Published 28 October 2026
An export of services is zero-rated only if the payment is received in a way the IGST Act accepts. Section 2(6)(iv) of the IGST Act requires payment “in convertible foreign exchange”, or in Indian rupees where the Reserve Bank of India allows it. Exporters have asked whether money received in rupee accounts, or settled by set-off, qualifies. Circular No. 263/09/2026-GST, issued on 26 October 2026 by the Central Board of Indirect Taxes and Customs (CBIC), answers these questions, and also addresses the time to realise export proceeds on goods.
Services: which receipts qualify
An earlier circular (202/14/2023-GST, 27 October 2023) had accepted payment in rupees from the Special Rupee Vostro Accounts of foreign correspondent banks. This circular goes further. It points out that under the FEMA regulations (FEMA 14R/2023), payment for exports to countries other than Nepal, Bhutan and members of the Asian Clearing Union may be made in rupees or in any foreign currency. Rupee payments may come through INR Nostro (Rupee Vostro) accounts of correspondent banks, or through repatriable rupee accounts such as the Special Rupee Vostro Account and the Special Non-Resident Rupee (SNRR) account.
The circular clarifies that the condition in section 2(6)(iv) is met where the payment for export of services is received:
- in convertible foreign exchange; or
- in repatriable rupee accounts, such as an SNRR account or an INR Nostro account, or any similar account used for repatriating foreign exchange.
Stock brokers
Stock brokers serve overseas clients (FPIs, NRIs and OCIs) and are paid in rupees. Payment through repatriable rupee accounts (SNRR, NRE) fulfils the condition. A payment through an NRO account must, as per RBI guidelines, be routed through a repatriable account (SNRR or NRE) to qualify.
Set-off
Set-off of export receivables against import payables is a valid way to settle under FEMA. The circular notes that the RBI allowed set-off with conditions (goods against goods, services against services), and that under the new Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, in force from 1 October 2026, those conditions no longer apply. So long as the set-off is in line with RBI directions, the section 2(6)(iv) condition is treated as met.
Reinsurance brokers
An Indian reinsurance broker’s commission is not remitted separately. The foreign reinsurer is treated as paying the commission by letting the broker retain it out of funds, before the net premium is sent abroad. Under FEMA this extinguishes the obligation to realise and repatriate. The circular says it may be treated as meeting section 2(6)(iv).
Goods: realisation of proceeds and rule 96B
Rule 96B of the CGST Rules says that where sale proceeds of exported goods are not realised, in whole or part, within the period allowed under FEMA (including any extension), the refund already paid must be repaid with interest, to the extent of non-realisation, within thirty days of the end of that period. No recovery is made where the requirement to realise has been written off by the RBI on merits.
The circular clarifies that:
- The period allowed for realisation under the IGST Act is whatever period, or extended period, is set under the RBI’s Master Direction (FED Master Direction No. 16/2015-16 dated 01.01.2016, last amended on 05.06.2026), as amended from time to time.
- Where the requirement to realise has been written off, in whole or part, by the Authorised Dealer bank, recovery under rule 96B is not to be made. Note that rule 96B itself speaks of a write-off by the RBI. The circular extends the protection to a write-off by the AD bank.
Points for exporters
- Check how each export receipt reached the bank. If it came through an NRO account, find out whether it was routed through a repatriable account.
- Keep the bank records of each realisation, and any RBI or AD bank approvals for set-off, extension or write-off.
- Keep track of the FEMA time limit for each shipment. It sets the start of the thirty days under rule 96B.