GST LETTER OF UNDERTAKING OR EXPORT BOND FILING
The Letter of Undertaking (LUT) is prescribed to be furnished in form GST RFD 11 under rule 96A, whereby the exporter declares that he/she must be fulfill all those requirements as prescribed under the GST while exporting without making IGST payment.
All GST registered goods and service exporters are eligible to submit the undertaking on behalf of the company and prosecuted for any offence and the amount of tax evasion exceeds Rs.250 lac under the CGST Act or the Integrated Goods and Services Tax Act,2017 or any of the existing laws. In such cases, where the exporter is not eligible to file LUT, they would have to furnish an export bond.
Letter of Undertaking (LUT) for Exports
According to the Central Goods and Services Tax Rules, 2017 any registered person exporting the goods without payment of integrated tax is required to furnish a bond or a Letter of Undertaking along with FORM GST RFD-11.
All GST registered goods and services exporters are eligible to submit LUT except the exporters who have been prosecuted for any offence and the amount of tax evasion exceeds Rs.250 lac under the CGST Act or the Integrated Goods and Services Tax Act,2017 or any of the existing laws.
Letter of Undertaking is valid for a period of twelve months from the date of submission . If the exporter fails to comply with the conditions of the Letter of Undertaking, privileges could be revoked and the exporter would be required to furnish a bond. All exporters are required to submit letter of undertaking or export bond under the new format specified under GST.
Export Bond for GST
Entities not eligible to submit a Letter of Undertaking (LUT) as per the conditions mentioned above would have to furnish an export bond along with bank guarantee. The bond should cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. Export bond should be furnished on non-judicial stamp paper of the value as applicable in the State in which the bond is being furnished.
Also, exporters can furnish a running bond, so that export bond need not be executed for each and every export transaction. However, if the outstanding tax liability on exports exceeds the bond amount at any time, then the exporter must furnish a fresh bond to cover the additional liability.
A bank guarantee can be mandated along with export bond. The value of bank guarantee should normally not exceed 15% of the bond amount. However, based on the track record of the exporter, the bank guarantee required to be submitted with export bond can be waived off by the jurisdictional GST Commissioner.