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?

[KASTURI SETHI]

Dear Sir,

For offsetting of export proceeds, please go through para 2.74 of Hand Book Procedures, 2023. Special permission of RBI is required and Appendix-2 L is to be submitted.

[DR.MARIAPPAN GOVINDARAJAN]

Thank you very much sir.

[Shilpi Jain]

Settlement by way of netting off is a valid mode of payment. Will be regarded as compliance.

AI Summary

Convertible foreign exchange requirement: netting off can satisfy repatriation, subject to special permission and procedural filing. Receipt of payment must be in convertible foreign exchange or in rupees where permitted; net settlement accounts (netting off importer and exporter dues) are recognised as a valid mode of payment, but offsetting export proceeds requires special permission from the foreign exchange authority and submission of Appendix 2L as per procedural guidance.