How to Export with Bond/LUT in GST
How to Export with Bond/LUT in GST
In this article we will discuss:
- Procedure for export under Bond/LUT in GST
- Required Forms and formats
- Relevant provisions for exports.
In this article we will discuss the procedure of Export with Bond/LUT in GST . There are some practical issues exporters are facing. RFD 11 is not available online and it is difficult to arrange it offline.You can find format of LUT here at this link . You can also draft it online at this link.(Click on text)
Section 16 of IGST Act defines the Zero rated sale and provide two options to the exporter.One to export with IGST utilizing the input tax credit and then take the refund of that IGST. Second option is export without payment of IGST with appropriate bond/surety and then take refund of ITC. Section 16 of IGST is reproduced here for reference:
Section 16 of IGST Act: Zero rated supply:
“zero rated supply” means any of the following supplies of goods or services
or both, namely:––
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies,
notwithstanding that such supply may be an exempt supply.
(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:––
(a) he may supply goods or services or both under bond or Letter of Undertaking,
subject to such conditions, safeguards and procedure as may be prescribed, without
payment of integrated tax and claim refund of unutilised input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.”
Who can export the goods/services under an LUT: Only specific person covered in circular No. 16/2017-Central Tax dated 07/07/2017
Procedure for refund for export under :
Rule 96A provide for the procedure for export of Goods/services under bond/LUT in GST.
Bond/LUT in GST will be furnished in FORM GST RFD 11 to the jurisdictional commissioner.Through this bond/LUT exporter will bind himself to pay tax with interest if:
a) If the goods are not exported out of India within three months from the date of invoice. Payment will be made within 15 days from expiry of three months.
b) If the payment of such services is not received within a period of one year then tax and interest will be payable within 15 days from expiry of one year.
The details of export invoices contained in FORM GSTR 01 furnished on portal.This information shall be transmitted to customs to ensure that relevant goods are exported.
If the export is not made and the person fails to pay the required amount the export allowed under bond /LUT shall be immediately withdrawn. It should be restored on payment.
Related Topic:
Format for LUT in GST for Exports: RFD 11
Required forms for export with Bond/LUT in GST
An exporter is required to fill FORM GST RFD 11 for export under bond/LUT. This form have the formats of both bond and LUT. Every exporter is not allowed to export the goods/services under LUT. You need to check the specific requirements for LUT. If you don’t fulfill that criteria then you will be eligible to make export under bond only.
Applicability of these provisions on SEZ developer /Unit:
The provisions related to bond/LUT in RFD 11 shall be applicable on SEZ developer and unit also.Thus a supplier to SEZ will also fill form RFD 11 to claim refund.
CA Shafaly Girdharwal
CA
New Delhi, India
CA Shaifaly Girdharwal is a GST consultant, Author, Trainer and a famous You tuber. She has taken many seminars on various topics of GST. She is Partner at Ashu Dalmia & Associates and heading the Indirect Tax department. She has authored a book on GST published by Taxmann.
