The Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 202/14/2023-GST to clarify doubts regarding receipt of export remittances in special INR vostro accounts as permitted by RBI for export of services to qualify as ‘export’.
CBIC GST Circular 202/14/2023 dated 27/10/2023: INR Receipts Permitted by RBI, Qualify as Export Proceeds under GST – Clarification
Conditions for Export of Services
Export of services requires fulfillment of conditions under Section 2(6) of IGST Act. One condition is receipt of payment in foreign exchange or INR as permitted by RBI.
RBI Circular on Special INR Vostro Accounts
RBI vide Circular No. 10 dated 11th July 2022 has allowed payments for exports/imports in INR through special rupee vostro accounts opened by banks with prior RBI approval.
Para 2.52(d) of Foreign Trade Policy 2023 also allows invoicing, payment and settlement of exports/imports in INR through this mechanism.
Clarification by CBIC
Receipt of export proceeds in INR by Indian exporters from special vostro accounts as per RBI circular shall be considered as fulfilling the IGST Act condition.
This is subject to conditions/restrictions in Foreign Trade Policy, RBI circulars and other applicable laws.
Key Takeaways
Payment receipt in INR from special vostro accounts as allowed by RBI will qualify as valid consideration for export of services under GST.
However, other conditions specified under IGST Act and other applicable laws still need compliance.
The circular provides clarity on this issue and would facilitate ease of doing exports under GST.