Table of Contents
Table of Contents
Last updated: 26 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
Exporters of services increasingly get paid in rupee accounts rather than in a foreign currency outright – through RBI-permitted mechanisms like SNRR or Nostro arrangements – and the question of whether that still counts as “foreign exchange” for GST’s export definition has caused real uncertainty. Circular No. 263/09/2026-GST, dated 26 October 2026, settles it, and also clarifies the realisation time limit for export of goods under Rule 96B.
New to terms such as “SNRR account” or “Nostro account”? See the technical terms explained in simple words further down.
To qualify as an “export of services” under the IGST Act, one of the conditions is that payment for the service must be received in convertible foreign exchange, or in Indian rupees wherever permitted by the RBI. In practice, a growing share of export payments arrive not as a foreign-currency remittance but through rupee-denominated mechanisms the RBI itself permits – Special Rupee Vostro Accounts (SRVA), Special Non-Resident Rupee (SNRR) accounts, and INR Nostro accounts of correspondent banks.
Under the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 (FEMA 14R/2023), receipt for export to countries other than Nepal, Bhutan and Asian Clearing Union members may be made in INR, routed through an INR Nostro (Rupee Vostro) account or a repatriable account such as SRVA or SNRR. Since these are all valid, RBI-permitted modes of settlement, the circular clarifies:
Wherever payment for export of service is received in convertible foreign exchange, or in a repatriable rupee account such as an SNRR account, an INR Nostro account, or any similar account for repatriation of foreign exchange, the condition under section 2(6)(iv) of the IGST Act is satisfied.
Stock brokers who provide services to overseas clients – FPIs, NRIs and OCIs – frequently get paid in INR. The circular clarifies that payment received through repatriable INR accounts (SNRR, NRE) satisfies the export condition. Where payment instead comes through an NRO account, it only satisfies the condition once it is routed through a repatriable INR account (SNRR, NRE), consistent with RBI guidelines.
Set-off is a recognised settlement method under FEMA. Previously, RBI’s set-off guidelines carried conditions (broadly, goods against goods, services against services); with the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, effective from 1 October 2026, those specific conditions no longer apply to such transactions. The circular confirms that wherever export receivables are set off against import payables in accordance with RBI’s directions, condition (iv) of section 2(6) of the IGST Act is treated as satisfied.
An Indian reinsurance broker’s commission for broking services to foreign reinsurers is often settled by net retention – the broker retains its commission out of the premium funds before remitting the net premium abroad, rather than receiving a separate inward remittance. Under FEMA, this net retention mechanism extinguishes the broker’s obligation to realise and repatriate export proceeds. The circular treats this as satisfying section 2(6)(iv) of the IGST Act as well.
Rule 96B requires that where sale proceeds of exported goods are not realised, wholly or partly, within the FEMA-prescribed period (including any extension), the refund already paid must be deposited or recovered to that extent, with interest – unless the RBI itself has written off the realisation requirement on merits.
The circular clarifies two points:
Confirming that an export client’s actual payment mechanism – SNRR, Nostro, set-off or net retention – genuinely falls within RBI’s permitted modes is what decides whether the GST export conditions, and the refund that depends on them, hold up; please reach out to our team and we will be happy to assist.
| Term | What it means |
|---|---|
| SNRR account | A Special Non-Resident Rupee account, a repatriable rupee account a non-resident can use to settle genuine transactions with India. |
| Nostro account | An account a bank holds in a foreign currency with a correspondent bank abroad, through which cross-border rupee or foreign-currency settlements can flow. |
| Repatriable account | A bank account whose balance can be freely converted and sent back out of India, as opposed to one restricted to use within India. |
| Set-off (in FEMA) | Settling an export receivable by adjusting it against an import payable, instead of two separate cross-border remittances. |
| Rule 96B | A CGST Rules provision requiring recovery of an export refund already paid where the export sale proceeds are not realised within the time allowed under FEMA. |
Yes. Circular No. 263/09/2026-GST clarifies that payment for export of services received in a repatriable rupee account such as a Special Non-Resident Rupee (SNRR) account, an INR Nostro account, or any similar account for repatriation of foreign exchange, satisfies condition (iv) of section 2(6) of the IGST Act – the same as receipt in convertible foreign exchange.
Stock brokers providing services to FPIs, NRIs and OCIs commonly get paid in INR. The circular clarifies that payment received through repatriable INR accounts such as SNRR or NRE satisfies the export-of-services condition. Payment through an NRO account only qualifies once it is routed through a repatriable account, per RBI guidelines.
Yes, where such set-off is permitted and done in accordance with RBI’s directions. The circular treats a valid set-off of export receivables against import payables, under the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, as satisfying condition (iv) of section 2(6) of the IGST Act.
Where an Indian reinsurance broker’s commission is settled by net retention – deducted from the premium before the balance is remitted abroad – rather than by a separate inward remittance, this is treated under FEMA as discharging the broker’s obligation to realise export proceeds, and is accordingly treated as satisfying condition (iv) of section 2(6) of the IGST Act.
The time limit is whatever period, or extended period, is prescribed by the RBI’s FED Master Direction No. 16/2015-16 (as amended from time to time), not a separate GST-specific limit. Where the realisation requirement has been written off, wholly or partly, by the Authorised Dealer Bank, no recovery under Rule 96B is to be made to that extent.
This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.