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EXPORT/SEZ PROCEDURES (BOND/LUT OR REFUND ROUTE) - Part-II

Goods and Services Tax - GST - By: - CASanjay Kumawat - Dated:- 18-8-2017 Last Replied Date:- 19-8-2017 - I am posting this article in continuation to my earlier article on 'ZERO RATED SUPPLY WITH EXPORT PROCEDURES (BOND/LUT OR REFUND ROUTE)- Part- I'. The Central Government vide Circular No. 5/5/2017 - GST dated 11th August 2017 has clarified issues related to the furnishing of Bond/Letter of Undertaking for Exports. A large number of communications have been received from the field for .....

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taking scheme (LUT) scheme? Whether LUTs is limited to manufacturer exporters only like in Central Excise provisions? Clarification : Notification No. 16/2017 - Central Tax dated 7th July, 2017 specifies conditions to be fulfilled for export under Letter of Undertaking (LUT) in place of bond. In the extant Central Excise provisions, LUTs were limited to manufacturer exporters only. The intent of the said Notification is to liberalize the facility of LUT and extend it to all kind of suppliers. It .....

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r. A few illustrative cases are as follows: · Case 1 : An exporter had a turnover of ₹ 15 crore in the previous financial year. He would be eligible for LUT facility if remittance received against this export is ₹ 1.5 crore or more (10% of export turnover is more than ₹ 1 crore) · Case 2 : An exporter had a turnover of ₹ 5 crore in the previous financial year. He would be eligible for LUT facility if remittance received against this export is ₹ 1.0 cro .....

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s 5% of the export turnover. He will not be eligible for LUT facility as remittance received is less than 10% of export turnover, even though it is in excess of ₹ 1 crore. · Case 5 : An exporter has received ₹ 1 Crore 10 lacs as foreign inward remittances in FY 2016-17 which is 20% of the export turnover. In this scenario, he will be eligible for LUT facility. It may however be noted that a status holder as specified in paragraphs 3.20 and 3.21 of the Foreign Trade Policy 2015 .....

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. b) All exporters of goods, services and technology having an import-export code (IEC) number shall be eligible for recognition as a status holder. Status recognition depends upon export performance. An applicant shall be categorized as status holder upon achieving export performance during current and previous two financial years, as indicated in paragraph 3.21 of Foreign Trade Policy. The export performance will be counted on the basis of FOB value of export earnings in free foreign exchange. .....

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Four Star Export House : 500 $ · Five Star Export House : 2000 $ Que. 2 What is the form for furnishing LUT ? Clarification: Bonds are furnished on non-judicial stamp paper, while LUTs are generally submitted on the letterhead containing signature and seal of the person or the person authorized in this behalf as provided in said Notification. Que. 3 What is the expected time for acceptance of LUT/Bond ? Clarification : As LUT/bond is a priori requirement for export, including supplies to .....

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ithout payment of central excise duty. The scheme holds no relevance under GST since transaction between a manufacturer and a merchant exporter is in the nature of supply and the same has not been exempted under GST even on submission of LUT/bond. Therefore, such supplies would be subject to GST. The zero rating of exports, including supplies to SEZ, is allowed only with respect to supply by the actual exporter under LUT/bond or payment of IGST. Que. 5 What is the GST impact on transactions with .....

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Indian Rupee especially with respect to exports to Nepal, Bhutan and SEZ developer/SEZ unit. Attention is invited to Para A (v) Part-I of RBI Master Circular no. 14/2015-16 dated July 1, 2015 (updated as on November 5, 2015), which states there is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act 1999. Further, in terms of Para 2.52 of the Foreign Trade Policy (2015-20 .....

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LUT instead of a bond for supplies of goods to Nepal or Bhutan or SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or convertible foreign exchange as long as they are in accordance with applicable RBI guidelines. It may also be noted that supply of services to SEZ developer or SEZ unit will also be permissible on the same lines. The supply of services, however, to Nepal or Bhutan will be deemed to be export of services only if the pay .....

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on would be implemented liberally. Some of the instances of liberal interpretation are as follows: i. an exporter registered with recognized Export Promotion Council can be allowed to submit bond without bank guarantee on submission of a self-attested copy of the proof of registration with a recognized Export Promotion Council. ii. In the GST regime, registration is State-wise which means that the expression registered person used in the said notification may mean different registered persons (d .....

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red persons, having one Permanent Account Number, maybe ₹ 1 crore or more and it also maybe 10% or more of total export turnover. In such cases, the registered person can be allowed to submit bond without bank guarantee. Que. 8 Who will be the Jurisdictional officer for submission of LUT/Bond? Clarification : It has been clarified in Circular Nos. 2/2/2017 - GST dated 4th July, 2017 and 4/4/2017 - GST dated 7th July, 2017 that Bond/LUT shall be accepted by the jurisdictional Deputy/Assista .....

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