Deduction of interest due to prepayment of usance bill is allowed: Expert

Against our exports, the buyer has pre-paid the usance bill after deducting interest for the unexpired usance period. Will it be treated as a shortfall in export realisation under FEMA? 

No. Para C.16 of the RBI Master Direction no. 16/2015-16 dated January 1, 2016 (as amended), on export of goods and services says that occasionally, exporters may approach AD Category-I banks for reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bills. AD Category-I banks may allow cash discount to the extent of amount of proportionate interest on the unexpired period of