Furnishing of Bond/LUT for exports

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Aug 28, 2017

Members of the Council,

Dear Sirs,

As members are aware,  as far as exports are concerned,  there is an option to pay applicable IGST and export and thereafter claim refund or go-in for zero rated exports by furnishing Bond or LUT to the concerned GST Authority.

The following registered persons shall be eligible for submission of Letter of Undertaking in place of a bond for exports:-

  1. a status holder (one star to five star export houses) as specified in paragraph 5 of the Foreign Trade Policy 2015-2020; or
  2. who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year.

Your attention is invited to our earlier circular dated Aug 16, 2017 (given below), providing clarification on issues related to furnishing of Bond / Letter of Undertaking for Exports issued vide GST circular No. 5/5/2017-GST dated 11/08/17. Page no. 4 of the said GST circular states the following:-

  1. An exporter registered with recognized Export Promotion council can be allowed to submit bond without bank guarantee on submission of a self-attested copy of the proof of registration with a recognized Export Promotion Council.
  2. The exporter is at liberty to furnish the bond / LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. It is reiterated that the Central Tax officers shall facilitate all exporters whether or not the exporter was registered with the Central Government in the earlier regime.

Members may kindly note the above .

Thanks & regards

Ramesh Kumar

Executive Director



August 16, 2017

Members of the Council,

Dear Sirs,

Sub:    Clarification on issues related to furnishing of Bond/Letter of Undertaking for Exports.

The Central Board of Excise and Customs has issued a Circular No.5/5/2017-GST dated 11/8/17 on the above subject. The circular states the following.

a.      It is hereby clarified that any registered person who has received a minimum foreign inward remittance of 10% of export turnover in the preceding financial year is eligible for availing the facility of LUT provided that the amount received as foreign inward remittance is not less than Rs.one crore. This means that only such exporters are eligible to LUT facilities who have received a remittance of Rs. one crore or 10% of export turnover, whichever is a higher amount, in the previous financial year.

b.      It may however be noted that a status holder as specified in paragraphs 3.20 and 3.21 of the Foreign Trade Policy 2015-2020 is eligible for LUT facility regardless of whether he satisfies the above conditions.

c.       Bonds are furnished on non-judicial stamp paper, while LUTs are generally submitted on the letterhead containing signature and seal of the person or the person authorized in this behalf as provided in said Notification.

d.      As LUT/bond is a prior requirement for export, including supplies to a SEZ developer or a SEZ unit, the LUT/bond should be processed on top most priority and should be accepted within a period of three working days from the date of submission of LUT/bond along with complete documents by the exporter.

e.      Circular No.4/4/2017 dated 7th July, 2017 provides that bank guarantee should normally not exceed 15% of the bond amount. However, the Commissioner may waive off the requirement to furnish bank guarantee taking into account the facts and circumstances of each case.

Members may kind note the above.

Thanks and regards

R.Ramesh Kumar
Executive Director