Is it still an export of services if my foreign client pays me in Indian rupees?
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Short answer
Only if the rupee payment is one the Reserve Bank of India (RBI) permits. Condition (iv) of section 2(6) of the IGST Act requires payment "in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India".1 CBIC Circular No. 202/14/2023-GST confirms that export proceeds paid in rupees from a Special Rupee Vostro Account meet that condition; a plain domestic rupee transfer is not covered by that clarification.2
A tutor teaching a family in Singapore, a consultant advising a Kenyan company or a writer working for a Sri Lankan agency is sometimes offered payment in rupees. Whether the job stays an export for GST depends on how those rupees arrive.
What does the law require for payment?
Condition (iv) of section 2(6) of the IGST Act requires the payment for the service to be received "in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India".1 Rupees are acceptable, but only through a route the RBI permits. If condition (iv) fails, the service is not an export even if the client is abroad.1
Which rupee payments qualify?
CBIC Circular No. 202/14/2023-GST (27 October 2023) deals with one permitted route. It clarifies that when Indian exporters of services are paid export proceeds in rupees from the Special Rupee Vostro Account of a correspondent bank of the partner country, opened by an Indian authorised dealer (AD) bank, condition (iv) is met.2 The circular adds that this is subject to the Foreign Trade Policy and RBI circulars.2
| How the client pays | Condition (iv) position |
|---|---|
| Sends US dollars, euros or another foreign currency by wire or through a payment platform | Convertible foreign exchange |
| Pays rupees through a Special Rupee Vostro Account route | Met, per Circular 202/14/2023-GST |
| Transfers rupees from an ordinary Indian bank account | Not covered by the circular; check with your bank and a CA |
The table applies condition (iv) and the circular.12 For how rupee invoicing works with your bank, see export invoicing in INR and the Special Rupee Vostro Account guide.
Why does this matter if I filed an LUT?
It matters because the Letter of Undertaking (LUT) promise depends on the same condition. Under rule 96A(1)(b) of the CGST Rules, if payment is not received in convertible foreign exchange, or in rupees where the RBI permits, within the period the rule sets, the tax becomes payable with interest.3 An invoice raised without IGST and settled through an unpermitted rupee route can therefore turn into a tax bill.
What should I do before accepting rupees?
Ask the client how the rupees will reach you, and ask your bank whether that route is a permitted one for export proceeds. Keep the bank's advice for each receipt. If the answer is unclear, invoice in foreign currency instead, or confirm the GST treatment with a chartered accountant (CA) before you issue the invoice.
How did we verify this?
We checked this page against the sources below on 28 October 2026. Read our methodology or report an error.
Frequently asked questions
My client sent dollars and my bank credited rupees. Is that a rupee payment?+
That is the usual way foreign currency reaches an Indian account: the remittance arrives in foreign currency and the bank converts it. Keep the bank advice or FIRA showing the foreign currency amount as evidence.
What is a Special Rupee Vostro Account?+
It is a rupee account that an Indian AD bank opens for a correspondent bank of a partner country, through which Indian exporters can be paid in rupees. Circular 202/14/2023-GST treats such payments as meeting condition (iv).2
What happens to my LUT invoice if the payment does not qualify?+
Rule 96A(1)(b) requires the tax with interest if payment is not received in convertible foreign exchange or in rupees where the RBI permits, within the period it sets.3
This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.
Keep reading
Can an Indian exporter invoice a foreign client in Indian rupees?
Can an Indian service exporter invoice a foreign client in rupees? RBI and FEMA rules on INR invoicing and settlement, the 12-month realisation period and GST.
RBI and FEMAWhat is a Special Rupee Vostro Account and how does it pay Indian exporters?
What a Special Rupee Vostro Account is, how Indian service exporters get paid in rupees through one, and what RBI's July 2026 consolidated circular changed.
GSTWhat counts as export of services under GST and under FEMA?
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