11th September 2017
Goods and service tax regime is a completely new concept of indirect taxation in India. It has subsumed the multiple taxes that were levied under the previous regimes. One such new concept introduced by GST regime is filing of bond or the letter of undertaking (LUT).
As per the GST regime exports are exempted from the purview of taxation thus an exporter can make the payment of IGST at the time of export and then the claim the refund later. But this results in blockage of their working capital. Thus to overcome this problem a provision is being made wherein the exporters can undertake exports without the payment of IGST by filing a bond or letter of undertaking(LUT) as applicable to the exporters.
In order to file the letter of undertaking (LUT) the exporter is required to file GST RFD-11.
Following documents are required to file a bond/LUT for export of goods and services under GST-
• Form GST RFD – 11 duly signed
• Copy of PAN card of the company (Self-attested)
• Letter of Undertaking
• Copy of AOA/MOA of the company (Self-attested)
• Copy of certificate of provisional registration in Form GST REG-25(Self-attested)
• Self-attested copy of ID proof and address proof of all directors.
• Certificate from the bank for the realization of foreign inward remittances.
• ID proof of two witnesses
• Authorization letter
Persons liable to file Bond/LUT for export of goods and services
Following persons are allowed to file LUT for export of goods and services-
1. Status holder specified in foreign trade policy
2. A person who has received foreign inward remittances equal to the minimum of 10% of the export turnover, which should not be less than INR 10 million, in the preceding financial year.
3. The person filing the LUT should not have been prosecuted for any offense under CGST or any other existing law where the tax amount exceeds INR 25 million.
The LUT once filed would be valid for the period of 12 months. In case the exporter fails to comply with the requirements of the letter of undertaking, then the privileges given to him will be revoked and the exporter will be asked to furnish a bond.
Persons who are liable to file a bond-
Every entity which is not eligible to submit Letter of Undertaking as per the conditions mentioned above is required to furnish an export bond along with bank guarantee. The estimated tax liability as assessed by the exporter himself involved in the export shall be mentioned in the bond. Further, the export bond should be furnished on non-judicial stamp paper of the value as applicable in the State in which the bond is being furnished.
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