry timeline for the applicable service EDF |
|
9 months |
Normal export realisation period |
|
12 months |
Applicable period for exports invoiced or settled in INR |
|
₹10 lakh |
Simplified EDPMS closure facility for eligible exports |
|
1 year |
Threshold for consequences where proceeds remain unrealised
beyond the applicable or extended period |
|
3 times |
Maximum penalty where the amount involved is quantifiable |
|
₹2 lakh + ₹5,000/day |
Maximum penalty where the amount cannot be quantified, plus
the daily penalty for a continuing contravention |
The FEMA clock
The realisation
period does not begin from the same event for every export.
|
Export |
The clock |
|
Goods |
Generally from shipment |
|
Software and services |
Generally from invoice |
|
Goods sold from an overseas warehouse |
From sale |
|
Exports invoiced or settled in INR |
12 months |
|
Project exports |
Applicable contractual/regulatory framework |
Example.
A service invoice dated 10 October 2026 will ordinarily have a nine-month
realisation deadline of 10 July 2027. A commercial credit period agreed with
the customer does not, by itself, replace the FEMA realisation requirement.
1. What has changed from SOFTEX to EDF?
The practical
change is: SOFTEX process → common EDF framework → integrated FEMA export
control. The exporter must not stop at declaration; the transaction must
move through declaration, EDPMS, receipt, reconciliation and closure. The
Authorised Dealer (AD) bank has an important operational role in extensions,
reductions, set-offs, third-party receipts and closure.
One
EDF does not mean one filing route.
|
Export |
Broad route |
|
Goods through EDI port |
Shipping bill/customs route |
|
Goods through non-EDI port |
Customs route |
|
Software from DTA |
AD bank/STPI, as applicable |
|
Other services from DTA |
AD bank |
|
SEZ exports |
Development Commissioner/applicable SEZ route |
For service and
software exporters, the monthly invoice-to-EDF process is particularly
important. October 2026 invoices enter the first monthly EDF cycle, and the
filing should ordinarily be completed by 30 November 2026.
2. The FEMA export life cycle
The new compliance system should be designed around one simple chain.
Figure 1. The FEMA export life cycle
EDF filing is
only one event in the FEMA life cycle; it is not the closure of the export
transaction. An exporter can have an invoice, an EDF and a bank receipt while
the corresponding EDPMS item remains open. The internal control should
therefore continue until the applicable FEMA closure is completed.
3. Put EDF into the monthly compliance calendar
This is the
most important operational change. FEMA export compliance should not be left to
the annual audit or year-end receivable review.
|
Timing |
Compliance action |
|
At invoice |
Classify export and calculate FEMA dates |
|
Monthly internal cut-off |
Reconcile invoices with books and GST returns (GSTR-1 and
GSTR-3B) |
|
Within applicable EDF period |
File EDF |
|
After bank processing |
Verify EDPMS entry |
|
Monthly |
Match receipts with export invoices |
|
At 6 months |
Review ageing and problem receivables |
|
Before FEMA due date |
Ensure receipt or initiate permitted remedy |
|
After receipt |
Obtain mark-off/closure |
|
Quarterly |
Review eligible ₹10 lakh closure cases |
|
Monthly/quarterly |
CFO review of exceptions |
Keep statutory
and internal dates separate. 30 days and nine months are regulatory
timelines. A 15th-of-the-month reconciliation target or a six-month warning
is an internal control designed to give time for corrective action.
Why
six months? At six months, management can still ask:
•
Is payment actually expected? Is there a customer
dispute?
•
Is a short receipt likely? Is third-party payment
involved? Is set-off relevant?
•
Will an extension or other permitted remedy be
required?
The objective is simple: find the FEMA problem while there is
still time to solve it.
4. The CFO FEMA register
Every exporter
should maintain one central register rather than separate spreadsheets for
Accounts, Treasury and FEMA.
|
Field |
Purpose |
Field |
Purpose |
|
Customer/country |
Counterparty |
Receipt |
Date and amount |
|
Export category |
Goods/software/services |
Difference |
Short receipt/charges/claim |
|
Invoice/date/value |
Underlying transaction |
Extension/reduction |
Approval/details |
|
GST return |
GSTR-1 period; LUT or IGST |
Set-off |
Details |
|
EDF |
Filing date/reference |
Third-party receipt |
Details |
|
EDPMS |
Entry/status |
Mark-off |
Date |
|
FEMA due date |
Realisation deadline |
Closure |
Final status |
The
monthly reconciliation should be:
Books ↔ Invoice register ↔ GST returns ↔
EDF ↔ Bank ↔ EDPMS
Any unexplained
break should become an exception, with an identified owner and action date.
5. Match the EDF with GST returns
The same export
invoices are reported under GST and under FEMA, so the two sets of figures
should agree every month before the EDF is filed.
|
GST record |
What to match with the FEMA record |
|
GSTR-1, Table 6A (exports) |
Invoice number, date and value agree with the EDF for the
same month; shipping bill details for goods |
|
GSTR-3B, Table 3.1(b) (zero-rated supplies) |
Monthly export turnover agrees with the EDF total and the
books |
|
LUT or IGST payment |
Each export invoice is identified as supplied under LUT or
with IGST paid |
|
Refund claim |
Realisation evidence filed with the refund claim (FIRC/BRC)
ties to the receipt marked off in EDPMS |
|
Annual return (GSTR-9) |
Export turnover for the year agrees with EDFs filed and the
books |
Why it
matters. For services, receipt of payment is part of the GST definition of
an export of services, so an unrealised invoice is a GST exposure as well as a
FEMA one. For goods, rule 96B of the CGST Rules requires a refund to be repaid
with interest where proceeds are not realised within the FEMA period, including
any extension. The nine-month FEMA date is therefore also a GST date.
Expected
differences should be explained, not ignored: exchange-rate differences, credit
notes, amendments made in a later GSTR-1, and advances.
6. Realisation ageing: six months is the warning, nine months is the normal period
A service invoice raised on 10 October 2026 may have a normal FEMA
realisation deadline of 10 July 2027. The control should operate as follows.
Figure 2. Realisation ageing control
Do not wait for
the deadline to expire before approaching the AD bank where regulatory action
is required. A longer contractual credit period does not automatically extend
the FEMA period.
7. Rs.10 lakh: simplified closure, not blanket exemption
For eligible
export entries within the prescribed limit, a simplified declaration-based
EDPMS closure mechanism is available. But ₹10 lakh should not be treated as a
blanket exemption from FEMA export compliance. Always ask two separate
questions: Was EDF required? and Is the transaction eligible for the
₹10 lakh closure facility? These are different compliance questions.
8. The three common exceptions
|
Exception |
The issue |
Control |
|
Short receipt |
Example: export value ₹12 lakh, receipt ₹10 lakh. The
difference may arise from bank charges, exchange differences, discount,
rebate, customer claim or another commercial adjustment. The accounting entry
does not itself determine the FEMA treatment. |
Export value → receipt → difference → FEMA treatment →
closure |
|
Third-party receipt |
Payment comes from someone other than the overseas
customer. |
Establish the identity of the payer, the relationship with
the customer, the reason for payment, the underlying transaction and
compliance with applicable FEMA conditions. |
|
Set-off |
An export receivable and import payable may appear
commercially capable of set-off. But commercial set-off is not automatically
FEMA-permitted set-off. |
Check and document the applicable conditions and the
AD-bank procedure. |
9. AD bank and EDPMS controls
The exporter
should obtain the AD bank’s current operating procedure for EDF submission,
software/service exports, EDPMS entry, extension, reduction, set-off,
third-party receipts, mark-off and closure.
One control
should be non-negotiable: EDF submitted ≠ EDPMS updated. The EDPMS
reference/status should be verified and retained. Legacy open EDPMS entries
should also be reviewed.
10. What happens when export proceeds remain unrealised?
If proceeds
remain unrealised beyond the applicable or extended period, the matter should
immediately move from routine ageing to FEMA exception management. Where the
prescribed period remains exceeded by more than one year, the Regulations
provide for restrictions on further exports, including the prescribed full
advance payment or irrevocable Letter of Credit requirement, subject to the
applicable provisions.
FEMA ageing is
therefore not merely an accounts-receivable report. It is a regulatory-risk
report.
11. Penalties and regularisation
A contravention
can attract penalty under section 13 of FEMA. Where the amount involved is
quantifiable, the penalty can extend to three times the sum involved. Where it
cannot be quantified, the penalty can extend to ₹2 lakh. A continuing
contravention can attract an additional penalty of up to ₹5,000 per day. These
are statutory maximums, not automatic penalties in every delayed case.
The
practical response is:
Identify → document → regularise →
obtain AD-bank treatment → close
Compounding may
be available in appropriate cases under section 15 of FEMA.
12. Six controls that prevent most FEMA export problems
|
# |
Control |
What it means |
|
1 |
Separate the three dates |
Maintain separately: EDF filing date, FEMA realisation date
and EDPMS closure date. |
|
2 |
Start ageing at invoice level |
Do not wait for the balance-sheet date. |
|
3 |
Trigger review at six months |
Six months is the management warning; it is not the
statutory deadline. |
|
4 |
Escalate exceptions before the due date |
Short receipt, dispute, third-party payment, set-off or
expected delay should be identified early. |
|
5 |
Reconcile EDPMS monthly |
EDF filing alone is not sufficient evidence of closure. |
|
6 |
Give every exception an owner |
A FEMA register without an accountable person is only a
spreadsheet. |
October 2026: implementation checklist
|
# |
Every exporter should now |
Done |
|
1 |
Replace the old SOFTEX SOP wherever applicable. |
|
|
2 |
Obtain the AD bank’s current EDF/EDPMS procedure. |
|
|
3 |
Create one central FEMA export register. |
|
|
4 |
Load current and legacy open export entries. |
|
|
5 |
Add FEMA due dates to receivable ageing. |
|
|
6 |
Introduce a six-month warning trigger. |
|
|
7 |
Reconcile invoices, GST returns, EDF, bank receipts and
EDPMS monthly. |
|
|
8 |
Identify short receipts and other exceptions. |
|
|
9 |
Initiate permitted remedies before the deadline where
required. |
|
|
10 |
Assign an owner to every open FEMA exception. |
|
|
11 |
Include FEMA ageing in the monthly CFO review. |
|
|
12 |
Complete the first applicable October 2026 monthly EDF
cycle by 30 November 2026. |
|
The CA S. Ahuja Perspective
SOFTEX was a
form. EDF is a system. The real compliance change from 1 October 2026 is
not simply the replacement of one declaration with another. It is the need to
control the complete export life cycle shown in Figure 1, from invoice to
closure. And the management system should operate before the regulatory
deadline:
|
When |
What it is |
|
6 months |
Warning |
|
9 months |
Normal realisation period |
|
Before due date |
Remedy where required |
|
Overdue |
Immediate exception management |
The simplest
management rule: every export invoice should have a FEMA due date, an owner,
an EDPMS status and a closure status. That is the practical discipline that
replaces the old SOFTEX mindset.