The Government has introduced Rule 96B under CGST Rules, designed to ensure exporters do not misuse IGST refunds when export proceeds are not realized in foreign currency. This rule tightly integrates with provisions of GST, Customs, Foreign Trade Policy (FTP), and the Foreign Exchange Management Act (FEMA).
What Is Rule 96B?
Rule 96B mandates that if an exporter receives an IGST refund on goods exported, and the export proceeds are not realized within the time allowed under FEMA (currently 9 months), the refunded amount must be returned along with interest.
This provision bridges a major gap in export-related compliance, ensuring that tax refunds are genuinely earned and not misused for financial arbitrage.
Broader Legal Connections:
Under GST, exports are zero-rated, meaning taxes paid can be claimed as refunds.
Rule 96B ensures refund eligibility is tied to actual foreign exchange realization, as required under FEMA rules.
The rule aligns with FTP norms, which also make export benefits subject to realization of payment.
From a Customs perspective, exports are considered valid only when actual remittance occurs.
Key Compliance Points for Exporters:
Maintain clear documentation of export transactions and BRC/FIRC certificates.
Track payment realization timelines under FEMA guidelines.
If payment is not received within time, proactively return the refund to avoid penalties or notices.
India Advocacy’s Take:
Rule 96B is a clear signal from the government to tighten the loop between tax refund policies and forex laws. Exporters must now be doubly cautious and ensure that their tax claims are backed by actual remittances.
Our legal team helps exporters navigate GST, FEMA, and FTP regulations for refunds, appeals, and compliance audits.
For guidance on export taxation and refund compliance, reach out to India Advocacy today.
