How to file bond/LUT for exports under GST online! – Step by step procedure for filing/furnishing LUT/BOND for export

1.0 Introduction

Export and import under GST are treated as interstate supply and hence governed mostly by the IGST act. As per the IGST act, there are only two ways possible to export goods or services in India which are as follows:

• Export of goods and services without payment of IGST
• Export of goods and services with payment of IGST.

In the case of second option, one need to pay IGST as usual as domestic trade, however one can claim the refund later on. However, if someone wants to export the goods or services from India without payment of IGST, then he need to file/furnish a bond or letter of undertaking (LUT) with the department.

Hence, you can see the importance of LUT and bond in case of export of goods and services. Let us discuss the bond and LUT in details along with the complete procedure as how to file bond and LUT.

 

2.0 What is a bond/LUT? Is there any format prescribed for bond or LUT?

Bond or LUT is a document through which an exporter satisfies the department that the exporter shall obey all the rules and regulations relating to export. The bond or LUT is filed in the prescribed format of GST RFD – 11. However, many other documents are also required which we shall discuss later on in this article.

 

3.0 What to file a bond or LUT for new & existing exporters?

As per notification no.16/2017, the government specifies the conditions and safeguards for LUT and bond. As a general rules, the exporter is required to file the bond along with bank guarantee to the department for export of goods and services.

However, if the following conditions are satisfied, then only a letter of undertaking can be filed instead of a bond with bank guarantee.

• Exporter should have 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.

• 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.

Therefore, in both the conditions are satisfied, and then a letter of undertaking (LUT) can be filed.

 

4.0 How to calculate the bond amount for exports?

As per the government circular, the bond amount shall be equal to the tax amount on the previous year turnover or the expected export turnover. E.g. if my total expected turnover is Rs.2 crore and the tax rate on my item is 18%, then the bond amount shall be Rs.36 lakh.

 

5.0 Calculation of bank guarantee for bond filing for exports under GST

The government has prescribed that bank guarantee should not be less than 15% of the bond amount. Hence, if the bond amount is equal to Rs.10 lakh, then you need to get the bank guarantee of atleast 15%, i.e. Rs.1.50 Lakh.

 

6.0 Procedure to file bond/LUT for exports under GST

Let us now discuss the complete procedure to file the bond/LUT for export of goods and services.

 

#Step no.1 – Check what to file bond or LUT based on condition along with jurisdiction

The first step is to check what is required to be filed, a bond or LUT in terms of the condition mentioned in the notification as discussed above. If a bond is required to be filed, then additional documents relating to bank guarantee is also need to be prepared.

Further, you must also look for your jurisdiction correctly as per your area. This is because the file shall not be accepted if filed in wrong jurisdiction.

 

#Step no.2 – Prepare all the necessary documents for LT U and bond under GST

Documents requirements for bond and LUT are completely different. Hence, let us discuss the documents required part for LUT and bond separately. Let us take this one by one:

Documents required for LUT under GST

Here is the list of documents required for filing of LUT under GST:

• FORM  RFD 11 on letter head
• UT 1 bond on stamp paper
• Authority letter
• Other supporting documents.

 

Documents required for bond under GST

Here is the list of documents required for filing of bond under GST:

• FORM RFD 11 on letter head
• Bond on stamp paper
• Bank guarantee
• Authority letter
• Other supporting documents

 

#Step no. 3 – Prepare duplicate copy of LUT or bond with certain evidence

Once you have prepared all the documents as per step 2, the next step is to recheck the documents and prepare a duplicate copy along with office copy. One thing you must make sure in case of filing of LUT that you carry certain evidences to prove that you satisfy the conditions as mentioned in the notification.

 

#Step no.4 – Visit the department and go to your division

After rechecking the documents and preparing the two sets of documents, the next step is to visit the GST department and got to your jurisdiction. Once you reach there, make sure you went to the proper officer and get the documents verified from him. There may be a chance, that he may not entertain you and he may ask you to submit the documents at the reception.

In that case, you should manage the situation well and get the docs verified to avoid rejection or resubmission later on.

 

#Step no.5 – Get the documents checked properly with the officer

Once you reach the division, get the documents verified from the proper officer. Further, the proper officer may ask for certain more documents, in that case, you should prepare the list of additional documents required and come next day and submit the required documents.

 

#Step no.6 – Take Acknowledgment and come back after 2 to 3 days

Once you submit the file, don’t forget to take acknowledgment and come back after 2 to 3 days to get the letter signed. Contact your proper officer in case you find any problem with the letter.

 

7.0 In whose name the bank guarantee should be filed for filing bond under GST

The bank guarantee should be filed in the name of “President of India (hereinafter called " The Government") acting through the Assist. Comm./ Dy. Commissioner of Central Tax (please address to appropriate division).”

 

8.0 Is it mandatory to file LUT/bond for export of services?

Yes, it is mandatory to file LUT or bond for export of services as well if you want to export without charging GST on the same. In case you do not file the LUT or bond, then you need to charge GST and then claim the refund later on.

 

9.0 Conclusion

In case you need to need to file the LUT/bond for exports, please email to us at info@hubco.in.