prpri GST: Export under Bond / Letter of Undertaking (LUT) GST: Export under Bond / Letter of Undertaking (LUT)

‘Export’ and ‘Supply to SEZ units’ is collectively termed as “Zero rated Supply” under GST. Therefore, the procedures for ‘Export’ and ‘Supply to SEZ without charging tax’ are similar. The main purpose of Bond or LUT is to prevent Cash Outflow from pocket of exporter to pay IGST.

This article aims to consolidate series of notifications/circulars issued by CBEC with respect to Export of Goods and Services under Bond or LUT.

Important point to note here is that GST has removed the concept of Deemed Exporter (or Manufacturer Exporter) and Merchant Exporter. Therefore, the concept of CT-1 form, which was earlier used for purchase of goods by a merchant exporter from a manufacturer without payment of central excise duty, has become irrelevant.

Moreover, supply to Export Oriented Units (EOUs) is not considered as Deemed Export.  In other words, benefit of GST refund can be claimed only be Actual Exporter.

Export under Letter of Undertaking (LUT)

WHAT: What is LUT? – LUT is generally submitted on the letterhead containing signature and seal of the person or the person authorized. LUT shall be valid for 12 months.

WHO: Who can furnish LUT? – Only following categories of Exporters can avail facility of LUT:

(1) Status holders, that is, Star Export houses under Foreign Trade Policy (2015-2020) OR

(2) Exporters who have received a remittance which is higher of:

(a) Rs. one crore or

(b) 10% of export turnover,

in the previous financial year.

HOW: How to furnish LUT? – The format of LUT is provided in Form GST RFD-11 which has to be furnished online. However, till the time online module becomes operative, the form can be manually furnished to jurisdictional Deputy/ Assistant Commissioner of Central Tax Dept or State Tax Dept.

Export under Bond

WHAT: What is Bond? – Bond is to be furnished on non-judicial stamp paper along with Bank Guarantee. Exporter can furnish running bond instead of consignment-wise bond.

WHO: Who has to furnish bond? – All the exporters other than those eligible to furnish LUT have to furnish bond.

HOW: How to furnish bond? – The bond is to be furnished manually in Form GST RFD-11 till the time online module becomes operative.  Bank Guarantee – The bond should be accompanied with Bank Guarantee (BG). The amount of BG should be as decided by jurisdictional Commissioner, which in any case cannot exceed 15%. However, the Commissioner may waive off the requirement to furnish bank guarantee in following cases:

1. 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.

2. If a person is having state-wise multiple GST registration under common PAN Number but combined export receipts satisfies criteria of “inward foreign remittances of Rs. 1 crore or 10% of turnover, whichever is higher”, then such person can be allowed to submit bond without bank guarantee.

Bottom line

Thus necessary provisions are made in GST to promote export of goods and ensure that the exporters do not face burden of GST. However, certain changes are made in comparison of earlier indirect tax laws to streamline the process. Proper consultation by export organizations will ensure that they benefit from GST provisions.

In case of any query, the author can be reached at

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Chartered Accountant having more than three years of experience in one of the 'Big4' consulting firms, I have assisted multinational companies in international taxation and intra-group pricing (transfer pricing) consulting. I have assisted - unicorn start-ups (like a fantasy gaming company, dati View Full Profile

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July 2021