What CBIC has clarified
The Central Board of Indirect Taxes and Customs (CBIC) has clarified how exporters prove they have actually received payment for exports — the condition that decides whether a supply of services counts as an export of services for GST purposes. Circular No. 263/09/2026-GST, dated 26 October 2026, issued under Section 168(1) of the Central Goods and Services Tax Act, 2017 (CGST Act), deals with the receipt-of-payment condition in Section 2(6)(iv) of the Integrated Goods and Services Tax Act, 2017 (IGST Act).
That condition requires the payment for an export of services to be received in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India (RBI). The circular, signed by Gaurav Singh, Commissioner (GST), GST Policy Wing, answers the practical questions that had built up around that one condition: which rupee accounts count, how stockbrokers serving overseas clients must route money, whether netting export receivables against import payables counts, and how the realisation rules for goods exports interact with refund recovery.
💡 In one line: payment for an export of services counts when it arrives in convertible foreign exchange or in a repatriable rupee account such as an SNRR or INR Nostro account — but money sitting in an NRO account alone does not qualify, and netting export receivables against import payables counts when done under RBI directions.
The core rule: convertible forex or a repatriable rupee account
The circular's central clarification is that the Section 2(6)(iv) condition is satisfied where payment for an export of services is received in convertible foreign exchange or in a repatriable Indian rupee account. The circular names the Special Non-Resident Rupee (SNRR) account and the INR Nostro account as examples, along with similar accounts that permit repatriation. The point is the repatriable character of the account, not its label alone: the money must be in a channel through which it can be repatriated, not merely denominated in rupees.
The circular also confirms that settlement in Indian rupees under the FEMA framework referenced as FEMA 14R/2023 is a valid route, with an exception for Nepal, Bhutan and members of the Asian Clearing Union (ACU). Exporters using rupee settlement therefore need to check that exception before assuming the route works for their counterparty's jurisdiction.
This builds on Circular No. 202/14/2023-GST, dated 27 October 2023, which had addressed the Special Rupee Vostro account route. Circular 263 extends the same logic beyond that earlier account type: the question is no longer whether the account is a Special Rupee Vostro account, but whether the account is a repatriable rupee account of the kind the circular describes.
Stockbrokers: SNRR or NRE qualifies, NRO alone does not
One of the circular's most practical clarifications concerns stockbrokers who serve overseas clients — foreign portfolio investors (FPIs), non-resident Indians (NRIs) and overseas citizens of India (OCIs). For such clients, payment routed through an SNRR account or an NRE account qualifies under the export-of-services payment condition. Payment that merely sits in an NRO account does not: the circular is explicit that NRO alone is insufficient, and the money must be routed through SNRR or NRE.
The distinction matters because NRO and NRE accounts look similar on a bank statement but behave differently on repatriation. NRE accounts are repatriable; NRO accounts are not freely repatriable in the same way. The circular's test — repatriable rupee account — therefore draws the line exactly where the FEMA account rules draw it, and stockbrokers should check their client-money routing against that line rather than assuming any rupee credit counts.
Set-off: netting export receivables against import payables counts
The circular also settles the position on set-off. Where an exporter sets off export receivables against import payables in accordance with RBI directions, that set-off fulfils the receipt-of-payment condition. In other words, the exporter does not fail the condition merely because no gross cash payment arrived — the netting itself, done the way RBI directions require, counts as realisation for this purpose.
At the same time, the circular retires an older pair of restrictions. The earlier conditions that set-off had to be goods-against-goods or services-against-services cease to apply for transactions after the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 came into force on 1 October 2026. Businesses with transactions straddling that date therefore need to apply the old matching conditions to the earlier transactions and the new, freer position to later ones — the cut-off is the Regulations' commencement, not the circular's date.
Reinsurance brokers: commission on a net-retention basis counts
The circular gives a specific answer for reinsurance brokers as well. Commission received on a net-retention basis counts as realisation of the export proceeds. This matters because reinsurance commission is often settled net — the broker's commission is retained out of premiums rather than paid gross — and a gross-payment-only reading would have denied export treatment to a common market practice. The circular confirms that the netting in that structure is realisation, not a failure to receive payment.
Goods exports: realisation period and Rule 96B recovery
For exports of goods, the circular points to the RBI's realisation framework rather than creating a GST-specific clock. The period for realisation of export proceeds is governed by the RBI's Foreign Exchange Management (Export of Goods and Services) framework — the FED Master Direction No. 16/2015-16, dated 1 January 2016 and last amended on 5 June 2026, as cited in the circular. Exporters should therefore track the FEMA realisation period, including any extension granted under that framework, rather than looking for a separate GST deadline in this circular.
The circular also addresses Rule 96B of the CGST Rules, the provision under which refunds already paid can be recovered if export proceeds are not realised. Recovery under Rule 96B must be made within 30 days after the FEMA period — or any extended period — expires. And where the realisation requirement itself has been written off, there is no recovery: the circular states that no Rule 96B recovery arises in that situation.
⚠️ Read this wording carefully — do not smooth it over: the circular's discussion of write-off is not worded identically in both places. One passage refers to the realisation requirement being written off by the RBI, while another refers to it being written off by an Authorised Dealer Bank. Until the Board clarifies which write-off counts, a business relying on a write-off should check whose write-off it holds and keep the supporting record — the two wordings may not be treated as interchangeable in an audit.
Old position vs new position
Who is affected, and what to do next
Service exporters are the most directly affected — anyone whose export-of-services status depends on the Section 2(6)(iv) payment condition should now test their actual receipt route against the circular's list, not against a general assumption that "payment in rupees" is enough. If receipts land in an SNRR or INR Nostro account, or in convertible foreign exchange, the condition is met on the circular's terms; if they land only in an NRO account, the routing needs to change to SNRR or NRE.
Goods exporters should diarise the FEMA realisation period and the 30-day Rule 96B window that follows it, and keep write-off documentation that identifies who granted the write-off, given the RBI-versus-Authorised-Dealer wording difference flagged above. Businesses that net export receivables against import payables should confirm the set-off was done in accordance with RBI directions and note the 1 October 2026 cut-off for the old matching conditions. Reinsurance brokers can rely on net-retention commission counting as realisation, with the underlying netting records retained.
The circular is addressed to Principal Chief Commissioners and Chief Commissioners (all) and Principal Directors General and Directors General (all), with trade notices to be issued to publicise its contents and implementation difficulties to be brought to the Board's notice. Taxpayers facing a live dispute on any of these points should put the circular before the officer concerned and, where the write-off wording is decisive, seek a clarification rather than assuming the favourable reading.
Frequently asked questions
Does payment in an SNRR account count as receipt for an export of services?
Yes. Circular 263/2026-GST confirms that payment received in a repatriable INR account such as an SNRR or INR Nostro account satisfies Section 2(6)(iv) of the IGST Act.
Can an export of services be paid for in Indian rupees at all?
Yes, where permitted by the RBI — including INR settlement under FEMA 14R/2023, except for Nepal, Bhutan and Asian Clearing Union members.
My stockbroker client pays into an NRO account. Does that qualify?
No, not on its own. For overseas clients (FPI, NRI, OCI), the money must be routed through an SNRR or NRE account to qualify.
Does netting export receivables against import payables count as receipt?
Yes, where the set-off is done in accordance with RBI directions. The old goods-against-goods and services-against-services matching conditions no longer apply to transactions after 1 October 2026.
What is the deadline for Rule 96B recovery on goods exports?
Recovery must be made within 30 days after the FEMA realisation period, or any extended period, expires. No recovery arises where the realisation requirement has been written off — subject to the RBI-versus-Authorised-Dealer wording difference noted in this article.
Does reinsurance commission received net count as realisation?
Yes. Commission received on a net-retention basis counts as realisation of the export proceeds under Circular 263.
Sources
CBIC Circular No. 263/09/2026-GST, dated 26 October 2026 (F. No. CBIC-20001/2/2026-GST, GST Policy Wing, signed Gaurav Singh, Commissioner (GST)) — official CBIC Tax Information Portal: https://taxinformation.cbic.gov.in/view-pdf/1003354/ENG/Circulars. Instruments as cited in the circular: Section 2(6)(iv) of the IGST Act, 2017; Section 168(1) of the CGST Act, 2017; Circular No. 202/14/2023-GST dated 27 October 2023; Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 (effective 1 October 2026); RBI FED Master Direction No. 16/2015-16 dated 1 January 2016 (last amended 5 June 2026); Rule 96B of the CGST Rules. This article is general information only and is not tax or legal advice; exporters should confirm their position with their tax advisers.
