The Central Board of Excise and Customs (CBEC) for the purpose of having uniformity in the interpretation of 

1. Notification No. 16/2017 – GST dated 7th July, 2017

2. Circular No. 2/2/2017 – GST dated 5th July, 2017 and

3. Circular No. 4/4/2017 – GST dated 7th July, 2017, certain issues have been clarified.

1. Eligibility to export under LUT

Any registered person who has received a minimum foreign inward remittance of 10% of export T/o in the preceding F Yr. is eligible for availing the facility of LUT provided that the amount received as foreign inward remittance is not less than Rs. 1 crore.


Status holder as specified in the Foreign Trade Policy 2015-2020 – In Brief

  • Business leaders who have excelled in international trade & have successfully contributed to country’s foreign trade.
  • All exporters of goods, services and technology having an import-export code (IEC)
  • One/Two/Three/Four/Five Star Export House.

2. Form for LUT:

Bonds are furnished on non-judicial stamp paper, while LUTs are generally submitted on the letterhead containing signature and seal of the person or the person authorized in this behalf as provided in said Notification.

3. Time for acceptance of LUT/Bond:

As LUT/bond is a prior requirement for export, including supplies to a SEZ developer or a SEZ unit, the LUT/bond should be processed on top most priority and should be accepted within a period of three working days from the date of submission of LUT/bond by the exporter.

4. Purchases from manufacturer and form CT-1 or Treatment of CT-1

The scheme holds no relevance under GST since transaction between a manufacturer and a merchant exporter is in the nature of supply and the same has not been exempted under GST even on submission of LUT/bond. Therefore, such supplies would be subject to GST. The zero rating of exports, including supplies to SEZ, is allowed only with respect to supply by the actual exporter under LUT/bond or payment of IGST.

5. Transactions with EOUs:

Zero rating is not applicable to supplies to EOUs and there is no special dispensation for them. Therefore, supplies to EOUs are taxable under GST just like any other taxable supplies. The EOUs, to the extent of exports, are eligible for zero rating like any other exporter.

6. Forward inward remittance in Indian Rupee:

It is clarified that acceptance of LUT instead of a bond for supplies of goods to Nepal or Bhutan or SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or convertible foreign exchange.

Further, supply of services to SEZ developer or SEZ unit will also be permissible on the same lines. However, to Nepal or Bhutan will be deemed to be export of services only if the payment for such services is received by the supplier in convertible foreign exchange.

7. Bank guarantee:

Circular No. 4/4/2017 dated 7th July, 2017 provides that bank guarantee should normally not exceed 15% of the bond amount. However, the Commissioner may waive off the requirement to furnish bank guarantee taking into account the facts and circumstances of each case.

8. Jurisdictional officer:

It has been clarified that Bond/LUT 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 bond/LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented.

9. Documents for LUT:

Documents submitted as proof of fulfilling the conditions of LUT shall be accepted unless there is any evidence to the contrary. Self-declaration shall be accepted unless there is specific information otherwise.

Verification, if any, may be done on post facto basis. Similarly, Status holder exporters have been given the facility of LUT under the said notification and a self-attested copy of the proof of Status should be sufficient.

10. Applicability of circulars on Bond/LUTs:

It is clarified that the instructions issued vide said circulars including the latest one are applicable to any export made on or after the 1st July 2017.

CBEC Circular No. 5/5/2017 – GST Dated 11th August 2017

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December 2020