GST Export Proceeds After Circular 263: Which Payment Routes Still Count as Realisation

You shipped the goods. You delivered the service. The buyer paid — just not the way your refund officer expected. The money came in rupees through a special account, or it never came in at all because you netted it against something you owed the same party abroad. Then the GST refund file lands on an officer's desk, and one question decides it: did the export proceeds actually get realised?

That question matters more than most exporters realise. Exports are zero-rated, so you either ship under a Letter of Undertaking and claim back your input tax credit, or you pay IGST and claim it back. Either way, for services, the refund application must carry a statement of invoices with Bank Realisation Certificates — today, the electronic eBRC. No proof of realisation, no refund. And until last week, officers in different states were answering the same payment routes differently.

Circular 263/09/2026-GST, dated 26 October 2026, ends that argument. It was issued under section 168(1) of the CGST Act after field formations themselves asked for clarity. Here is the short answer, then the detail.

In short: Circular 263/09/2026-GST, dated 26 October 2026, says your export still counts when the money arrives in convertible foreign exchange or a repatriable rupee account such as an SNRR or INR Nostro account, when an RBI-compliant set-off settles it, or when a reinsurance broker keeps commission by net retention. For goods, a refund survives an authorised dealer bank's write-off of realisation.

Why does GST care how you were paid?

For a supply to count as an export of services under section 2(6) of the IGST Act, several conditions must all hold — and one of them, condition (iv), is that the payment has been received in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank. The circular settles only that payment condition. It does not wave through the other conditions. Keep that boundary in mind: a payment route being accepted does not by itself make a transaction an export.

For goods, the pressure point sits in a different place. Rule 96B of the CGST Rules says that where sale proceeds are not realised within the period FEMA prescribes, including any extension, the refund already paid becomes liable to be deposited or recovered — with interest — within thirty days of that period expiring. So the clock, and what stops it, is real money.

Do rupee payments into SNRR and Nostro accounts count?

Yes. The circular says payment for export of services received in convertible foreign exchange or in repatriable rupee accounts — it names the Special Non-Resident Rupee (SNRR) account and the INR Nostro account, plus any other similar account for repatriation of foreign exchange — satisfies condition (iv). This builds on an earlier clarification, Circular 202/14/2023-GST, which had already accepted receipts into Special Rupee Vostro Accounts of correspondent banks for partner countries, subject to the Foreign Trade Policy and RBI circulars.

One niche answer hides in the same paragraph, and it matters to stock brokers. Brokers serving overseas clients — foreign portfolio investors, non-resident Indians and overseas citizens — get paid in rupees. Payment through repatriable accounts (SNRR, NRE) counts. Payment through an NRO account does not count on its own: under RBI guidelines it must be routed through a repatriable account first. If you are a broker sitting on NRO receipts, that routing step is the whole ball game.

Does setting off an export bill against an import bill count?

Yes, where the set-off follows the Reserve Bank's directions in force. The circular states plainly that set-off is a valid mode of settlement under FEMA, and that export receivables set off against import payables satisfy condition (iv) as long as the set-off is in accordance with RBI directions.

Think of it the way a neighbourhood shopkeeper would. You owe him ₹10,000 for supplies; he owes you ₹10,000 for work you did. Passing the same notes back and forth settles nothing extra — striking off both dues settles both. That is set-off. The tax officer, though, cannot see a striking-off the way they see a bank credit. Which is why the evidence matters as much as the rule: keep the set-off paper and your authorised dealer bank's confirmation in the refund file.

One caution. The circular notes that the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, effective from 1 October 2026, changed the conditions that used to govern set-offs. Do not rely on an old summary of those conditions. Check the directions in force on your transaction date.

What about a reinsurance broker who never receives the commission separately?

It counts too. An Indian reinsurance broker serving foreign reinsurers often never sees a separate inward remittance for commission. The foreign reinsurer authorises the broker to retain the commission out of funds before remitting the net premium abroad. Under FEMA, that net retention extinguishes the obligation to realise and repatriate the proceeds — the reinsurer is treated as having paid. The circular says this satisfies condition (iv) as well.

What if a goods buyer never pays — do you lose the refund?

Not automatically, and not in full. Three things decide it. First, the recovery under Rule 96B runs only to the extent of the non-realisation — if eighty percent of the proceeds came in, only the twenty percent slice is at stake. Second, the clock is the RBI period, including any extension your authorised dealer bank grants. Chase the extension before the period runs out, not after. Third, and this is the circular's most useful clarification for goods exporters: where the requirement of realisation has been written off, wholly or partly, by the authorised dealer bank, no recovery follows for that part. The rule text itself spoke of write-off by the Reserve Bank; the circular extends the shield to authorised dealer bank write-offs.

So a buyer default is not the end of the refund. It is the start of a paper chase: extension letter first, write-off letter if the money is truly gone, and both filed before anyone talks about recovery.

How long do you actually get to realise the money?

Here is the trap in this circular, and I would rather flag it than smooth it over. Circular 263 names no month figure at all. It says the period is whatever RBI's FED Master Direction No. 16/2015-16 prescribes, as amended from time to time, including extensions. Older guides still cite nine months. At least one newer analysis claims the period moved to fifteen months. Those two cannot both be your deadline, and the circular itself does not pick between them.

Do not count your days off a blog post — including this one. Confirm the current direction with your authorised dealer bank, in writing, for your shipment date. If your buyer is dragging, that single letter is worth more than any article.

Which route fits your business?

A worked example: one invoice, two payment routes

Take a Pune software firm that bills a US client ₹50 lakh for a year of support. ₹30 lakh arrives by inward remittance, and the eBRC matches it cleanly. The other ₹20 lakh never travels anywhere: the firm owes the same client group ₹20 lakh for a licence, and the two sides set it off with their authorised dealer bank's confirmation under RBI directions. Both limbs satisfy condition (iv) after Circular 263. But picture the refund file. The bank statement shows ₹30 lakh. The other ₹20 lakh looks, to a stranger, unpaid. Without the set-off paper in the file, the firm invites the very dispute the circular just settled. The example is illustrative, but the file-building lesson is not: evidence for the unusual route matters more than evidence for the usual one.

Five mistakes that still cost exporters their refund

• Filing a services refund with invoices but no eBRC or bank realisation paper.
• Treating an NRO receipt as good without routing it through a repatriable account.
• Netting receivables against payables with no authorised dealer bank paper to show for it.
• Counting days from an old guide's nine months and missing the extension window.
• Assuming the circular settles everything — the other export-of-services conditions still have to hold, and the circular says nothing about them.

Before your next refund claim, assemble this pack

Invoices, with shipping bills for goods or SOFTEX where it applies. The eBRC for every services invoice claimed. Bank advice showing the account through which each receipt arrived. Set-off evidence and the authorised dealer bank's confirmation wherever you netted. Extension letters wherever a buyer paid late. A write-off letter wherever realisation was written off. If any one of those is missing, get it before filing — a refund claim is much cheaper to defend when the file is complete on day one. If you are unsure whether your route qualifies, a GST refund application review before filing costs far less than a recovery notice after. And if you are new to exporting altogether, the Import Export Code is the first registration in the chain.

Frequently asked questions

I was paid in rupees into my regular current account. Does Circular 263 cover me?

Not by name. The circular names convertible foreign exchange and repatriable rupee accounts such as SNRR and INR Nostro. An ordinary domestic account receipt is not listed. Ask your authorised dealer bank whether your route qualifies, and get the answer routed through a repatriable account if it does not.

Does Circular 263 change how LUT filing works?

No. The Letter of Undertaking route is untouched — you still export without paying IGST and claim unutilised credit back. What changes is only how the payment behind that claim is judged. Our guide to GST LUT filing for exporters still walks through the RFD-11 choice.

I received part of the proceeds. Is the whole refund recovered?

No. Rule 96B recovery runs only to the extent of the non-realisation, with interest, and only after the RBI period — including extensions — expires. Part-realisation protects the realised part.

My dispute about a rupee receipt is already pending. Does the circular help?

It is the Board's current instruction to all field formations, issued precisely to secure uniform treatment. Place the circular before the officer handling your case. It settles the payment-route question; it does not promise any individual outcome.

My buyer paid late but inside the extended period. Am I safe?

Yes, if the payment arrived within the period the RBI direction prescribes, including any extension your authorised dealer bank granted. Recovery is triggered by expiry of that period with proceeds still unrealised — not by lateness alone.

Circular 263 does something rare for a tax clarification: it lines the tax rule up with the way exporters actually get paid. Rupees through proper accounts, netting against imports, commission kept by retention — all of it now has the Board's word behind it. Use that word, but build the file that proves it. And if the maths of getting help matters, the compliance fee calculator gives you a quick sense of what sorting a refund position costs before you commit.