Clearing the air with regard to exemption from payment of integrated GST by exporters, the finance ministry has said that big exporters with good track record can give the letter of undertaking (LUT) to the customs. On the other hand, small exporters would have to give bond to seek IGST exemption on export consignments. After implementation of the Goods and Services Tax (GST), exporters raised the issue of lack of clarity on norms relating to submission of bonds or LUTs for clearance of export consignments and seek IGST exemption. The Central Board of Excise and Customs (CBEC) in a notification has specified the conditions and safeguards for the entities that intend to supply goods or services for export without payment of integrated tax, for furnishing an LUT in place of a bond.
It said status holder exporters who have received inward forex remittances in excess of Rs 1 crore in the previous financial year can provide LUT to seek exemption. Welcoming the move, the Federation of Indian Export Organisations (FIEO) said that the notification has resolved the confusion with regard to LUTs and bonds. “Now it is clear that status holder exporters have to give LUT on their company’s letter head to seek IGST exemption. And other exporters will give bond on non-judicial stamp paper,” FIEO Director General Ajay Sahai said. He added that bond with bank guarantee would be sought only from those exporters whose track record is not good.
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Status holder exporters are those whose shipments were more than Rs 20 crore in the last three years. Under the GST, an exporter can get exemption from payment of IGST if he/she submits bonds or LUTs. In case the IGST has been paid, exporters can seek refund of the tax paid, according to a Customs circular on export procedure in the GST regime. However, it was not clear like who would have to submit bonds and whether the bond should be accompanied by a bank guarantee. IGST is levied on the supply of any goods and services in the course of inter-state trade or commerce. As per the IGST Act, export and import of goods and services are deemed to be a supply in the course of inter-state trade or commerce.