REPATRIATION OF EXPORT - CONVERTIBLE FOREIGN EXCHANGE

[DR.MARIAPPAN GOVINDARAJAN]

Section 2(6)(iv) of IGST Act requires that the 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. In one case the exporter did not receive payment for his services but made 'Net Settlement Account' by which the dues of the importer and exporter are set off. Whether such action fulfills the conditions of Section 2(6)(iv) of IGST Act?

AI Summary

Debate on Net Settlement Accounts: Do They Meet IGST Act Section 2(6)(iv) Payment Rules? RBI Guidance Needed. A forum discussion addressed whether using a 'Net Settlement Account' to offset exporter and importer dues satisfies the payment requirements under Section 2(6)(iv) of the IGST Act, which mandates payment in convertible foreign exchange or Indian rupees as permitted by the Reserve Bank of India. One participant advised consulting the Hand Book Procedures, 2023, and obtaining special RBI permission. Another participant confirmed that netting off is a valid payment method and is considered compliant with the Act.