GST ON EXPORTS
As per the IGST Act, export of goods or services is deemed to be a supply in the course of inter-state trade or commerce. Exports have been defined under “zero rated supply”.
Export cannot be done without following any of the two ways of raising an export invoice, mention either
Any exporter paying the IGST can claim refund of such tax paid on the supplied goods or services or both. The applicant has to apply for the refund as per the conditions specified under this act
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 then claim a refund of unutilised input tax credit.
Eligibility of Furnishing LUT
Not every registered person supplying goods or services for exports are eligible for furnishing LUT. Following registered person shall be eligible for submission of Letter of Undertaking in place of a bond:
Further, a registered person shall not be prosecuted for any offense under the Central Goods and Services Tax Act, 2017 or under any of the existing laws in case where the amount of tax evaded exceeds two hundred and fifty lakh rupees.
The validity of LUT - Letter of the undertaking shall be valid for twelve months.
Please note that those who does not satisfy above mentioned conditions, would submit bond.
Running bond or Separate bond ?
The exporters shall furnish a running bond (with debit/credit facility), instead of separate bond for each consignment/export. The bond would cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. The exporter shall ensure that the outstanding tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the tax liability in yet to be completed exports, the exporter shall furnish a fresh bond to cover such liability.
Furnishing of bond on Non- Judicial Stamp paper - The bond shall be furnished on non- judicial stamp paper of the value as applicable in the State for which bond is being furnished.
PROCEDURE FOR FURNISHING BOND:-
PROCEDURE FOR FURNISHING LUT:-
APPLICABILITY OF RCM (REVERSE CHARGE MECHANISM):-
In the case of supply by an unregistered person (including unregistered job workers), the registered person i.e., the exporter shall be liable to pay GST under reverse charge mechanism. However, the exporter can avail ITC of such GST paid and either utilize the ITC or claim a refund of the same.