Refund of IGST - Export of goods or services or both without payment of IGST against under LUT/Bond and claim refund of ITC [Rule 96A of CGST Rule] - GST Ready Reckoner - GST

Refund of IGST - Export of goods services or both, without payment of IGST Export of goods services, or both and procedure of refund - Export goods services , or both without payment of IGST against under LUT/Bond and claim refund of ITC [ read with rule 96A read with rule 89 , rule 96B of CGST Rules] (1) Time limit for export and payment of tax in case of Non- Export - Any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified under section 50(1) within a period of - (a) fifteen days after the expiry of three months, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the goods are not exported out of India; or (b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export , if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India. [ Substituted vide Notification No. 12/2024 Central Tax dated 10-07-2024 w.e.f. 10.07.2024 ] fifteen days after the expiry of one year, or the period as allowed under the Foreign Exchange Management Act, 1999 including any extension of such period as permitted by the Reserve Bank of India, whichever is later, from the date of issue of the invoice for export , or such further period as may be allowed by the Commissioner, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India. [ Inserted vide Notification No. 12/2024 Central Tax dated 10-07-2024 w.e.f. 10.07.2024 ] (2) Electronic transmission of the details - The details of the export invoices contained in FORM GSTR-1, [ as amended in FORM GSTR-1A if any ( Inserted vide NN. 12/2024 CT dated 10-07-2024 w.e.f. 10.07.2024) furnished on the common portal shall be electronically transmitted to the system designated by Customs and a confirmation that the goods covered by the said invoices have been exported out of India shall be electronically transmitted to the common portal from the said system. (3) Recovery and bond/LUT withdrawn - Where the goods are not exported within the time specified in rule 96A(1) of CGST Act and the registered person fails to pay the amount mentioned in the said sub-rule, the export as allowed under bond or Letter of Undertaking shall be withdrawn forthwith and the said amount shall be recovered from the registered person in accordance with the provisions of section 79. (4) Restoration of Bond/LUT - The export as allowed under bond or Letter of Undertaking withdrawn shall be restored immediately when the registered person pays the amount due. (5) The Board, by way of notification, may specify the conditions and safeguards under which a Letter of Undertaking may be furnished in place of a bond. (6) The provisions of rule 96A(1) of CGST Act shall apply, mutatis mutandis , in respect of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit without payment of integrated tax. Clarification on issues related to furnishing of Bond/Letter of Undertaking for exports [ Circular No. 8/8/2017-GST dated 4 th October, 2017 ] a) Eligibility to export under LUT ? The facility of export under LUT has been now available to all registered persons who intend to supply goods or services for export without payment of integrated tax. Except those who have been prosecuted for any offence under the CGST Act or the Integrated Goods and Services Tax Act, 2017 or any of the existing laws and the amount of tax evaded in such cases exceeds 250 lakh rupees unlike Notification No. 16/2017-Central Tax dated 7th July, 2017 which extended the facility of export under LUT to status holder as specified in paragraph 5 of the Foreign Trade Policy 2015-2020 and to persons receiving a minimum foreign inward remittance of 10% of the export turnover in the preceding financial year which was not less than one crore. b) What shall be the validity of LUT ? The LUT shall be valid for the whole financial year in which it is tendered. In case the goods are not exported within the time specified in rule 96A(1) of the CGST Rules and the registered person fails to pay the amount mentioned in the said sub-rule, the facility of export under LUT will be deemed to have been withdrawn. If the amount mentioned in the said sub-rule is paid subsequently, the facility of export under LUT shall be restored. As a result, exports, during the period from when the facility to export under LUT is withdrawn till the time the same is restored, shall be either on payment of the applicable integrated tax or under bond with bank guarantee. c) What are provisions for acceptance of LUT/Bond ? The registered person (exporters) shall fill and submit FORM GST RFD-11 on the common portal. An LUT shall be deemed to be accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN), is generated online. d) What are the documents required for LUT ? No document needs to be physically submitted to the jurisdictional office for acceptance of LUT. e) Time for acceptance of LUT/Bond: An LUT shall be deemed to have been accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN), is generated online. If it is discovered that an exporter whose LUT has been so accepted, was ineligible to furnish an LUT in place of bond as per Notification No. 37/2017-Central Tax , then the exporter s LUT will be liable for rejection. In case of rejection, the LUT shall be deemed to have been rejected ab initio. (i) all registered persons who intend to supply goods or services for export without payment of integrated tax shall be eligible to furnish a Letter of Undertaking in place of a bond except those who have been prosecuted for any offence, (a) the CGST Act or the IGST Act, 2017 or any of the existing laws and (b) the amount of tax evaded in such cases exceeds two hundred and fifty lakh rupees unlike Notification No. 16/2017-Central Tax dated 7th July, 2017 which extended the facility of export under LUT to status holder as specified in paragraph 5 of the Foreign Trade Policy 2015-2020 and (c) to persons receiving a minimum foreign inward remittance of 10% of the export turnover in the preceding financial year which was not less than one crore. (ii) the Letter of Undertaking shall be furnished on the letter head of the registered person, in duplicate, for a financial year and it shall be executed by the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorised by such working partner or Board of Directors of such company or proprietor; (iii) where the registered person fails to pay the tax due along with interest, as specified time period under rule 96A(1) of CGST Rules, 2017,the facility of export without payment of integrated tax will be deemed to have been withdrawn and if the amount mentioned in the said sub-rule is paid, the facility of export without payment of integrated tax shall be restored. f) Bank guarantee: Since the facility of export under LUT has been extended to all registered persons, The bond will be required to be furnished by those persons who have been prosecuted for cases involving an amount exceeding two hundred and fifty lakhs. A bond, in all cases, shall be accompanied by a bank guarantee of 15% of the bond amount. g) What are the provisions regarding running bond ? The exporters shall furnish a running bond where the bond amount would cover the amount of self-assessed estimated tax liability on the export. The exporter shall ensure that the outstanding integrated tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the said liability in yet to be completed exports, the exporter shall furnish a fresh bond to cover such liability. The onus of maintaining the debit / credit entries of integrated tax in the running bond will lie with the exporter. The record of such entries shall be furnished to the Central tax officer as and when required. h) Sealing by officers: Till mandatory self-sealing is operationalized, sealing of containers, wherever required to be carried out under the supervision of the officer, shall be done under the supervision of the central excise officer having jurisdiction over the place of business where the sealing is required to be done. A copy of the sealing report would be forwarded to the Deputy/Assistant Commissioner having jurisdiction over the principal place of business. i) is there provision for issusance of CT-1 form which enable merchant exporter to purchases goods from a manufacturer without payment of tax ? It is clarified that there is no provision for issuance of CT-1 form which enables merchant exporters to purchase goods from a manufacturer without payment of tax under the GST regime. The transaction between a manufacturer and a merchant exporter is in the nature of supply and the same would be subject to GST. j) is zero rating applicable for transactions with EOUs ? Zero rating is not applicable to supplies to EOUs and there is no special dispensation for them under GST regime. Therefore, supplies to EOUs are taxable like any other taxable supplies. EOUs, to the extent of exports, are eligible for zero rating like any other exporter. k) is the condition of realization of export proceeds in Indian Rupee ? Attention is invited to para A (v) Part- I of RBI Master Circular No. 14/2015-16 dated 01st July, 2015 (updated as on 05th November, 2015), which states that 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 (2015-2020), all export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency. However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan . Further, attention is invited to the amendment to section 2(6) of the IGST Act, 2017 which allows realization of export proceeds of services in INR, wherever allowed by the RBI. Accordingly, it is clarified that the acceptance of LUT for supplies of goods or services to countries outside India 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 the applicable RBI guidelines. l) State the power of Jurisdictional officer ? In exercise of the powers conferred by section 5(3) of the CGST Act, it is hereby stated that the LUT/Bond shall be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter. The exporter is at liberty to furnish the LUT/bond before either the Central Tax Authority or the State Tax Authority till the administrative mechanism for assigning of taxpayers to the respective authority is implemented.