CBEC issued a master Circular No. 8/8/2017-GST on 4th October 2017 clarifying the following –
1. Goods or services or both can be exported without payment of IGST under LUT
2. Eligibility to export under LUT:
a. Registered tax payer
b. No history of prosecution for tax evasion for amounts more than Rs. 2,50,000
3. Self-declaration of non-prosecution and fulfillment of all applicable conditions is to be submitted.
4. Validity: LUT shall be valid for the relevant financial year in which it is submitted.
5. LUT shall be deemed to be withdrawn in case the tax payer fails to pay the tax in cases where goods are not actually exported within the prescribed time limit. Upon payment of the tax due, the LUT shall be restored.
6. Form and documentation: FORM GST RFD-11 is to be used as format of LUT. LUT is to be furnished on the letter head, signed by, the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorized by such working partner or Board of Directors of such company or proprietor.
7. Time limit: It is clarified that LUT/bond should be accepted within a period of three working days of its receipt along with the self-declaration. If the LUT / bond is not accepted within a period of three working days from the date of submission, it shall be deemed to be accepted.
8. Other important clarifications –
a. Bank Guarantee: Required only for tax payers involved in prosecution for tax evasion for amounts more than Rs. 2,50,000.
b. Running Bond: The exporters have to furnish a running bond where the bond amount would cover the amount of self-assessed estimated tax liability on the export.
c. 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.
d. 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.
e. Realization of export proceeds in Indian Rupee: The acceptance of LUT for supplies of goods or services to SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or convertible foreign exchange.
Above mentioned circular can be downloaded from this link.
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