GST Export Proceeds & Rule 96(10): Circulars 263 & 264/2026 Explained

CBIC Circulars 263/09/2026-GST and 264/10/2026-GST, both dated 26 October 2026, address two important export and refund issues. Circular 263 clarifies how specified export payments and settlement mechanisms are treated, and how Rule 96B applies when export proceeds are not realised. Circular 264 addresses the effect of the omission of Rule 96(10) after the Supreme Court decision in Goodluck India Limited.

For exporters and GST professionals, the practical question is not simply whether a refund is available. The payment route, FEMA treatment, status of export realisation, any write-off by an Authorised Dealer bank, and the procedural status of a Rule 96(10) proceeding can all materially affect the outcome.

Quick Answer

  • Export of services: receipt in convertible foreign exchange or through eligible repatriable INR accounts such as SNRR or INR Nostro can satisfy the payment condition under section 2(6)(iv) of the IGST Act, subject to the applicable FEMA and RBI framework.
  • Stock-broker receipts: payments from overseas clients through SNRR or NRE accounts may qualify. Payments through NRO accounts need the routing treatment described in Circular 263 and the applicable RBI framework.
  • Set-off: export receivables set off against import payables can satisfy the payment condition where the set-off is permitted under RBI directions.
  • Reinsurance brokers: specified net-retention settlement can be treated as satisfying the export-payment condition.
  • Export of goods: Rule 96B realisation timing follows the period, including any extension, prescribed under the applicable RBI Master Direction.
  • AD-bank write-off: Circular 263 clarifies that Rule 96B refund recovery should not be made to the extent the realisation requirement has been written off by the Authorised Dealer bank.
  • Rule 96(10): Circular 264 states that its omission is to be treated as effective retrospectively from 23 October 2017, while pending proceedings are to be dealt with in line with the Supreme Court judgment in Goodluck India Limited.
In this guide
In this guide

1. Why Circulars 263 and 264 Matter for GST Export Proceeds

Circular 263 focuses on GST export proceeds and their receipt or realisation. It deals with how specified rupee accounts and settlement methods are treated for export of services, and how the Rule 96B recovery mechanism should operate for export of goods.

Circular 264 focuses on a different but closely related refund issue: the omission of Rule 96(10), which had restricted the IGST-paid export refund route in specified situations. For an exporter with an old refund dispute, both the underlying refund eligibility and the procedural status of the dispute may therefore need separate review.

2. Export of Services: SNRR, Nostro and Repatriable INR Receipts

Section 2(6)(iv) of the IGST Act contains a payment condition for a supply to qualify as an export of services. Circular 263 addresses situations where the consideration is received in INR through recognised repatriable arrangements rather than as a conventional inward remittance in foreign currency.

The Circular states that payment for export of services received in convertible foreign exchange or in repatriable INR accounts such as SNRR or INR Nostro accounts, or a similar account used for repatriation of foreign exchange, can satisfy the payment condition, subject to the applicable foreign-exchange framework.

Stock brokers serving overseas clients

Circular 263 also deals specifically with stock brokers providing services to overseas FPIs, NRIs and OCIs. Payments through repatriable INR accounts such as SNRR or NRE may be treated as satisfying the condition. Where payment is through an NRO account, the Circular refers to routing through repatriable INR accounts in accordance with RBI guidelines for the condition to be treated as satisfied.

Practical point: the GST conclusion should not be reached by looking only at the currency label on the bank credit. The account type, repatriability and RBI/FEMA treatment matter.

3. Set-Off of Export Receivables and Reinsurance Net Retention

Set-off: Circular 263 recognises set-off of export receivables against import payables as a valid settlement method where the set-off is in accordance with RBI directions. The Circular also notes the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, effective from 1 October 2026, while explaining the current settlement framework.

Reinsurance brokers: the Circular separately deals with an Indian reinsurance broker that retains its commission before remitting the net premium to the foreign reinsurer. Under the FEMA treatment described in the Circular, the service-exporter’s obligation to realise and repatriate the brokerage is extinguished through this net-retention mechanism. The payment condition can therefore be treated as satisfied.

Documentation matters: where the commercial settlement is by set-off or net retention rather than a simple inward remittance, retain the contractual, banking and accounting trail that explains how the receivable was settled.

4. Export of Goods: Rule 96B Realisation Period and AD-Bank Write-Off

Rule 96B deals with recovery of refund where sale proceeds of exported goods are not realised within the period prescribed under FEMA, including any permitted extension. To the extent of non-realisation, the refund can become recoverable with applicable interest under the Rule.

Circular 263 clarifies that the relevant realisation period is the period, or extended period, prescribed under the RBI’s FED Master Direction No. 16/2015-16 dated 1 January 2016, as amended from time to time. The Circular records that the Master Direction had last been amended on 5 June 2026 at the time of issue.

It further clarifies that where the requirement to realise export proceeds has been written off, wholly or partly, by the Authorised Dealer bank, recovery of the refund under Rule 96B should not be made to that extent.

Action point: if a Rule 96B recovery issue arises, first verify the applicable RBI realisation period, any extension, the amount actually realised and whether an AD-bank write-off has been granted.

5. Circular 264: What Changed for Rule 96(10)?

Rule 96(10) had restricted the IGST-paid export refund route in specified cases involving benefits or concessions on procurements. The sub-rule was omitted with effect from 8 October 2024 by Notification No. 20/2024-Central Tax.

The later dispute was whether the omission should affect proceedings relating to earlier periods. In M/s Goodluck India Limited & Anr. v. Union of India & Ors., SLP (Civil) No. 24550 of 2025 and connected matters, the Supreme Court on 6 August 2026 held that, because there was no saving clause or sunset clause preserving pending proceedings, the omission applied to proceedings pending on the date of omission.

Circular 264, issued after that judgment, states that the omission of Rule 96(10) will be effective retrospectively from 23 October 2017 and directs field formations to deal with pending proceedings in accordance with the Supreme Court judgment.

Do Not Read Circular 264 as an Automatic Reopening of Every Historical Case

The Supreme Court judgment and Circular 264 specifically address the effect of the omission and the treatment of pending proceedings. A concluded demand, a refund rejection that attained finality, a matter under appeal, and a still-pending adjudication are not procedurally identical. The effect must be examined against the actual status of the particular case before taking action.

6. What Happens to Pending and Concluded Proceedings?

Pending proceedings: Circular 264 directs that pending Rule 96(10) proceedings be dealt with in accordance with the Supreme Court judgment. This can be highly relevant where an SCN, adjudication, appeal, writ or refund dispute was still alive when the omission took effect.

Matters already finally concluded: the Circular does not create a blanket statement that every historical matter automatically reopens or that every amount previously paid becomes refundable. Limitation, finality, appellate status and other procedural facts may need to be considered.

Practical approach: classify the matter first as pending adjudication, pending appeal, pending writ, concluded without appeal, or otherwise. Only then determine the next legal and procedural step.

Circular 264 states that the same treatment will apply, mutatis mutandis, to the omission of Rules 89(4A) and 89(4B).

Therefore, a professional reviewing a historical export-refund dispute should not look only for the words “Rule 96(10)”. The notice, order or appeal may involve connected refund restrictions under Rules 89(4A) or 89(4B), and those provisions should also be checked against the Circular and the procedural status of the case.

8. Practical Decision Table

Situation Key Check Practical Response
Export-service receipt in SNRR / INR Nostro Is the account repatriable and settlement compliant with RBI/FEMA? Document the account and settlement route before treating the payment condition as satisfied.
Stock-broker receipt through NRO account Was the amount routed through the required repatriable INR account? Check Circular 263 and RBI routing requirements before claiming export treatment.
Export receivable set off against import payable Is the set-off permitted under RBI directions? Maintain the settlement, accounting and FEMA documentation.
Goods export proceeds not realised What is the applicable RBI realisation period or extension? Evaluate Rule 96B recovery only after confirming the FEMA/RBI timeline.
AD bank has written off realisation Is there a valid write-off, wholly or partly? Apply Circular 263 to the corresponding Rule 96B recovery issue.
Rule 96(10) SCN / appeal / writ still pending What is the exact procedural status? Review Circular 264 and the Goodluck India judgment before the next submission or hearing.
Historical Rule 96(10) matter already concluded Has the matter attained finality, or is any statutory remedy still live? Do not assume automatic reopening or refund. Obtain case-specific review.

9. Exporter and Professional Checklist

  • Identify whether the case concerns export of services, export of goods, or a historical refund restriction.
  • For GST export proceeds from services, verify the exact account type and whether the receipt is repatriable under the applicable RBI/FEMA framework.
  • For set-off or net-retention transactions, retain contracts, bank records, ledger treatment and settlement evidence.
  • For goods exports, verify the applicable RBI realisation period and any formal extension before applying Rule 96B.
  • Check whether an RBI or AD-bank write-off exists for any unrealised amount.
  • For Rule 96(10), 89(4A) or 89(4B) disputes, identify the exact procedural status of every notice, order, appeal or writ.
  • For pending proceedings, place Circular 264 and the Goodluck India judgment on record where relevant.
  • Do not treat the retrospective clarification as an automatic entitlement to reopen every concluded historical case.

Frequently Asked Questions

Circular 263 clarifies that receipt in specified repatriable INR accounts, including SNRR or INR Nostro arrangements, can satisfy the payment condition under section 2(6)(iv) of the IGST Act, subject to the applicable RBI and FEMA framework.

Yes, where the set-off is in accordance with RBI directions. Circular 263 treats a permitted set-off as satisfying the relevant payment condition.

Circular 263 refers to the period, including any extended period, prescribed under RBI FED Master Direction No. 16/2015-16, as amended from time to time.

Circular 263 clarifies that recovery of refund under Rule 96B should not be made to the extent the realisation requirement has been written off by the AD bank.

Circular 264 states that the omission will be effective retrospectively from 23 October 2017, following the Supreme Court judgment in Goodluck India Limited.

No blanket conclusion should be drawn. The Circular and the Supreme Court judgment specifically address pending proceedings. The effect on any concluded or otherwise final matter depends on its procedural status and applicable legal remedies.

TaxPower GST Editorial Note

Export and refund issues often require a three-way reconciliation of GST records, banking/FEMA evidence and the procedural status of any notice or refund proceeding. Circulars 263 and 264 remove important areas of uncertainty, but they should still be applied to the facts and records of the particular exporter.

Official Reference Framework

  • CBIC Circular No. 263/09/2026-GST dated 26 October 2026 – clarification on receipt of payment for export of goods or services. CBIC Tax Information Portal.
  • CBIC Circular No. 264/10/2026-GST dated 26 October 2026 – clarification on omission of Rule 96(10). Official CBIC circular.
  • Reserve Bank of India – FEMA Notifications, including the 2026 export/import regulations referred to in Circular 263.
  • M/s Goodluck India Limited & Anr. v. Union of India & Ors., SLP (Civil) No. 24550 of 2025 and connected matters, Supreme Court order dated 6 August 2026.
  • Relevant provisions include section 2(6)(iv) of the IGST Act and Rules 96B, 96(10), 89(4A) and 89(4B) of the CGST Rules.

Disclaimer: This article is for general information and professional awareness. Export status, refund recovery and litigation consequences can depend on the applicable FEMA/RBI framework, documentary evidence, limitation and procedural status. Verify the current official position and obtain professional advice before acting in a specific case.