Circular 263/09/2026-GST: Export Payment Modes & Rule 96B

GST 30 October 2026 Official PDF

Circular 263/09/2026-GST export of services Section 2(6) IGST SNRR account Nostro account NRE account set-off export import Rule 96B export refund realisation of export proceeds AD bank write-off reinsurance broker

Summary

CBIC Circular 263/09/2026-GST dated 26 October 2026 clarifies that export of services payments received in SNRR, INR Nostro or similar repatriable rupee accounts, broker payments through SNRR or NRE accounts, RBI-compliant set-off against import payables and net retention by reinsurance brokers all meet Section 2(6)(iv) of the IGST Act. For export of goods, the Rule 96B realisation period follows the RBI Master Direction, and no recovery is made where the AD bank has written off the amount.

The CBIC has issued Circular No. 263/09/2026-GST dated 26.10.2026 under Section 168(1) of the CGST Act. It settles two common refund objections faced by exporters:

for export of services: whether payment received in rupee accounts (SNRR, Nostro, NRE), by set-off, or by net retention counts as valid receipt of export proceeds; and
for export of goods: which time limit applies under Rule 96B when export proceeds are not realised.

Why This Matters

A supply of services is an “export of services” under Section 2(6) of the IGST Act only if all five conditions are met. Condition (iv) requires that the payment is received by the supplier in convertible foreign exchange, or in Indian rupees wherever permitted by the RBI. If this condition fails, the supply is not zero-rated, and refunds or LUT benefits are denied. Officers were rejecting refunds where money came into rupee accounts or was adjusted against payables. This circular removes that doubt.

Part 1: Export of Services — Accepted Modes of Receipt

How the payment is received	Meets condition (iv) of Section 2(6)?
Convertible foreign exchange	Yes
INR through Special Rupee Vostro Account (SRVA) of the partner country’s bank	Yes (already clarified by Circular 202/14/2023-GST)
INR in a repatriable account — SNRR account, INR Nostro account, or any similar account for repatriation of foreign exchange	Yes
Stock brokers paid by overseas clients (FPIs, NRIs, OCIs) through SNRR or NRE accounts	Yes
Stock brokers paid through an NRO account	Only if routed through a repatriable INR account (SNRR or NRE), as per RBI guidelines
Set-off of export receivables against import payables	Yes, as long as the set-off follows RBI directions
Reinsurance brokers — commission retained through net retention before remitting net premium abroad	Yes

Rupee accounts (SNRR, Nostro)

Under the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, payment for exports to countries other than Nepal, Bhutan and Asian Clearing Union members may be received in INR or any foreign currency. INR can come through INR Nostro (Rupee Vostro) accounts of correspondent banks, or through repatriable INR accounts such as SRVA and SNRR. Since these are valid modes under FEMA, receipt in them satisfies condition (iv).

Set-off against import payables

Set-off is a valid mode of settlement under FEMA. Earlier, RBI allowed it only goods-against-goods and services-against-services, with conditions. Under the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, effective 1 October 2026, those conditions no longer apply. So, where export receivables are set off against import payables in line with RBI directions, the payment condition is treated as met.

Reinsurance brokers — net retention

An Indian reinsurance broker’s commission from foreign reinsurers is not received as a separate remittance. The broker keeps it out of the premium before sending the net premium abroad. Under FEMA, the foreign reinsurer is treated as having paid the commission, and the broker’s duty to realise and repatriate the proceeds is extinguished. This is treated as meeting condition (iv).

Part 2: Export of Goods — Rule 96B Recovery

Under Rule 96B of the CGST Rules, if the sale proceeds of exported goods are not realised, wholly or partly, within the period allowed under FEMA (including any extension), the refund already paid must be deposited or recovered to that extent, with interest, within 30 days after that period ends. The circular clarifies two points:

Time limit: the period for realisation is the period, or extended period, prescribed in the RBI’s FED Master Direction No. 16/2015-16 dated 01.01.2016 (last amended on 05.06.2026), as amended from time to time.
Write-off by AD bank: Rule 96B refers to write-off by the RBI. The circular clarifies that where the realisation requirement has been written off, wholly or partly, by the Authorised Dealer (AD) bank, the refund will also not be recovered under Rule 96B.

Practical Checklist for Exporters

Service exporters with refund or LUT queries about money received in SNRR, INR Nostro or NRE accounts: rely on para 2.3 of this circular. Keep the bank credit advice or FIRA showing the account type.
Stock brokers: make sure overseas client payments come through SNRR or NRE accounts. NRO payments should be routed through these.
Set-off cases: keep the AD bank’s approval or reporting showing the set-off was done as per RBI directions.
Goods exporters with a Rule 96B notice: check the realisation period under the RBI Master Direction, including any extension. If the AD bank has written off the amount, submit the write-off letter. Recovery should not be made.
Pending refund rejections on these grounds: cite Circular 263/09/2026-GST in the reply or appeal.

Reference: Circular No. 263/09/2026-GST dated 26.10.2026; Circular No. 202/14/2023-GST dated 27.10.2023; Section 2(6), IGST Act, 2017; Rule 96B, CGST Rules, 2017. This page is for general information only.

Official CBIC circular

Circular No. 263/09/2026-GST

CBIC · Dated 26.10.2026 · 4 pages

View circular

Frequently Asked Questions

Is payment received in an SNRR or INR Nostro account valid for export of services?

Yes. Circular 263/09/2026-GST clarifies that payment received in convertible foreign exchange or in repatriable rupee accounts such as SNRR, INR Nostro or similar accounts satisfies condition (iv) of Section 2(6) of the IGST Act.

Do stock brokers paid in INR by FPIs and NRIs meet the export of services condition?

Yes, if the payment comes through repatriable INR accounts such as SNRR or NRE. Payments from NRO accounts should be routed through SNRR or NRE accounts, as per RBI guidelines, to meet the condition.

Can export receivables be set off against import payables for GST purposes?

Yes. Set-off is a valid mode of settlement under FEMA. As long as the set-off is in accordance with RBI directions, the payment condition of Section 2(6)(iv) of the IGST Act is treated as fulfilled.

Does net retention of commission by a reinsurance broker count as receipt of export proceeds?

Yes. Under FEMA, the foreign reinsurer is treated as having paid the commission when it authorises the Indian broker to retain it before remitting the net premium. This satisfies Section 2(6)(iv) of the IGST Act.

What is the time limit for realisation of export proceeds under Rule 96B?

It is the period, or extended period, prescribed in the RBI's FED Master Direction No. 16/2015-16 dated 01.01.2016, as amended from time to time. If proceeds are not realised by then, the refund must be repaid with interest within 30 days.

Will GST refund be recovered if the AD bank has written off the export proceeds?

No. Circular 263/09/2026-GST clarifies that where the realisation requirement has been written off, wholly or partly, by the AD bank, recovery of the refund under Rule 96B will not be made.

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Circular No. 263/09/2026-GST: Export Payments in SNRR, Nostro, Set-Off and Rule 96B