How to file LUT/Bond for SEZ units under GST

[PARAS MEHRA]

Introduction

On receiving large number of representations from exporter, the Central Board of Excise and Customs (CBEC) in order to grant significant relief to the exporter who were facing lot of difficulties under GST regime, had issued circular just to clarify the issues relating to furnishing of bonds/letter of undertaking (LUT) for exports without payment of IGST.

These clarifications brought huge relief for the exporters with respect to export without payment of IGST

Export or Import to SEZ unit is an interstate supply of goods or service and hence they are mainly covered under IGST act.

IGST Act provides for special treatment of Special Economic Zone Units just as export promotion strategy and supply of goods and services to this unit is treated as zero-rated supply.

What is SEZ?

SEZ is a specially designated area which is duty-free for the purpose of promotion of goods and services to enhance economic activities, promotion of export and investment, development of infrastructure, the creation of employment opportunities and so on.

How to supply goods or services to SEZ units

Supply of goods and services to SEZ Unit is considered as zero-rated it can be made in the manner as provided below:

• Supply under bond or LUT without payment of tax.
• Supply with payment of tax and claiming refund thereafter.

In this article, we shall only discuss the case I, i.e. supply to SEZ under bond or LUT made without payment of tax.

Supply to SEZ under bond or LUT are also called Zero-rated supplies

Supply to SEZ units under bond or LUT is made in such cases where goods or services are supplied without payment of IGST, it is therefore also called “Zero-rated supplies.

One needs to file certain documents with the department to supply the goods and services to the SEZ units. The list of documents is as under:

• You need to deliver LUT on stamp paper / while in case of Bonds it can be provided on non-judicial stamp paper both should be signed by the appropriate authority of the organization.

• In both LUT / Bond Fill appropriately Form  GST-RFD-11 on the letter head of the organization

• In both cases of LUT / Bond, you need to produce authority letter of your organization for furnishing with the department.
• Additional requirement to be fulfilled in case Bond that is the supplier would be required to give Bank guarantee of maximum 15% of the bond amount which is needed to be given to the department

• In both the case other supporting documents as may be prescribed and asked by the department also expected to be furnished.

​​​Submit document with the department

Further, once all the document is prepared then you would be required to visit the department for submission and verification, you need to ensure with appropriate authority with which you are submitting the required documents so that it could be processed smoothly without any hassles and complexity.

Assignment of the officer’s jurisdiction is entirely depending upon the principal place of business of the exporter.

Receipt of Acceptance letter

Once you submit the above-said document and LUT / Bond with appropriate authority and the respective officer verify and check the credentials of the information submitted as per the document.

The authority will issue acknowledgement as a token of compliance in the form letter after getting their signature on the documents within 3 days.

Conclusion

We have tried to cover almost all the relevant point in this article further if you need further guidance and assistance and have any doubt or query related to GST feel free to write us on [email protected].