EXPORT PROCEEDURE UNDER GST

[Asked by Guest]

OUR LAST YEAR EXPORT WAS ABOVE 1 CRORE. WE WANT TO KNOW APPLICABILITY OF DOCUMENTS UNDER GST. CA ATTESTED LUT BOND AND BANK GUARANTEE REQUIRED ???. BOTH ARE REQUIRED OR SINGLE BANK GUARANTEE REQUIRED. PL HELP US........

[MUKUND THAKKAR]

Bond and Bank guarantee both are required. 15% BG is require of Bond amount.

[Kishan Barai]

15% Bank guarantee is sufficient but most of the bank denies it because if you don't export bank need to pay IGST 100% & had to suffer 85% loss, so most of the banks block 100% amount and provide BG unless the track record of exporter is so strong, if we only provide BG with 15% of amount with 15% of liability GST range officer will reject your proposal & will ask for 15% of BG with bank liability of 100% of IGST amount, & if you ask the same to bank, forex manager will scold you & tell you why we should take risk of 85%. This is the scenario at present but it will get improved.

LUT system is working best else pay IGST & apply for refund for smooth & fast process

[Rajagopalan Ranganathan]

Sir,

According to Notification No.16/2017 – Central Tax dated 7.7.2017 -

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

(a) a status holder as specified in paragraphs 3.20 and 3.21 of the Foreign Trade Policy 2015-2020; or

(b) 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,

and he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount of tax evaded exceeds two hundred and fifty lakh rupees.

Moreover, the Letter of Undertaking shall be furnished in duplicate for a financial year in the annexure to FORM GST RFD – 11 referred to in sub-rule (1) of rule 96A of the Central Goods and Services Tax Rules, 2017 and it shall be executed by the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorised by such working partner or Board of Directors of such company or proprietor on the letter head of the registered person.

If you furnish Letter of Undertaking you need not furnish bank guarantee.

[KIRTIKUMAR PUROHIT]

Clause given in Notfn: 16/2017 for LUT as per my view that is now applicable to BIG Exporter Only; such likes, Star Export House. Every small exporter now require to give Bond with Bank gaurantee.Example: if tentative export for next 9 month suppose ₹ 1 Crore than GST amount will be ₹ 18,00,000/- than BG will attract of ₹ 15% of ₹ 18,00,000 i.e. ₹ 2,70,000/-.

AI Summary

Letter of Undertaking allows exporters to avoid bank guarantees under specified eligibility and compliance conditions.
Export under GST requires either a bond with a bank guarantee or an eligible Letter of Undertaking (LUT). Banks commonly demand full exposure despite references to a 15% bank guarantee. An LUT, when furnished, removes the need for a bank guarantee. LUT eligibility is confined to status holders or exporters with foreign inward remittances of at least ten percent of export turnover (minimum threshold in preceding year) and no prosecution for serious tax offences. The LUT must be submitted in duplicate in the annexure to FORM GST RFD-11 and executed by an authorised signatory on the exporter's letterhead.