GST on FX gets simpler with clean payment records. Skydo issues FIRA on every payment, audit-ready and instant.

<a></a>What is GST on Foreign Exchange?

GST on foreign exchange applies to the service of converting one currency into another, not to the money itself. When a bank or an authorised dealer facilitates an exchange, the conversion they perform is a taxable service under GST. The currency being swapped is treated as a transaction in money and is never taxed.

The 18% GST is applied to this service value, calculated under Rule 32 of the CGST Rules, 2017, and not to the amount of currency being converted.

If you are an exporter, though, the real question is usually broader: where does GST touch the money you receive from abroad? When an international payment reaches you, GST can appear at three distinct points, and it helps to see them together before going into each one:

The rest of this guide takes each of these in turn, along with how to calculate the conversion GST, how to file, and how to stay compliant.

<a></a>Who does GST on Foreign Exchange Apply to?

GST on foreign exchange applies to anyone who converts one currency into another through a bank or authorised dealer. It follows the scope of supply: any time a conversion service is provided, GST applies to that service. That covers a wide set of everyday transactions:

In each of these, you are paying for a conversion service, so 18% GST applies to the value of that service.

There is one important group this does not catch in the same way: exporters receiving payment from foreign clients. Money coming in for the export of goods or services is treated very differently, and we cover that separately under inward remittances below.

<a></a>How to Calculate GST on Foreign Exchange?

GST on foreign exchange is calculated by applying 18% to the taxable service value, not to the amount exchanged. That service value is worked out using one of two methods under Rule 32 of the CGST Rules: the calculation-based method or the slab-based method. A bank or authorised dealer chooses one method and sticks with it across the financial year.

The two methods are built keeping a couple of things in mind: accuracy and practicality. The calculation-based method values the service by the actual spread earned, which is precise but needs the RBI reference rate for that currency and a per-deal calculation. Since the RBI publishes reference rates only for selected major currencies, and tracking the spread on every transaction is impractical for a busy forex desk, the slab-based method offers a simpler alternative: a fixed formula based on the amount alone, usable even when no reference rate exists, with the service value capped at ₹60,000.

<a></a>Calculation-based method

This method looks at the spread, the difference between the rate the bank offers you and the RBI reference rate for that currency.

Example: You sell $10,000 to a bank at ₹85 per dollar, while the RBI reference rate that day is ₹84.5 per dollar. The markup is ₹0.50 per dollar.

Service value = (85 − 84.5) × 10,000 = ₹5,000 GST at 18% = ₹900

When the RBI reference rate is not available: The RBI publishes rates only for selected major currencies. If your currency is not on that list, the service value is taken as 1% of the gross rupee amount received or paid.

When neither currency is INR: Sometimes you convert between two foreign currencies with no rupee directly involved, say USD to GBP to pay an overseas supplier. Here, the service value is 1% of the lower of the two amounts, once both are converted to INR.

GST at 18% would then apply to ₹16,500.

<a></a>Slab-based method

The alternative is a tiered structure based on the total INR amount exchanged:

Example: For ₹15,00,000 exchanged, the service value is ₹5,500 + 0.1% of ₹5,00,000 (the amount above ₹10 lakh), which comes to ₹6,000. GST at 18% = ₹1,080.

<a></a>What is GST on Foreign Currency Conversion (Forex Services)?

GST on foreign currency conversion is 18%, charged on the value of the conversion service, not on the amount you convert. What that service value comes to depends on how your provider prices the exchange. Under the calculation-based method, the taxable value is the spread between the rate you are given and the RBI reference rate. So a provider that builds a wide, hidden markup into the exchange rate creates a larger service value, and 18% GST then applies to that larger base. A provider that charges a clear, flat fee keeps the taxable value, and the GST on it, low and predictable.

One more thing to know: this GST applies to retail customers. Inter-bank forex transactions, meaning conversions between banks or authorised dealers themselves, are exempt.

<a></a>What is GST on Inward Remittances (Export Payments)?

There is no GST on inward remittances received for exports. If you are an Indian exporter receiving payment from a foreign client, whether you sell services or ship goods, you do not charge GST on those invoices, because these payments are zero-rated exports under Section 16 of the IGST Act.

Zero-rated does not mean exempt. It means you charge 0% GST on your export invoice, but you can still claim Input Tax Credit on the GST you paid on business expenses like software, equipment, raw materials, or rent.

How you qualify depends on what you export. For goods, the supply qualifies as an export when the goods physically leave India for a destination abroad, with the shipping bill as your key piece of evidence. For services, all five of these conditions must be met:

To back up this classification, you need proof of foreign inward remittance, such as a FIRC (Foreign Inward Remittance Certificate) or a bank advice. These show the payment arrived in foreign currency and validate your export status during an audit.

If you are a registered business, it is best to file a <a href="https://www.skydo.com/blog/all-you-need-to-know-about-lut-for-tech-service-export">Letter of Undertaking</a> (LUT) so you can export without paying IGST upfront. If you do not file an LUT, you must pay IGST on the invoice first and then claim it back as a refund, which blocks your cash for months.

<a></a>What is GST on Compliance Services like FIRC &amp; BRC?

GST does apply to FIRC and BRC, but only to the bank's issuing fee, not to your remittance. When foreign payments land in your account, your bank issues two documents:

Banks charge a fee to issue these, usually in the range of ₹500 to ₹2,000 per certificate, and 18% GST is added on top of that fee, because issuing the certificate is treated as a domestic service.

In most cases, this GST is either built into the bank's invoice or handled through the reverse charge mechanism, so it is already taken care of by the time you pay the fee. You do not need to collect any GST from your foreign client for it.

<a></a>GST on Foreign Exchange: Some Common Errors

Mistakes here fall into two buckets: getting the tax treatment wrong, and getting tripped up on the GST portal. Both are easy to avoid once you know them.

<a></a>Conceptual mistakes

<a></a>Operational mistakes on the portal

<a></a>How to file GST for international income in India?

To file GST for international income, treat it as a zero-rated export: hold an active GSTIN, raise GST-compliant export invoices, export either under an LUT or with IGST paid, and report the income in GSTR-1 (Table 6A) and GSTR-3B. As an Indian business selling to clients abroad, your international income is an export of goods or services, taxed at 0% but still reportable. Here is the sequence:

1. Ensure you have an active GSTIN. You must be registered under GST to report export income and claim its benefits.

2. Raise GST-compliant invoices. Each export invoice should mention "Export of services with payment of IGST" or "Export of services without payment of IGST," carry your GSTIN and the recipient's billing address outside India, and show the currency and conversion rate per the RBI reference.

3. Choose your export route.

4. File your GST returns. Report export income in GSTR-1 (Table 6A) and GSTR-3B. If you are claiming a refund, file RFD-01 with the supporting documents.

5. Maintain documentation. Keep invoices, FIRA or eBRC, your LUT, and shipping bills (for goods) as required.

<a></a>What are the best practices for managing GST on foreign transactions?

The best practices for managing GST on foreign transactions are to use RBI-authorised channels, mark your export invoices clearly as zero-rated, keep the right documents on file, and stay updated on rule changes. A few habits keep your cross-border payments clean and audit-ready:

Use RBI-authorised channels: Always receive and convert foreign currency through RBI-authorised banks or platforms. They apply the correct GST slabs and issue proper, input-credit-friendly invoices.

Mark export invoices clearly: Add a note like "Export of Services, IGST Zero-Rated under Section 16." If your payment partner charges a service fee with GST, make sure that GST shows as a separate line item so nothing gets mixed up.

Keep the right documents on file: The set you want ready includes:

Stay updated: The core GST rules on export of services have been stable since 2017, but minor updates do surface, especially around forex services and compliance documents. Follow a reliable CA or a GST update source so nothing catches you off guard.

<a></a>How does Skydo help in GST Compliance?

Skydo helps with GST compliance by charging GST only on its flat service fee (not on your remittance), issuing FIRA free and instantly with every payment, and giving you GST-compliant invoicing, live forex rates, and transparent flat fees. Instead of chasing your bank for certificates and second-guessing what GST applies, you get everything in one place.

Transparent, flat fees. Skydo's pricing is simple and predictable:

GST only on the fee, never on your payment. Skydo charges 18% GST on its flat service fee, not on your remittance. Receive $10,000 and the fee is $29, so the GST is 18% of $29, roughly $5.22. Because the fee is flat and the rate carries no hidden spread, the taxable value stays small and you know your GST in advance, instead of it ballooning inside a marked-up exchange rate.

FIRA, instant and free. Every payment comes with a FIRA the moment it lands, so you have your compliance proof ready without a bank fee or the GST on it.

GST-compliant invoicing. Raise clean, zero-rated export invoices that carry the right details out of the box, so your paperwork holds up at filing and audit time.

Live forex rates. You see the real rate you are getting, with no hidden markup buried in the spread.

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Duty drawback status shows the current stage of a duty drawback refund claim. It helps exporters track whether their claim is under processing, requires additional information, has been approved or has been credited to their bank account.

For instance, if a garment shipment from India to the USA is subject to duty drawback, the exporter can use the shipping bill number to check the duty drawback status. When the status appears as ‘drawback paid,’ it indicates that the refund amount has been successfully credited.

<a></a>Who is Eligible to Claim Duty Drawback?

The minimal eligibility criteria for handling drawback claims are:

In addition, here are the eligible goods for the duty drawback status:

Checking your duty drawback status helps you track the progress of your refund claim and identify any issues that may delay payment. It aids in the reimbursement of customs and excise taxes paid by exporters on imported or local inputs used in the production of export goods.

For exporters, the status fulfils several vital functions:

<a></a>What are the Different Types of Duty Drawback Claims?

In India, there are 3 main types of duty drawback claims. These are:

How to Check Drawback Status with Shipping Bill on ICEGATE?

Checking your drawback status with the shipping bill is important for maintaining financial transparency and ensuring your company takes advantage of the rebates it is eligible for. To check your duty drawback status on ICEGATE, follow these steps:

Go to the ICEGATE portal and login with your credentials.&nbsp;

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To access the drawback status area, select ‘Icegate Inquiry Service’ under the ‘Services’ section. Depending on the details you need, choose ‘Drawback Inquiry’, ‘Drawback Disbursement Status’ or ‘Monthwise Drawback Enquiry’ to track the status of your drawback claim.

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After selecting ‘Drawback Enquiry’, enter the relevant date range in the ‘Date From’ and ‘Date To’ fields. Next, choose the port location for which you want to check the drawback status.

Select ‘Drawback Pending Status’ to view a list of shipping bills whose duty drawback claims are still being processed during the specified period.

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Select ‘Drawback Sanctioned Status’ to see the shipping bills for which the duty drawback has already been processed and approved.

For hassle-free processing, verify that your <a href="https://www.skydo.com/blog/iec-code-full-form-importance-fees">IEC</a>, shipping bill number, and bank details are correct before submitting the enquiry.

While you track your drawback status, don’t let delays in refunds slow down your business. With <a href="https://www.skydo.com/">Skydo</a>, exporters can receive international payments faster with zero hidden forex markup, helping you keep your working capital flowing even when claims are pending.

<a></a>Meaning of Different Duty Drawback Status Messages

The ICEGATE portal displays different status messages, such as ‘EGM Not Filed’, ‘Query Raised’, and ‘Scroll Generated’. These indicate the progress of a duty drawback claim and highlight any issues that may require action.

Here is a detailed overview of some of the most common status messages and what they mean:

When checking your status, you may see ‘EGM Not Filed’ or ‘EGM Mismatch’, even though your products were shipped two weeks ago. This is one of the most common causes of delays.

Until the shipping line or airline files an accurately completed Export General Manifest (EGM), the drawback engine cannot process the claim. The solution is to compare the EGM submitted with the rotation number and container details on your Bill of Lading. The operation will end even if there is a single character discrepancy (CNTR123 vs CNTR1234).

The status ‘Query Raised’, with the remark ‘Substantiate classification under DBK Schedule’, appears when the item description in the shipping bill does not accurately match the drawback schedule description, or when the declared value appears unusually high. In such cases, the automated system or a customs officer may flag the claim for clarification.

To solve this, you must log in and provide technical documentation or a certificate from a chartered engineer attesting to the product's composition matching the stated HS Code.

Even if the bank account has not yet been credited, the status may show that a scroll has been generated. In many cases, the ‘Temporary Scroll’ or ‘Permanent Scroll’ is released by customs within 24 to 48 hours.

If the delay persists beyond this period, it may indicate a Public Financial Management System (PFMS) issue, often caused by a character-to-character mismatch between the bank account name and the IEC name.

<a></a>Common Reasons for Duty Drawback Claims Rejection

Here are the common reasons and solutions for duty drawback claims rejection:

Cause: The exporter's IEC is not connected to ICEGATE.

Solution: Use your new contact and bank information to register and validate IEC.

Cause: Customs officers either received the shipping bill at a non-EDI port or have not yet processed it.

Solution: Make sure the port is compatible with ICEGATE or wait for an EDI upgrade.

<a></a>Incorrect or Unlinked Bank Details

Cause: Your financial information and ICEGATE records do not match.

Solution: Use ICEGATE's registration module to update bank information.

Cause: An audit, a document inconsistency or a customs objection.

Solution: Either escalate by written representation or pursue it through the responsible official.

<a></a>How Skydo Helps Exporters Stay Compliance-Ready?

Managing international payments can be challenging for exporters. From unexpected charges and payment delays to repeated follow-ups and complex paperwork, every step can take up valuable time.

Thus, Skydo is built to simplify some of these challenges and make cross-border transactions smoother.

It helps exporters handle international payments with greater ease while keeping every transaction aligned with central bank guidelines. With automated documentation and a compliance-focused approach, Skydo reduces manual work and removes unnecessary complications.

This allows exporters to spend less time managing payment processes and more time building their global business.

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How to Sell on Amazon USA from India: Fees, Shipping, Products (2025 Guide)

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An IGST scroll is an electronic payment document generated by the Customs department after authorizing an exporter’s Integrated Goods and Services Tax (IGST) refund claim. Because GST classifies exports as zero-rated supplies, any IGST paid at the time of shipment is eligible for a refund.

Customs generate the IGST scroll only when you file and verify the following four documents:

Customs uses the Indian Customs EDI System (ICES) to cross-reference the data across these four inputs. When the data makes a perfect match, Customs generates a unique scroll number asking banks to disburse the approved refund amount directly to your bank account.

You check your IGST scroll status because the ICES system processes refunds automatically but does not alert you when something goes wrong, so an unnoticed mismatch can stall your refund indefinitely.

Proactive tracking lets you predict when a sanctioned refund will hit your account, catch errors like an invoice mismatch early, and confirm your bank account has cleared the mandatory PFMS validation needed for payout. The ICES is an efficient system, but it doesn't alert you in case of mismatches. You must track the status proactively to stay on top of IGST refunds.

<a></a>What Happens If You Don’t Check?

Suppose your logistics team logs an invoice as “EXP-500” on the shipping bill, but your accountant enters “500” in GSTR-1. Without checking your status, you wouldn’t know that this tiny mismatch triggered a SB005 error, keeping your money trapped in the customs system until you file a data amendment.

<a></a>How to Check IGST Scroll Status Online?

You can track your IGST scroll status online through the GST Portal and ICEGATE. Your refund moves through two stages: first, your data migrates from the tax department to Customs, and second, Customs authorizes the payment.

Track IGST scroll status on the GST Portal

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Source: <a href="https://tutorial.gst.gov.in/userguide/refund/Track_Refund_Status_for_IGST_paid_on_account_of_Export_of_Goods.htm">GST Portal</a>

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<a></a>Track IGST scroll status on ‌ICEGATE

<a></a>What are the Types of IGST Scroll Statuses?

IGST scroll statuses fall into three groups: the two overall scroll outcomes that tell you if your refund is cleared (Sanctioned or Pending/Failed), the customs response codes from SB000 to SB006 that pinpoint exactly what failed during validation, and the PFMS bank validation outcomes that decide whether a sanctioned amount actually reaches your account. Reading all three together tells you exactly where your money is at any point. This section covers each in turn.

<a></a>Understanding Your IGST Scroll Outcomes

After you click on Search, the portal will display one of the two outcomes:

If your status isn't "Sanctioned," you will see a specific error code. Each code requires a different fix to get your refund back on track:

<a></a>Final Bank Verification: PFMS Outcomes

After clearing the error codes, the Public Financial Management System (PFMS) must validate your bank account before disbursing the refund amount. Here are the most common outcomes you can expect to see:

<a></a>What are the common reasons for IGST Refund delays?

The most common reasons for IGST refund delays are data mismatches between your GSTR-1 and shipping bill, the carrier not filing the Export General Manifest (EGM), PFMS bank account validation failures, regulatory alerts on your Import Export Code (IEC), missing Aadhaar authentication on the GST portal, and gaps where the IGST paid in your GSTR-3B is less than what you declared in GSTR-1. Each is explained below, with the fix for each:

Minor typos in invoice numbers, port codes, or GSTINs between the GSTR-1 and shipping bill can cause delay. Even an inconsistency in tax values or an extra character in an invoice will put the automated system off from matching the details.

Customs will not release the scroll until the carrier files the Export General Manifest (EGM). It will remain in the pending state until your shipping carrier files the EGM.

The Public Financial Management System (PFMS) must validate your bank account at the final stage. Failures can occur because of inactive accounts, incorrect IFSC codes, or a mismatch between the entity’s PAN name and bank records.

Any active investigation, compliance flag, or suspension on your Import Export Code (IEC) stops all pending refund allocations. Resolve these jurisdictional alerts and have the suspension revoked to resume processing your scroll.

Missing Aadhaar authentication on the GST portal prevents your invoice data from being shared with ICEGATE. Without this transmission, Customs cannot see your refund claim

If the cumulative IGST paid in your GSTR-3B summary is less than what you declared in your GSTR-1 invoice details, the refund will be delayed. Pay the remaining tax liability to resume the refund process.

While IGST refund delays can take weeks of waiting, your international payments can be relatively quicker with the help of Skydo.

Skydo simplifies both international collections and regulatory compliance:

Set up virtual accounts in USD, EUR, GBP, SGD, AUD, and CAD in as little as 10 to 15 minutes. Your clients pay you via local transfer networks, bypassing the high SWIFT fees and hidden markups.

Skydo auto-generates a free digital Foreign Inward Remittance Advice (FIRA) for every transaction. FIRA is critical for GST refund audits and tax assessments.

Bulk upload your shipping bills, and Skydo will map them with the right payments. In one click, you can generate an Electronic Bank Realization Certificate (eBRC) and stay compliant without delays.

You get flat pricing: under $2,000 = $19 flat; $2,000–$10,000 = $29 flat; over $10,000 = 0.3%. There are no currency conversion charges or hidden markups like banks or PayPal, which can shave off 5-10% of your income.

Sounds worth trying? Sign up to create your free account.

Modernize the Core: Your B2B Payments Strategy Reset

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Import duty is the tax Indian Customs charges on all goods entering India from foreign countries. It is governed by the Customs Act, 1962 and administered by the Central Board of Indirect Taxes and Customs (CBIC) under the Ministry of Finance.

In most cases, import duty is applied to all goods unless they qualify for a specific exemption, and is calculated on the product's CIF value, which stands for Cost, Insurance, and Freight.

For example, if a product costs Rs. 1,000 with Rs. 100 in transportation (Freight) and Rs. 50 in insurance, the assessable value becomes Rs. 1,150, and import duty is charged on this total amount.

<a></a>What Are the Types of Import Duties in India?

There are different types of import duties, such as BCD, IGST, Social Welfare Surcharge (SWS), Anti-Dumping Duty, Safeguard Duty, and Countervailing Duty. The purpose and applicability of each duty are explained below:

Note: Anti-Dumping and Safeguard duties apply only to some products and specific countries. These are temporary duties that happen only when certain conditions are met.

<a></a>What Determines Import Duty Rates in India?

Import duty rate in India is determined based on factors such as government notifications issued by the CBIC, applicable trade agreements, the importing country’s origin, and product classification under the Customs Tariff system.

Import duty is calculated by applying the applicable duties, such as BCD, IGST, and other duty rates, to the CIF value of imported goods. Assume you are importing a personal computer from China with the HSN code 84713010 and a CIF value of $500.

You can calculate the import duty by following the manual calculation steps provided below:

<a></a>How to Pay Import Duty Online via ICEGATE?

Import duty can be paid online through the ICEGATE portal by logging in and making an e-payment against the Bill of Entry.

Step 1: Go to the <a href="https://www.icegate.gov.in/">ICEGATE</a> website and click on services, then e-payment and select the top-up payment option.

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Step 2: Now, enter your credentials and log in to the website.

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Step 3: This will take you to your dashboard. From there, select Services, then e-Payment, and finally click on Duty Payment to proceed with the payment process.&nbsp;

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Step 4: Enter the required details, including the document type and any other requested information, then review the entries and click “Proceed” to continue.&nbsp;

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Step 5: This will take you to the Unpaid Challan page, where you can select the challan you want to pay and proceed with the payment.

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Step 6: You can choose to pay through net banking, NEFT/RTGS, or ECL Wallet, as per your convenience.

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Step 7: Once payment is completed, you will promptly receive a receipt. Imported goods will be released after the duty clearance process is done. However, if payment is delayed, a 15% yearly penalty rate will apply to the outstanding balance due.

Note: As of March 2026, under <a href="https://www.caalley.com/cus26/Circular-No-13-2026.pdf">CBIC Circular No. 13/2026 (dated 24 March 2026)</a>, ICEGATE now lets you pay customs duty via UPI, debit card, and credit card through its new Payment Aggregator mode, in addition to net banking and NEFT/RTGS.

<a></a>Which Import Duty Exemptions Apply Today?

Exemptions from import duty in India have strict compliance requirements. All needed documents and criteria must be met to avail this exemption. In case of failure to provide valid documentation, full duty is charged, and clearance may be delayed.

<a></a>Import Duty vs Tariff vs Import Tax: What's the Difference?

The terms import duty, tariff, and import tax are often used interchangeably because they all refer to charges imposed on imported goods. However, there are subtle differences between them. Let's define each term to better understand what they mean and how they are used.

A tariff is the schedule of rates prescribed by the government under the Customs Tariff Act, 1975. It specifies the rate of duty applicable to each category of goods according to its classification. A tariff therefore establishes the rate but does not itself represent the sum payable. A reference to a 20% tariff on a product denotes the rate set out in this schedule.

Import duty is the amount payable to customs when goods enter India. It represents the tariff rate as applied to a specific consignment and collected at the point of import. Where the applicable tariff is 20% and the goods are valued at ₹1,00,000, the import duty payable is ₹20,000.

Import tax is a collective term encompassing all charges levied on imported goods. In addition to basic customs duty, this includes the Integrated Goods and Services Tax (IGST), the Social Welfare Surcharge, and any applicable cess. It does not denote a single levy with a fixed rate, but rather the aggregate of charges imposed on an import.

The three terms describe the same framework at different stages: the tariff is the prescribed rate, the import duty is the amount levied on a given consignment, and import tax is the collective term for the full range of charges applied to imported goods.

Many businesses that import inputs, raw materials, or components also export their finished products. If your business does both, the exchange rate costs you manage on the import side apply in reverse when your overseas clients pay you. Traditional banks often apply high exchange rate markups on these incoming payments, increasing overall transaction costs. Skydo can help address this through the following features:

Through <a href="https://www.skydo.com/">Skydo</a>, businesses that export as well as import can reduce currency losses, improve transparency, and gain greater control over their international payments.

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