Hi, ours is an SEZ Unit having IT/ITES operations in CSEZ zone. we are planning to provide services to DTA and when we invoice we will be invoicing the customer in USD as per RBI circular, and my question is whether can we realize the said amount in INR or it shall be in USD only?
| Export realisation in INR is allowed in specific circumstances under FEMA, but it affects GST zero-rated status. Here is the full picture: 1. FEMA Position (RBI Master Direction on Export of Goods and Services): - Export proceeds must generally be realised in freely convertible foreign exchange within 9 months from shipment - EXCEPTION — INR Settlement: Exports to Nepal and Bhutan can be settled in INR. Also, India has INR trade settlement arrangements with certain countries (e.g., Russia under the RBI framework announced in 2022-23) — exporters can receive payment in INR through Vostro account mechanism - For other countries, INR settlement is NOT the norm — an RBI/AD bank approval may be needed 2. GST Impact — Critical Point: - For export of services to qualify as 'export of services' (zero-rated) under Section 2(6) of IGST Act, one of the conditions is: 'payment for such service has been received by the supplier of service in convertible foreign exchange OR in Indian Rupees wherever permitted by the Reserve Bank of India' - So if RBI has specifically permitted INR settlement for your country/transaction, the INR receipt qualifies for zero-rated treatment - If INR receipt is NOT RBI-permitted, it may fail the export of services test and the supply becomes taxable in India 3. Goods Export: For goods, zero-rated status is based on the shipping bill/customs evidence — the currency of realisation matters less for GST purposes, but FEMA compliance is still mandatory 4. Practical Step: If receiving in INR, obtain a written confirmation from your AD Bank that the INR receipt is RBI-permitted. Attach this to your export documentation for GST refund purposes. |
Arpan Bohra & Co
Hyderabad
CA Inter
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N N V Satish & Co.,
Hyderabad
CA Inter
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CCI
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