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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →The Special Rupee Vostro Account (SRVA) framework gives Indian businesses an additional way to settle eligible international trade in Indian rupees instead of a freely convertible currency. An Indian Authorised Dealer (AD) bank can open an SRVA for a correspondent bank in a partner trading country, subject to Reserve Bank of India (RBI) approval and FEMA controls.
Indian exporters can receive service-export proceeds in INR from a designated SRVA and still satisfy the payment limb of the export-of-services definition under GST. That clarification does not remove the other statutory conditions. SRVA balances and related income also remain subject to ordinary FEMA, Income-tax Act, Foreign Trade Policy and documentation rules.
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What the SRVA framework does
RBI’s 11 July 2022 A.P. (DIR Series) Circular No. 10 introduced SRVA as an additional invoicing, payment and settlement channel for international trade. It operates alongside settlement in freely convertible currencies; it does not replace that route.
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The Indian AD bank applies to RBI for the arrangement and opens the special account for a correspondent bank of the partner trading country. The partner-country correspondent holds the rupee balance, while the Indian bank manages the relationship under applicable FEMA directions, approval conditions and customer due diligence requirements. The exchange rate between the partner currencies may be determined by the market.
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How money moves through an SRVA
Import transactions
An Indian importer pays rupees to the Indian AD bank. The bank credits the amount to the partner correspondent’s designated SRVA against the overseas supplier’s invoice. The correspondent bank then settles with the supplier under the commercial arrangement between the parties.
Export transactions
An Indian exporter receives rupee export proceeds from the balance maintained in the designated SRVA. The underlying export still needs the normal commercial and regulatory record: invoice, shipping or service evidence, agreed trade documents, and any letters of credit or Incoterms that apply to the contract.
Using an SRVA changes the settlement channel, not the obligation to document the underlying import or export. Businesses must continue to follow the applicable FEMA reporting process and the documentation requirements for their particular goods or services.
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FEMA controls and permitted use of balances
Bank approval and counterparty screening
The AD bank must obtain RBI approval for the arrangement, conduct due diligence on the correspondent bank and ensure that the correspondent is not located in a jurisdiction identified by the Financial Action Task Force for countermeasures. The bank and its customers remain subject to the extant FEMA framework, including any limits, approvals and reporting forms that apply when a transaction is made.
What surplus rupees can fund
Surplus SRVA balances may be used for permitted payments, including:
- Project and investment payments allowed under the applicable rules.
- Managing export or import advances and related settlement flows.
- Investment in Indian government Treasury Bills and government securities within the prescribed limits.
RBI’s April 2026 FAQ records a later permission, under the cited 2025 directions, to use balances for additional instruments issued by an Indian company, including non-convertible debentures, bonds and commercial paper. The exact eligibility, limits and approval conditions come from the latest directions, so an AD bank should confirm them before an investment is booked.
GST treatment for service exporters
When INR payment through an SRVA qualifies
CBIC Circular 202/14/2023-GST, dated 27 October 2023, clarifies that when an Indian exporter of services receives export proceeds in INR from the designated SRVA of a correspondent bank of the partner trading country, the payment condition in section 2(6)(iv) of the IGST Act, 2017 is treated as fulfilled.
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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteThat is a payment clarification, not a blanket exemption from the export-of-services test. The transaction must also meet all of these conditions:
- The supplier is located in India.
- The recipient is located outside India.
- The place of supply is outside India.
- The supplier and recipient are not merely establishments of the same person, as prohibited by the distinct-person condition.
Foreign Trade Policy 2023 and extant RBI restrictions continue to apply. Exporters should retain the contract, invoice, proof of service delivery, SRVA credit evidence and the records needed for a GST refund or a letter-of-undertaking (LUT) workflow. An SRVA receipt does not, by itself, prove that the service qualifies as an export.
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Income-tax implications
The RBI’s April 2026 FAQ does not create a special SRVA income-tax rate or exemption. Income earned on an INR balance may be repatriated only subject to applicable regulatory guidelines and tax provisions.
The tax result therefore depends on the underlying income and the facts of the recipient and transaction, including:
- Whether the amount is business revenue, interest or another category of income.
- The recipient’s residential or legal status and the relevant tax jurisdiction.
- When the income arises and when it is credited or repatriated.
- Whether withholding tax, transfer-pricing or permanent-establishment rules apply.
Businesses should obtain transaction-specific advice before repatriating income or paying a non-resident. The SRVA mechanism does not displace ordinary Income-tax Act analysis.
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SRVA versus conventional convertible-currency settlement
SRVA is optional. Before changing a payment route, an exporter or importer should compare the following operational factors with its existing convertible-currency process:
| Decision area | SRVA route | Conventional route |
|---|---|---|
| Settlement currency | Indian rupee through the designated SRVA | Freely convertible currency |
| Banking setup | RBI-approved arrangement between an Indian AD bank and a partner-country correspondent | Existing correspondent and foreign-currency banking arrangements |
| Trade records | Ordinary invoices, shipping or service evidence, and agreed documents still required | Ordinary invoices, shipping or service evidence, and agreed documents still required |
| GST service-export payment condition | INR paid from the designated SRVA can satisfy section 2(6)(iv), subject to the other conditions | Payment in an eligible convertible currency follows the ordinary route |
| Use of excess balances | Permitted project, investment, advance-flow and government-securities uses, subject to limits; additional 2025-direction instruments are recorded in the April 2026 FAQ | Governed by the rules for the relevant foreign-currency account and transaction |
The commercial decision should also consider counterparty acceptance, liquidity, conversion exposure, bank charges and the compliance workload. Those outcomes vary by corridor, bank and contract and cannot be assumed from the existence of the SRVA framework.
Quick Recap
Implementation checklist for an Indian business
- Confirm corridor eligibility. Ask the AD bank whether the partner country and correspondent bank are covered by an RBI-approved SRVA arrangement and pass the required screening.
- Set the contract currency and documents. State the INR settlement method, invoice terms, delivery or service evidence, Incoterms and any letter-of-credit conditions in the commercial contract.
- Map FEMA reporting. Identify the applicable import, export, advance-payment and realisation reports, deadlines and supporting records before the first transaction.
- Test the GST position. For services, document each of the four export-of-services conditions and retain proof that the INR came from the designated SRVA. Apply the relevant LUT or refund process.
- Plan balance utilisation. Obtain the AD bank’s confirmation of permitted investments or payments, applicable limits and any RBI approval needed before deploying a surplus.
- Review tax and repatriation. Determine the character of the income, withholding obligations, transfer-pricing or permanent-establishment exposure and the conditions for moving funds offshore.
- Re-check current rules. RBI directions, FEMA limits, Foreign Trade Policy and CBIC guidance can be updated; use the version in force when the transaction is executed.
Common errors to avoid
- Treating an INR credit as automatic proof that a service is an export. The supplier, recipient, place-of-supply and distinct-person conditions still have to be met.
- Using an SRVA without confirming that the AD bank obtained the required RBI approval and completed correspondent due diligence.
- Investing an excess balance in an instrument or above a limit without checking the latest FEMA direction and the bank’s approval process.
- Assuming that RBI’s permission to repatriate income is an income-tax exemption.
- Discarding ordinary invoices, shipping records, service evidence or advance-payment documentation because settlement occurred in rupees.
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