Question ID : 40905

Write Back of payment for Import Bills

My client has made imports of around 50 Lakhs four years back and due to bad quality of material it could not be sold. He has not paid the bills and now the overseas party has agreed to write off the entire amount. Can he do so without taking approval of RBI. Otherwise what should be the procedure for write off. At the time of Audit if company write off the amount without taking the approval of RBI what should be responsibility to report or disclose as an Auditor.

If the other party confirms in writing that it has written off the receivable. Otherwise, the company has to prove their auditors that why this amount is not payable. If the Auditors are not satisfied then they have to give emphasis of matter para in their auditors report. For writting back the liability it is not required to go to RBI.