GST Refund explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
More Indian exporters are being paid in rupees, routed through Special Rupee Vostro Accounts (SRVAs) opened by Indian banks for correspondent banks of partner countries. The worry is obvious: if the export definition asks for convertible foreign exchange, does a rupee receipt kill the zero-rating and the GST refund? For services, CBIC has answered that question directly.
Section 2(6)(iv) of the IGST Act accepts payment in convertible foreign exchange "or in Indian rupees wherever permitted by the Reserve Bank of India". Circular No. 202/14/2023-GST (27.10.2023) clarifies that export-of-services proceeds received in INR from Special Rupee Vostro Accounts of correspondent banks of the partner country, opened by AD banks, satisfy that condition, subject to FTP 2023 and RBI conditions. The supply stays zero-rated, the LUT route and the RFD-01 refund remain available, and your bank's realisation document replaces the usual FIRC.
The legal hook: section 2(6)(iv)
The five-part definition of export of services originally required payment in convertible foreign exchange. The IGST (Amendment) Act, 2018 added the words "or in Indian rupees wherever permitted by the Reserve Bank of India", effective 01.02.2019. The ICAI background material notes that the amendment was mainly aimed at services to Nepal and Bhutan, where payment is received in Indian currency, but the wording is general: whatever RBI permits, GST accepts.
What Circular 202/14/2023-GST says
The circular deals specifically with export remittances received in a Special INR Vostro account, as permitted by RBI. Its conclusion, as summarised in the ICAI material:
- where Indian exporters of services are paid export proceeds in INR from the Special Rupee Vostro Accounts of correspondent bank(s) of the partner trading country, opened by AD banks,
- the receipt is treated as fulfilling section 2(6)(iv),
- subject to the conditions and restrictions in the Foreign Trade Policy, 2023 and extant RBI circulars, and without prejudice to any permissions or approvals required.
So the GST test follows the FEMA test. If your bank handles the receipt as a permitted SRVA export realisation, GST treats it as valid export consideration.
| Receipt channel | Condition (iv) met? | Source |
|---|---|---|
| Convertible foreign exchange into your Indian account | Yes | s.2(6)(iv) |
| INR through a Special Rupee Vostro Account, per RBI/FTP | Yes, for services | Circular 202/14/2023-GST |
| INR from a client in Nepal or Bhutan | Treated as export | Circulars noted in the Refunds Handbook |
| INR paid by an Indian affiliate on behalf of the foreign client | Not covered by the circular | Take advice; high dispute risk |
| INR outside any RBI-permitted channel | No | s.2(6)(iv) |
If you are not sure which channel your receipt used, ask your bank before you file. Our LUT export refund team can review the remittance trail alongside the refund working.
Does the LUT still work?
Yes. The Refunds Handbook reproduces the CBIC clarification that acceptance of an LUT for supplies to countries outside India (or to SEZs) is permissible irrespective of whether payment is made in Indian currency or convertible foreign exchange, as long as it is in accordance with the applicable RBI guidelines. Nothing about rupee invoicing or rupee realisation stops you from exporting under LUT.
The same passage records the general FTP rule for goods: contracts and invoices may be in freely convertible currency or INR, but proceeds are realised in freely convertible currency, with specified exceptions for INR realisation through permitted Vostro arrangements. For goods exporters paid in INR through SRVAs, confirm the permission and documentation with your AD bank. Circular 202/14/2023-GST, as described in the ICAI texts, addresses export of services.
The refund claim with INR receipts
The claim itself works exactly like any other service export refund:
- File RFD-01 under "export of services without payment of tax" (LUT route), or under the IGST-paid route if you charged IGST.
- Compute the refund with the Rule 89(4) formula. Zero-rated turnover for services is based on payments received in the period.
- Fill Statement 3 with invoice-wise realisation details. Rule 89(2)(c) asks for BRC/FIRC details. For an SRVA receipt, use the realisation document your AD bank issues for that remittance and keep the bank's confirmation that it was an SRVA export realisation.
Illustration: A Pune engineering-design firm invoices a client in a partner country ₹50 lakh (invoice in INR). Payment arrives through the client bank's SRVA with an Indian AD bank. Domestic turnover in the quarter is ₹25 lakh and Net ITC is ₹4.5 lakh.
- Zero-rated turnover = ₹50 lakh (payment received in the quarter).
- Adjusted total turnover = ₹75 lakh.
- Refund = 50 × 4.5 ÷ 75 = ₹3 lakh.
No currency conversion is needed because the receipt is already in rupees. Run your own case in the GST refund calculator.
Practical risks
The document gap. Officers are used to FIRCs in foreign currency. Attach a short covering note citing section 2(6)(iv) and Circular 202/14/2023-GST, and include the bank's advice showing the SRVA channel. This saves a deficiency memo.
Third-party payers. The circular covers payment from the SRVA of the partner-country bank. Payment by a group company or agent in India is a different fact pattern and should be reviewed separately.
Time limits still apply. Rule 96A requires IGST with interest if payment for an LUT invoice is not received within one year of the invoice (or the FEMA period, if later). A rupee receipt that arrives late is still late. The refund's two-year limit runs from the date of receipt.
Need help with an INR export refund?
A rupee-paid export refund succeeds or fails on the paperwork: the SRVA trail, the bank's realisation document and a Statement 3 that ties each receipt to its invoice. We assemble that file, add the legal note the officer needs, and file the RFD-01. See our export refund under LUT service or the broader GST refund on exports page.
Key takeaways
- Section 2(6)(iv) IGST accepts INR where RBI permits it.
- Circular 202/14/2023-GST treats SRVA receipts as valid for export of services, subject to FTP 2023 and RBI conditions.
- The LUT is available whether payment is in INR or foreign exchange, if RBI guidelines are followed.
- Use your AD bank's realisation document for the SRVA receipt in Statement 3, and attach a short legal note.
- Goods exporters and third-party INR payers should confirm the position with their bank before relying on it.
Read next
- GST refund on export of services: conditions and filing
- GST refund for software exporters and IT companies
- Export without LUT: GST refund consequences
- Rule 96B: recovery where export proceeds are not realised
Disclaimer: Positions stated as on 30 September 2026, based on the CGST Act and Rules as amended, the Finance Act 2026, and the ICAI Handbook on Refunds under GST (January 2026). Verify current notifications before filing.