File Bond/LUT for exports under GST in India
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LUT Bond under GST
What is a LUT or bond under GST?
There are two ways possible to export under GST, one is export with payment of GST and second is export without payment of GST. To chose second option, you need to file the bond or LUT with the tax department stating that you shall fulfill all the export requirements.
When bond or LUT is filed under GST? what all laws govern them?
Filing of bond or LUT depends upon the total foreign receipts in the previous year. If you have received more than 1 Cr foreign exchange then you are required to file LUT instead of bond. Bond is required to be filed in following three cases:
#New Exporter or First Time Export: If you are a first time exporter of goods or services, then also you need to file the bond because you have no exports receipts in the previous year. Hence, if you are a first time exporter, you need to file bond with a bank guarantee.
#Foreign receipts less than 1 Crore: If you have total foreign receipts less than 1 crore, then you cannot file the LUT instead you need to file the bond with 15% bank guarantee.
#Foreign receipts less than 10% : If you have received less than 10% foreign receipts then also you need to file the bond. E.g. if you receive total FE of 2 crore and your total turnover is Rs. 50 Crore, then you shall need to file bond and not LUT.
Documents required for LUT/Bond Filing under GST
Related to Business
GST Registration Certificate
PAN Card and IEC Certificate
VAT returns and Export Bill
Bank details for Bank Guarantee
PAN and Aadhar card of owner
Letter of Authorization
ID Proof of two witness
LUT/Bond filing procedure for exports under GST
LUT and bond filing procedure is mandatory if you want to export without payment of IGST. As per rule 96A, a bond is required to be filed along with 15% bank guarantee. Here is the brief procedure:
# Step 1 – Arrange all required documents: The first step is to arrange all the documents and send the same over the email to us. We will check it and if everything is fine, you will required to pay us the required fees.
# Step 2 – Signing and Submission: After receiving the required documents and payment we shall start your work. We will prepare all the documents and we shall submit the same to the tax department.
# Step 3 – Letter of Acceptance: Once your application is accepted, the letter of acceptance is issued by the docs.
Is Bond/LUT is also required for Export of Services?
Under GST, the export of services are treated at par with export of Goods and hence, if you want to export the services under GST, then you need to either pay GST before making the payment or file bond or LUT with the tax department to export the services without making the payment of GST.
In other words, there are only two ways possible to export goods or services from India. The two ways are as follows:
- – Export without payment of GST
- – Export with payment of GST.
If any taxpayer wants to export without payment of IGST then he shall need to file a bond or a letter of undertaking to the department. A letter of undertaking (LTU) is the documents format of which is being prescribed under form GST RFD 11 under rule 96A.
In simple words, LTU is the document by which the taxpayer declares that he shall fulfill all the requirement of the GST with regard to export.