Getting Paid From Abroad in India: RBI Export Rules, FIRA, GST 2026

A backend developer in Indore sends her October invoice to a startup in Austin: $4,000, net 30. When the money lands, her bank will want a purpose code, her GST return will want proof that the payment arrived in foreign currency, and from this month the RBI wants a single new export form filed for all her software invoices. None of this is difficult. All of it is easy to get wrong, and the cost of getting it wrong is usually cash stuck with the tax department or a bank entry that never closes.

India sells a remarkable amount of services to the world. The RBI's survey of software and IT-enabled services exports, released on 18 September 2026, put 2025-26 exports at $221.4 billion, up 8.2 percent. The United States took 54.1 percent and Europe 31.8 percent. And 91.7 percent was delivered off-site, which is to say from desks in Indian cities, by companies large and small and by a long tail of individual freelancers. The rules that govern how that money comes home changed on 1 October 2026. This guide walks through them in the order an exporter meets them.

The new rulebook that started on 1 October

For a decade, India's export payment rules lived in a 2015 Master Direction patched by well over a hundred circulars. In January 2026 the RBI replaced them with the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 and accompanying Directions, effective 1 October 2026. According to an EY regulatory alert and a Mondaq summary, the new framework supersedes the 2015 export and 2016 import Master Directions and 167 circulars. The changes that matter most to smaller exporters are these:

• Realisation period. Proceeds must be realised and repatriated within nine months, counted from the shipment date for goods and the invoice date for services. Exports invoiced in rupees get 12 months.
• One form instead of several. A single Export Declaration Form (EDF) replaces the old SOFTEX form for software and services. Software exporters can file one EDF covering all of a month's invoices, due within 30 days after month-end. Other service exporters may file on or before the date payment is received.
• Small reductions on self-declaration. For invoices up to Rs 10 lakh, banks may accept a reduction in the amount realised, for example a client's short payment, on the exporter's own declaration.
• Set-off. Goods export receivables can be set off against service import payables and the other way round.
• A sharper penalty for chronic delay. If proceeds stay unrealised more than a year past the due date, the exporter may ship only against full advance payment or an irrevocable letter of credit.
• Bank conduct. Banks must publish their policies and may not charge customers for delays caused by regulatory processes.

The 15-month window itself predates October. A 13 November 2025 amendment had already stretched realisation from nine months to fifteen and extended the deadline for shipping goods against an advance from one year to three. The 2026 regulations first kept the longer window, then a September 2026 amendment restored nine months from 1 October, with 12 months for rupee-invoiced exports. The rule has moved three times in a year, so check the RBI's current text before you plan around it.

Step one: be paid through the right channel

Export proceeds must arrive through an authorised dealer bank, in convertible foreign currency or in rupees where the RBI permits it. In practice exporters use one of four routes: a SWIFT wire straight into an Indian bank account; a foreign-currency collection account that receives local transfers abroad and remits to India; a regulated cross-border payment aggregator; or a card or wallet platform that ultimately pays out through an Indian bank. Each route must end with a bank credit that is tagged as export income and documented.

When you compare routes, compare four things, not just the headline fee. The exchange margin against the mid-market rate is usually the largest cost and the least visible. Fixed fees per transfer matter more on small invoices. Intermediary deductions on SWIFT wires can shave an unpredictable amount off the top, a problem we cover in our explainer on correspondent banking. And the route must produce the right paperwork: an inward remittance advice with your name, the foreign remitter, the amount and the purpose code. A cheaper route that leaves you without that document is not cheaper once your GST refund stalls.

Step two: get the purpose code right

Every inward remittance is classified with an RBI purpose code. For services exporters the common ones, as listed in a purpose code directory, include P0802 for software consulting and implementation, P0807 for off-site software exports, P0803 for data processing, P1006 for business and management consulting, P1007 for advertising and market research, and P1008 for research and development services. Pick the code that describes the work, not the size of the payment.

The most expensive mistake is letting a business receipt be coded as a personal remittance. It may still reach your account, but it will not count as an export of services, which can unravel GST zero-rating and leave you explaining a mismatch between your returns and your bank's reporting. If a client's payment arrives with the wrong code, ask your bank to correct it promptly rather than at year-end.

Step three: the documents, and who issues them

Keep all of it. A guide for Indian freelancers recommends retaining invoices, contracts, delivery emails, bank credit advices and remittance advices for at least six years and reconciling them monthly. That sounds like overkill until a refund officer asks about an invoice from three years ago.

The paperwork is not the obstacle. The obstacle is doing it in March for a year of invoices.

Step four: GST, the LUT and why it decides your cash flow

Exports of services are zero-rated under GST, but only if five conditions in section 2(6) of the IGST Act are all met. As a GST explainer sets out: the supplier is in India; the recipient is outside India; the place of supply is outside India; payment is received in convertible foreign exchange, or in rupees where the RBI allows it; and the two parties are not merely establishments of the same entity. An Indian subsidiary billing its foreign parent counts as a separate person, but a branch billing its own head office does not.

If you are GST-registered you then have a choice. File a Letter of Undertaking and invoice without tax, or pay 18 percent IGST on each export invoice and claim it back. According to an export compliance guide, LUT approval is usually immediate or takes a day or two, while IGST refunds nominally target 60 days and in practice often take 45 to 90. One trap catches many consultants: if your service falls under the place-of-supply rule for intermediaries, the place of supply may be in India, and zero-rating may not apply at all. That is a question for a qualified tax adviser.

A worked example: one developer, one quarter

Return to the Indore developer. She bills $4,000 a month and her client pays 30 days after invoice. We use the rupee's 9 October 2026 close of 96.73 for illustration.

1. Rupee value per invoice: $4,000 x 96.73 = Rs 3,86,920.
2. With an LUT on file: she invoices without GST. Her bank credits about Rs 3,86,920, less the exchange margin and any fees of her chosen channel.
3. Without an LUT: she must pay IGST at 18 percent, Rs 69,646 per invoice, from her own funds when she files her return, then wait for a refund. With three monthly invoices in the refund queue at a 90-day turnaround, about Rs 2.09 lakh of her money sits with the government at any moment.
4. Realisation deadline: an invoice dated 15 October 2026 must be realised by 15 January 2028. Had she invoiced in rupees, the deadline would be 15 April 2028.
5. EDF deadline: her October software invoices go on one EDF due by 30 November 2026.
6. If the client short-pays by $150 on a disputed sprint, the reduction is far below the Rs 10 lakh self-declaration threshold, so her bank can close the entry on her declaration.

The difference between steps two and three is pure working capital. For a solo exporter, Rs 2 lakh tied up in a refund queue is often a month of rent and living costs. Filing the LUT in April each year is the highest-return ten minutes in her calendar.

Currency choice and the October hedging rules

The same RBI survey shows that 72.6 percent of India's software exports were invoiced in dollars, 9.6 percent in euros, 6.3 percent in rupees and 6.0 percent in sterling. The new 18-month window for rupee invoices is a nudge toward the rupee, but most foreign clients will still prefer their own currency.

Exporters who hedge should note the RBI's 10 October 2026 measures. The limit for hedging without documenting the exposure fell from $100 million to $5 million, and cancelled contracts can no longer be rebooked. The new 20 percent reserve applies to contracts where the customer buys foreign currency, so an exporter selling dollars forward is not directly affected. Our guide to FX risk for small businesses works through hedging choices with rupee numbers.

What to watch next

• 30 November 2026: the first monthly EDF deadline for software exporters' October invoices under the new regime. Expect banks and STPI centres to iron out filing glitches.
• Late 2026: banks must publish their export-import policies and standard procedures under the new Directions. Read your bank's version; it tells you what documents it will actually ask for.
• Rupee hedging costs: how banks implement the October undertaking requirement and the rebooking ban for exporters with forward books.
• 31 March 2027: every LUT filed for 2026-27 expires. File the 2027-28 undertaking before your first April invoice.
• September 2027: the RBI's next annual software exports survey will show whether rupee invoicing moved off its 6.3 percent share.

For the wider picture of how money moves into and out of India, see our guides to FEMA rules in 2026 and to cross-border B2B payments. This article explains rules in general terms; it is not tax or legal advice, and exporters should confirm their position with a chartered accountant or their bank.

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