GST Export Payments and Refunds: INR Accounts, Set-Off and Write-Off vide Circular No. 263/09/2026-GST
The Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 263/09/2026-GST dated 26 October 2026, clarifying payment realization for exports of goods and services.
The circular addresses receipts through repatriable rupee accounts, payments to stock brokers, adjustment of export receivables against import payables, reinsurance brokerage, and recovery of refunds where export proceeds are not realized.
1. Export Service Payments Received in INR Accounts
The circular clarifies that payment for exported services received in convertible foreign exchange or specified repatriable Indian rupee accounts satisfies the identified payment condition for export of services.
The accounts include:
• Special Non-Resident Rupee (SNRR) accounts;
• INR Nostro accounts; and
• Other similar accounts for repatriation of foreign exchange.
(Paragraph 2.3; Section 2(6)(iv) of the IGST Act)
The clarification concerns this particular payment condition. It should be read within that scope.
Background of the clarification
The circular refers to the earlier clarification accepting INR export proceeds received through Special Rupee Vostro Accounts, subject to the relevant Foreign Trade Policy and RBI conditions and other required permissions.
It also explains the permitted INR settlement routes under the FEMA regulations referred to in the document, including the stated country-related qualifications. (Paragraphs 2.1 and 2.2)
2. Payments to Stock Brokers from Overseas Clients
The circular addresses services provided by stock brokers to overseas clients, including Foreign Portfolio Investors, Non-Resident Indians, and Overseas Citizens of India.
Payments through repatriable INR accounts, including SNRR and NRE accounts, may satisfy the identified export-payment condition.
Where payment is made through an NRO account, it should be routed through a repatriable INR account, such as SNRR or NRE, in accordance with RBI guidelines for this condition to be satisfied. (Paragraph 2.3; Section 2(6)(iv) of the IGST Act)
3. Set-Off of Export Receivables Against Import Payables
An exporter may settle an amount receivable from exports by adjusting it against an amount payable for imports.
The circular clarifies that such a set-off satisfies the identified payment condition where it complies with RBI directions. (Paragraph 2.4; Section 2(6)(iv) of the IGST Act)
The circular also records that earlier guidelines permitted set-off subject to conditions, including goods against goods and services against services. It states that these conditions would not apply under the new regulations effective from 1 October 2026. The continuing requirement is compliance with the applicable RBI directions. (Paragraph 2.4)
4. Reinsurance Brokerage Retained Before Remitting Premium
Indian reinsurance brokers may receive their commission through net settlement.
Under the arrangement described, the foreign reinsurer or broker authorizes the Indian broker to retain commission from funds before remitting the net premium outside India. There is no separate inward remittance of that commission.
The circular explains that this net-retention mechanism extinguishes the export-proceeds realization and repatriation obligation under the FEMA treatment described in it.
Accordingly, the mechanism may be treated as satisfying the identified export-payment condition. (Paragraph 2.5; Section 2(6)(iv) of the IGST Act)
5. Export of Goods: Time Limit for Realizing Proceeds
For exported goods, the applicable period for realizing proceeds is governed by FEMA and RBI directions, including any permitted extension.
The circular links the GST treatment to the period prescribed in the RBI Master Direction identified in it, as amended from time to time. (Paragraph 3.1; FED Master Direction No. 16/2015-16 dated 1 January 2016)
It does not prescribe a separate fixed realization period for the GST purpose discussed.
6. When Can an Export Refund Be Recovered?
Where sale proceeds of exported goods are not realized, wholly or partly, within the applicable period or permitted extension, the corresponding refund is liable to be deposited or recovered.
The recovery is limited to the extent of non-realization and includes applicable interest. The circular refers to the requirement to deposit the amount within 30 days after the applicable realization period expires. (Rule 96B of the CGST Rules)
7. Write-Off by an Authorized Dealer Bank
The circular clarifies that refund recovery should not be made where the realization requirement has been written off, wholly or partly, by the Authorized Dealer Bank.
This addresses the treatment of the written-off amount within the framework explained in the circular. (Paragraph 3.1; Rule 96B)
Conclusion
Circular No. 263/09/2026-GST clarifies how specified INR receipts, RBI-compliant set-offs, and reinsurance net-retention arrangements meet the identified export-payment condition. For goods exports, it links realization timelines to RBI directions and addresses refund recovery where proceeds are unrealized or written off.
To read the complete clarification and access the original circular, refer to Circular No. 263/09/2026-GST dated 26 October 2026:
https://taxinformation.cbic.gov.in/view-pdf/1003354/ENG/Circulars
Disclaimer : This article is for informational purposes only and should not be construed as legal or professional advice. Taxpayers should consult their tax advisor based on the facts of their specific case before taking any action.
