In this article we have tried to include provisions contained in the Act, Rules, Notification or circulars issued till date in this regard.
As Per Rule 96A of CGST ACT, 2017 Registered Person would furnish Letter of Undertaking or Bond in Form GST RFD-11, This Form may be filled electronically through common portal but this facility is currently not available on common portal and CBEC vide its circular number 2/2/2017 dated 04.07.2017 has clarified that till this facility is not available on common portal this form may be furnished manually to jurisdictional deputy/ Assistant Commissioner.
1. Eligibility to export under LOU (Latter of Undertaking):
Any registered person who has received a minimum foreign inward remittance of 10% of export turnover in the preceding financial year is eligible for availing the facility of LUT provided that the amount received as foreign inward remittance is not less than Rs. one crore. This means that only such exporters are eligible to LUT facilities who have received a remittance of Rs. one crore or 10% of export turnover, whichever is a higher amount, in the previous financial year.
2. Export under Bond:
Registered persons who do not fulfill the above conditions i.e. who are not eligible to Export under LUT shall have to furnish Bond. Bond is required to be furnished on a non-judicial stamp paper of value as applicable in the respective state.
Bank Guarantee in Bond: Circular No. 4/4/2017 dated 7th July, 2017 provides that bank guarantee should normally not exceed 15% of the bond amount. However, the Commissioner may waive off the requirement to furnish bank guarantee taking into account the facts and circumstances of each case. If the jurisdictional commissioner is satisfied with the track record of the Exporter than Bond may be furnished without Bank Guarantee.
In the latter of undertaking or Bond in Form GST RFD-11 Taxpayer bind himself to pay the tax plus interest u/s 50(1) within a period of:
- 15 Days after the expiry of 3 Months from the date of issue of the invoice for export, if the goods are not exported out of India.
- 15 days after the expiry of 1 year from the date of invoice for export, if the payment of such invoice is not received by the exporter in convertible foreign exchange.
Where the goods are not exported within the time specified and the Exporter fails to pay the amount mentioned in sub rule, the export allowed under bond or LOU shall be withdrawn forthwith and the said amount shall be recovered in accordance with the provisions of section 79.But Bond or LOU shall be restored immediately when the person pay the due amount.
3. Value of Bond:
The Bond would cover the amount of tax involved in the export based on the estimated tax liability as assessed by exporter himself. In case the Bond amount is insufficient to cover the tax liability, the Exporter shall furnish a fresh bond to cover such liability.
4. How it would be determined weather goods have been exported or not:
GST Common Portal and system of Custom Department are interlinked and shall transmit information regarding export of goods. Details of Export Invoices filled in GSTR-1 shall be transmitted electronically to System designated by Custom department and custom department will verify with its records weather the goods have been exported or not and send a confirmation to GST Common Portal.
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