CBIC has clarified that certain RBI-permitted rupee receipts and settlement arrangements can satisfy the payment condition for export of services.

Indian businesses providing services to overseas customers should review how their export payments are received and recorded.

Some exporters receive payments in convertible foreign currency.

Others may receive money through permitted Indian Rupee accounts.

Certain businesses may also settle export receivables against import payables.

The GST treatment depends on the applicable statutory conditions and the actual settlement arrangement.

CBIC issued Circular No. 263/09/2026-GST dated 26 October 2026 (F. No. CBIC-20001/2/2026-GST), titled as a clarification in respect of receipt of payment for export of goods or services, clarifying several such situations.

This Circular is particularly relevant where a business is uncertain whether the payment-realisation requirement for export of services has been satisfied.

1. What Does the IGST Act Require?

Section 2(6) of the IGST Act, 2017 prescribes five conditions for a supply of services to qualify as an export of services.

All five conditions must be satisfied.

CBIC's latest clarification principally concerns Condition 4—the manner in which payment is received or settled.

It does not remove the requirements relating to the recipient, place of supply or distinct establishments.

The text of Section 2(6) is reproduced in CBIC Circular No. 202/14/2023-GST:

2. Payment Received Through Repatriable INR Accounts

What Has CBIC Clarified?

Paragraph 2.1 of Circular No. 263/09/2026-GST recalls the earlier Circular No. 202/14/2023-GST dated 27 October 2023, under which payment received in INR from Special Rupee Vostro Accounts was treated as satisfying Section 2(6)(iv), subject to the Foreign Trade Policy, 2023 and the applicable RBI circulars.

Paragraph 2.2 refers to the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, under which export receipts may be in INR or foreign currency, subject to specific provisions for certain countries.

Paragraph 2.3 then clarifies that payment received in convertible foreign exchange, or in repatriable Indian Rupee accounts, satisfies Section 2(6)(iv).

The Circular names the following as examples of repatriable INR accounts:

Special Non-Resident Rupee (SNRR) Account

INR Nostro Account

The words "such as" indicate that these are examples. Whether any other account is a repatriable INR account must be confirmed with the Authorised Dealer Bank under the RBI framework.

Practical Example

Imagine a Kolkata software-development company providing services to an overseas customer.

The company issues an invoice for the agreed services.

The overseas customer arranges payment through an RBI-permitted repatriable INR banking route.

The Indian company receives the corresponding amount in Rupees.

The Finance Manager asks:

“Does receipt in Indian Rupees automatically mean that our service cannot qualify as an export under GST?”

No.

The currency denomination alone does not decide the matter.

Where the receipt follows the permissible route described in the Circular, the payment condition may be satisfied.

However, the business must also establish the other requirements of Section 2(6).

Important: An ordinary domestic INR transfer is not automatically equivalent to an eligible export remittance.

The relevant account, banking route and applicable RBI conditions must be verified.

3. Can Export Receivables Be Adjusted Against Import Payables?

The Set-off Clarification

Paragraph 2.4 of the Circular addresses another practical issue.

A business may both supply services to an overseas party and purchase goods or services from overseas.

Instead of making separate payments for the entire gross amounts, the parties may wish to settle eligible receivables and payables through a permitted set-off arrangement.

The Circular records that set-off is a valid method of settlement under FEMA.

It notes that the earlier RBI guidelines permitted set-off subject to conditions, such as goods being set off against goods and services against services.

It then notes that, with the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 taking effect from 1 October 2026, those conditions no longer apply.

CBIC clarifies that where export receivables are set off against import payables, the payment condition in Section 2(6)(iv) is treated as fulfilled, as long as the set-off is in accordance with the directions issued by RBI.

For a set-off made before 1 October 2026, the RBI conditions in force at that time should be checked.

Illustrative Example

Imagine an Indian business with the following transactions involving an overseas party.

These figures are hypothetical.

The business cannot simply assume that the entire ₹10,00,000 has been realised merely because ₹7,00,000 was received.

It must establish whether the ₹3,00,000 adjustment was a valid set-off under the applicable RBI directions.

Relevant contracts, invoices, settlement records and authorised-bank documentation should support the arrangement.

A genuine, RBI-compliant set-off is different from an unsupported accounting journal entry.

The tax treatment of any imported service, including a possible GST reverse-charge liability, must also be examined separately.

4. Special Clarification for Stockbrokers

Paragraph 2.3 also addresses Indian stockbrokers providing services to overseas clients, namely FPIs, NRIs and OCIs, who are paid in Indian Rupees.

Payments received through repatriable accounts such as SNRR or NRE accounts satisfy the payment condition.

Where payment is made from an NRO account, it qualifies only if it is routed through a repatriable account (SNRR or NRE) in accordance with RBI guidelines.

Do not treat NRO, NRE and SNRR accounts as interchangeable merely because all may involve Indian Rupees.

The precise banking arrangement matters.

5. Reinsurance Brokers and Net Retention

Paragraph 2.5 addresses a specialised business arrangement.

An Indian reinsurance broker handles reinsurance premium payable to a foreign reinsurer.

Its commission is often settled through net retention: the foreign reinsurer authorises the broker to retain the commission out of the premium, and only the net premium is remitted abroad.

In such a case, there is no separate inward remittance representing the commission.

The Circular notes that under FEMA, the foreign reinsurer is treated as having paid the commission through this authorisation, which discharges the exporter's obligation to realise and repatriate the proceeds.

CBIC accordingly clarifies that commission received through this net-retention mechanism satisfies the payment condition in Section 2(6)(iv).

This treatment depends on the actual arrangement and applicable regulatory requirements.

It should not be extended automatically to every commission or brokerage transaction.

6. What About Export of Goods?

Paragraphs 3 and 3.1 of the same Circular separately discuss the realisation of export proceeds for goods under Rule 96B of the CGST Rules.

Under Rule 96B, where a refund relating to export of goods has been paid but the sale proceeds are not realised, wholly or partly, within the period allowed under FEMA (including any extension), the refund must be deposited back with interest, to the extent of non-realisation, within 30 days of the expiry of that period.

The Rule itself already provides that there is no recovery where RBI writes off the requirement of realisation on merits.

CBIC clarifies that the realisation period for this purpose is the period prescribed in RBI's Master Direction on Export of Goods and Services (FED Master Direction No. 16/2015-16 dated 01.01.2016), as amended from time to time.

It further clarifies that where the requirement of realisation has been written off, wholly or partly, by the Authorised Dealer (AD) Bank, recovery under Rule 96B shall not be done to that extent.

Export-of-services eligibility and recovery of refunds for export of goods are different legal questions.

Businesses should not combine the two without examining their respective provisions.

7. An Additional RBI Development Relevant to Service Exporters

On 2 November 2026, after the CBIC Circular was issued, RBI issued Notification No. FEMA 23(R)/(2)/2026-RB, the Foreign Exchange Management (Export and Import of Goods and Services) (Second Amendment) Regulations, 2026.

It amends the principal regulations notified as FEMA 23(R)/2026-RB dated 13 January 2026.

The amendment is stated to come into force from 1 October 2026.

It inserts two provisos in Regulation 3(2), under which an exporter of services is deemed to have submitted the EDF (Export Declaration Form) when the information required for receiving payment for the service is furnished to the Authorised Dealer for crediting the exporter's account:

• Resident individual exporters: the deemed submission applies without any value limit.
• Exporters other than resident individuals: the deemed submission applies only where the inward remittance for the service is not more than ₹10 lakh (or its equivalent in foreign currency).

The amendment also inserts a definition of "resident individual" and changes an IDPMS reporting provision relating to import of services.

This is a FEMA procedural amendment.

It is not an automatic GST export exemption or a relaxation of all five conditions under Section 2(6) of the IGST Act.

Businesses should coordinate the relevant FEMA documentation with their Authorised Dealer Bank.

8. Which Businesses Should Review This?

The clarification may be relevant to Indian exporters of software-development services, IT-enabled services, engineering consultancy, design services and other cross-border professional services.

It may also concern businesses with qualifying export/import set-off arrangements, stockbrokers serving overseas clients and reinsurance brokers.

Goods exporters with unrealised export proceeds or relevant Rule 96B issues should examine the separate part of the Circular.

However, having an overseas customer does not by itself establish an export of services under GST.

The complete statutory definition must be satisfied.

9. Check This Today — 5 Minute Self-Check

Ask your Finance or Export Accounts Manager to answer YES / NO / NOT SURE.

A NO or NOT SURE response does not automatically establish that GST was incorrectly treated.

It identifies a matter that should be verified.

10. What Documents Should You Keep Ready?

Overseas Customer Agreements: Contracts identifying the actual customer, services supplied and commercial arrangements.

Export-Service Invoices: Relevant invoices and the corresponding accounting records.

Bank Credit Advice and Remittance Records: Evidence of the actual receipt, currency, banking route and settlement.

Authorised Dealer Bank Communications: Confirmation or supporting information concerning permissible INR receipts or set-off arrangements, where applicable.

Set-off Documentation: Genuine reconciliation of export receivables and import payables, together with relevant approvals, declarations or bank records.

FEMA Reporting Documents: Applicable declarations and information furnished under the relevant RBI framework.

GST Returns and Refund Records: Relevant GSTR-1, GSTR-3B, LUT/refund documentation and related records, depending on the transaction.

Management Reconciliation: Invoice → Payment/Settlement → Bank Evidence → GST Treatment → Pending Action.

Not every document listed above is required for every transaction. The applicable requirements depend on the actual arrangement.

11. If You Identify a Problem: What You Can Check Yourself

Most of the first checks can be done in-house by your accounts team, using your own records and your bank. For each situation below, you will find what to check, what to ask your bank for, how the Circular helps, and when to get professional advice.

Situation 1: Export Payment Was Received in INR

What to check:

• Open the bank credit advice for the receipt and note the remitter's name, the remitting bank and the account the money came from.
• Check whether the remitter is the overseas customer named on your invoice.
• Match the amount and invoice reference with your export invoice.

What to ask your bank: A written confirmation or remittance certificate showing the nature of the account the payment came from, for example an SNRR account, an INR Nostro account, a Special Rupee Vostro account, or a domestic account.

How the Circular helps: If the bank confirms receipt from a repatriable INR account such as SNRR or INR Nostro, Para 2.3 of Circular No. 263/09/2026-GST treats the payment condition as satisfied. For Special Rupee Vostro accounts, see Circular No. 202/14/2023-GST.

Get professional advice if: the money came from an ordinary domestic account, from someone other than the overseas customer, or the bank cannot confirm the account type.

Do not automatically treat every INR receipt as an invalid export payment, and do not assume every INR receipt is valid either.

Situation 2: Export Receivable Was Adjusted Against Import Payable

What to check:

• Note the date of the set-off. If it was before 1 October 2026, the RBI conditions in force at that time apply, including the earlier goods-against-goods and services-against-services condition referred to in the Circular.
• Prepare a one-page reconciliation: export invoice amount, import invoice amount set off, net amount received, and bank reference for the net receipt.
• Check that both the export invoice and the import invoice exist, and that the contracts or correspondence support the set-off.

What to ask your bank: Confirmation that the set-off was handled or reported through your Authorised Dealer Bank, and any related record the bank holds.

How the Circular helps: Para 2.4 treats the payment condition as satisfied for the set-off portion, as long as the set-off is in accordance with RBI directions.

Get professional advice if: the set-off exists only as a journal entry in your books with no bank record, or if the bank has no record of it.

Also check separately whether GST is payable under reverse charge on the imported service.

Situation 3: A Refund or Export Classification Was Questioned

What to check:

• Read the notice or deficiency memo carefully and note the reply deadline stated in it.
• Identify which of the five conditions in Section 2(6) is being questioned. Use the table in Section 1 of this article.
• If the objection is only about payment (for example, "payment received in INR" or "full amount not received"), check whether your case falls under Situation 1, 2 or 4.

How the Circular helps: Where your receipt falls within a paragraph of Circular No. 263/09/2026-GST, you can refer to that paragraph in your reply, along with the supporting bank document.

Get professional advice if: the objection concerns place of supply, recipient location, intermediary status or distinct-person issues, or if the deadline is close. These questions turn on facts and contracts and are not answered by this Circular.

Situation 4: Overseas Stockbroker Receipts Are Involved

What to check:

• Group your overseas clients (FPIs, NRIs and OCIs) by the account from which brokerage is paid.
• Mark each as SNRR, NRE or NRO.
• For NRO cases, check whether the payment was routed through an SNRR or NRE account.

How the Circular helps: Para 2.3 treats payments through SNRR or NRE accounts as satisfying the payment condition. Payments from NRO accounts qualify only if routed through SNRR or NRE in line with RBI guidelines.

Get professional advice if: brokerage is being collected directly from NRO accounts without such routing.

Situation 5: Export Proceeds for Goods Remain Unrealised

What to check:

• List the shipping bills for which GST refund was received but the proceeds are still not fully realised.
• For each, note the realisation period under the RBI Master Direction and any extension granted.

What to ask your bank: Whether the AD Bank has written off the realisation requirement, wholly or partly, and a copy of that write-off.

How the Circular helps: Para 3.1 clarifies that recovery under Rule 96B shall not be done to the extent the realisation requirement has been written off by the AD Bank.

Get professional advice if: a Rule 96B recovery notice has already been issued, or the realisation period has expired without an extension or write-off.

Do not assume the new Circular automatically reopens every rejected refund or expired statutory remedy. Past orders and time limits must be examined case by case.

12. Legal References — Official Primary Sources

1. CBIC Circular No. 263/09/2026-GST

Date: 26 October 2026.

File No.: CBIC-20001/2/2026-GST.

Issuing Authority: Central Board of Indirect Taxes & Customs, GST Policy Wing.

Relevant provisions: Paragraphs 2 to 2.5 (export of services) and Paragraphs 3 and 3.1 (Rule 96B, export of goods).

What it supports: Para 2.1 - Special Rupee Vostro Accounts (Circular 202/14/2023-GST); Para 2.2 - FEMA (Manner of Receipt and Payment) Regulations, 2023; Para 2.3 - SNRR / INR Nostro receipts and stockbroker payments (SNRR, NRE, NRO routing); Para 2.4 - RBI-compliant set-off; Para 2.5 - reinsurance net retention; Paras 3 and 3.1 - Rule 96B realisation period and AD Bank write-off.

2. IGST Act, 2017 — Section 2(6)

Existing statutory requirement.

Prescribes the five conditions that must be satisfied for export of services.

The relevant payment condition is Section 2(6)(iv).

The provision is reproduced in Circular No. 202/14/2023-GST below.

3. CGST Rules, 2017 - Rule 96B

Recovery of refund of unutilised input tax credit or integrated tax paid on export of goods where export proceeds are not realised within the period allowed under FEMA, including any extension.

4. CBIC Circular No. 202/14/2023-GST

Date: 27 October 2023.

What it supports: Earlier clarification that payment in INR from Special Rupee Vostro Accounts (permitted by RBI A.P. (DIR Series) Circular No. 10 dated 11 July 2022) satisfies Section 2(6)(iv), subject to the Foreign Trade Policy, 2023 and applicable RBI circulars.

5. RBI Notification No. FEMA 23(R)/(2)/2026-RB

Date: 2 November 2026.

Commencement: 1 October 2026.

Title: Foreign Exchange Management (Export and Import of Goods and Services) (Second Amendment) Regulations, 2026.

What it supports: Amendments to the principal regulations (FEMA 23(R)/2026-RB dated 13 January 2026), including the deemed EDF submission provisos in Regulation 3(2) for exporters of services.

Source Note

This article is based on the text of the official documents listed above and is current as of 8 November 2026.

The Circular clarifies the payment condition only. It does not by itself establish that any particular taxpayer qualifies for zero-rating or a refund.

This article is general information and not a legal opinion on any specific transaction.

One Small Improvement for Today

Ask your Finance Manager to select one overseas-service invoice and match it with the actual payment or settlement record.

Verify whether the payment condition is supported by the applicable RBI-permitted route.

Need Professional Support?

Businesses exporting services may benefit from a focused GST Export Payment Realisation & Zero-Rating Health Check.

The review can examine selected overseas contracts, invoices, payment records, RBI-permitted settlement arrangements and relevant GST provisions.

The objective is to establish the correct tax position and identify genuine documentation or compliance gaps—not guarantee export classification or refund sanction.

GST DOST | GST Advisory, Export Compliance & Professional Support