<p class="ds-markdown-paragraph" style="margin: 16px 0px; color: rgb(15, 17, 21); font-family: quote-cjk-patch, Inter, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Open Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif; font-size: 16px;"><span class="">The Central Board of Indirect Taxes and Customs has issued a set of clarificatory circulars dated 26 October 2026 that resolve long-standing uncertainties in GST treatment of export payments, with particular relevance to shipping lines, freight forwarders, and exporters who handle cross-border transactions . The circulars give effect to recommendations from the 57th GST Council meeting and address issues that field formations had been raising regarding the mode of receipt of export proceeds and the eligibility of set-off arrangements.</span></p><p class="ds-markdown-paragraph" style="margin: 16px 0px; color: rgb(15, 17, 21); font-family: quote-cjk-patch, Inter, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Open Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif; font-size: 16px;"><span class="">Circular No. 263/09/2026-GST addresses the core question of what constitutes receipt of payment for export of services under Section 2(6)(iv) of the IGST Act . It clarifies that payment received in convertible foreign exchange, or in repatriable INR accounts such as SNRR, INR Nostro, or NRE accounts, satisfies the condition for export treatment. Payments from NRO accounts must be routed through repatriable INR accounts to qualify . This clarification is significant for shipping lines and freight forwarders that receive payments from overseas principals, agents, or customers through various rupee-denominated accounts, as it removes ambiguity about whether such receipts preserve export status for GST purposes.</span></p><p class="ds-markdown-paragraph" style="margin: 16px 0px; color: rgb(15, 17, 21); font-family: quote-cjk-patch, Inter, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Open Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif; font-size: 16px;"><span class="">The circular also validates set-off arrangements, which are common in shipping and freight forwarding where export receivables are offset against import payables owed to the same counterparty . It notes that with the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 coming into effect from 1 October 2026, the earlier restriction limiting set-offs to goods-against-goods and services-against-services no longer applies. Wherever export receivables are set off against import payables in accordance with RBI directions, the condition under the IGST Act is considered fulfilled . This is particularly relevant for shipping agents and freight forwarders who routinely net off balances with overseas principals across multiple transactions.</span></p><p class="ds-markdown-paragraph" style="margin: 16px 0px; color: rgb(15, 17, 21); font-family: quote-cjk-patch, Inter, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Open Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif; font-size: 16px;"><span class="">A separate circular, No. 264/10/2026-GST, addresses the retrospective omission of Rule 96(10) of the CGST Rules, which had restricted IGST refunds for exporters availing specified concessional benefits on inputs . The rule was omitted prospectively from 8 October 2024, but disputes continued over whether the omission applied to pending proceedings for earlier periods. Following the Supreme Court's judgment in Goodluck India Limited v. Union of India dated 6 August 2026, CBIC has clarified that the omission is effective retrospectively from 23 October 2017, and field formations must deal with pending proceedings accordingly . The same treatment applies to Rules 89(4A) and 89(4B).</span></p><p class="ds-markdown-paragraph" style="margin: 16px 0px; color: rgb(15, 17, 21); font-family: quote-cjk-patch, Inter, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Open Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif; font-size: 16px;"><span class="">For shipping lines and freight forwarders, these clarifications reduce compliance risk in several ways. First, they confirm that rupee-based settlement arrangements common in the maritime services sector do not automatically disqualify a transaction from export treatment, provided the accounts used are repatriable in nature . Second, they validate netting arrangements that are standard commercial practice in shipping agency relationships, where a local agent may owe freight or disbursements to an overseas principal while also being owed commission or service fees. Third, the Rule 96(10) clarification provides relief to exporters facing legacy refund disputes, which is relevant to shipping companies that also engage in export of goods or services.</span></p><p class="ds-markdown-paragraph" style="margin: 16px 0px; color: rgb(15, 17, 21); font-family: quote-cjk-patch, Inter, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Open Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif; font-size: 16px;"><span class="">The timing of the circulars aligns with the broader GST process reform agenda discussed at the CBIC trade interaction in Mumbai on 23 October, where Chairman Vivek Chaturvedi emphasised a "trust first, verify later" philosophy . The circulars operationalise that philosophy by resolving ambiguities that had created compliance friction, rather than by introducing new enforcement measures. For a sector that operates on thin margins and complex multi-party transactions, clarity on these points is as valuable as any concession.</span></p><p class="ds-markdown-paragraph" style="margin: 16px 0px; color: rgb(15, 17, 21); font-family: quote-cjk-patch, Inter, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Open Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif; font-size: 16px;"><span class="">For Indian exporters using shipping and logistics services, the circulars also clarify the time limit for realisation of export proceeds under Rule 96B. The period is now governed by RBI's FED Master Direction No. 16/2015-16, rather than a separate GST timeline, and where the realisation requirement has been written off by the Authorised Dealer Bank, recovery of refund under Rule 96B shall not be made . This provides a clearer pathway for exporters facing genuine non-realisation due to disruption or counterparty default, a scenario that has become more common amid the Gulf and Red Sea shipping crises.</span></p><p class="ds-markdown-paragraph" style="margin: 16px 0px; color: rgb(15, 17, 21); font-family: quote-cjk-patch, Inter, system-ui, -apple-system, BlinkMacSystemFont, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Open Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif; font-size: 16px;"><span class="">Looking ahead, the practical effect of these circulars will depend on how field formations apply them in assessment and audit proceedings. The clarifications are binding on tax authorities, and they provide a defensible basis for exporters and service providers to resist demands that are inconsistent with the circulars. For the shipping and logistics sector, the immediate benefit is reduced uncertainty in structuring cross-border payments and set-off arrangements. The longer-term benefit is a more predictable GST environment for export-oriented maritime services, which is essential if India is to build the shipping and logistics capabilities that IOC Chairman A S Sahney has identified as critical to capturing the benefits of discounted crude and expanding trade.</span></p>