CBEC permits Exports Under Letter of Undertaking (LUT) to all Registered Tax Payers– No Bond or Bank Guarantee needed
CBEC issued a master Circular No. 8/8/2017-GST on fourth October 2017 clarifying the subsequent Product or services or each will be exported without payment of IGST under LUT.
Eligibility to export under LUT:
- Registered tax Payer Entity/person
- No history of prosecution for nonpayment for amounts more than Rs. 2,50,000/-
- Self-declaration of non-prosecution and fulfillment of all applicable conditions is to be submitted.
- Validity: LUT shall be valid for the relevant fin. yr within which it’s submitted.
- LUT shall be deemed to be withdrawn just in case the tax payer fails to pay the tax in cases wherever product doesn’t seem to be truly exported among the prescribed closing date. Upon payment of the tax due, the LUT shall be restored ..
- Forms and documentations:
Form GST RFD-11 is to be used as format of LUT. LUT is to be filled on the letter head, signed by, the operating (working) partner, the director or the corporate Secretary or the businessman (proprietor) or by an individual duly authorized by such operating partner or Board of Directors of such company or Proprietor.
- Time limit: it’s ambiguous that LUT/bond ought to be accepted among a amount of 3 working days of its receipt in conjunction with the self-declaration. If the LUT / bond isn’t accepted within a amount of 3 working days from the date of submission, it shall be deemed to be accepted.
- Other Necessary clarifications –
- Bank Guarantee: needed just for tax payers concerned in prosecution for nonpayment for amounts more than Rs. 2,50,000/-.
- Running Bond: The exporters need to furnish a running bond wherever the bond amount would cover the amount of self-assessed estimated tax liability on the export.
- there’s no provision for supplying of CT-1 Form that permits exporters to buy product from a manufacturer without payment of tax under the GST regime. The transactions dealings between a manufacturer and a exporter is within the nature of supplies and therefore the same would be subject to GST.
- Transactions with EOUs: Zero rating isn’t applicable to supplies provided to EOUs and there’s no special dispensation for them under GST regime. Therefore, supplies provided to EOUs are taxable supply like several different taxable supplies. EOUs, to the extent of exports, are eligible for zero rating like any other Exporter.
- Realization of export issue in Indian Rupee: The acceptance of LUT for provides of products or services to SEZ developer or SEZ unit are permissible no matter whether or not the payments are created in Indian currency or convertible exchange.
This is a short write up to clarify the effect of notification and circulars, however readers are required to read the complete notifications.