1. The most significant change brought about by the GST is that supply of goods, Services or both is the basis of taxation as opposed to the removal of manufactured goods under the Excise regime.

2. The exporter whether manufacturer or merchant exporter can export under LUT/Bond or on payment of IGST & claim refund. Bond/Letter of Undertaking is required to be furnished by the exporter to the jurisdictional Deputy/Assistant Commissioner having control over the principal place of business of the exporter. The principal place of business is your head office/registered office shown in the GST registration. However, the manufacturers should execute LUT with the jurisdictional authority of the manufacturing facility as explained later.

3. The format of the LUT/Bond is available on the CBEC website under nomenclature FORM GST RFD-11. Please see Notification No. 15/2017–Central Tax dtd. 1.7.17.

4. The status holders recognized as such by the Director General of Foreign Trade regional offices can submit LUT. Further exporter, who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year, can also execute LUT subject to conditions.

5.  For executing the LUT, please give the following:

A. Cover Note.

B. LUT in duplicate on the letterhead of the registered person.

C. Declaration as per the format as given in Notification No. 16/2017–Central Tax dtd. 7.7.17.

D. Attach self certified Status certificate/CA certificate for the realization of foreign currency in excess of Rs. 1 Crore.

E. GST registration (It is not required because it is done online but being called for).

F. As a facilitation measure Exports may be allowed under existing LUTs/Bonds till 31st July 2017.

6. The fresh LUT once executed will be valid for a period of 12 months.

7. If the exporter is not eligible for the execution of the LUT then a bond in lieu of the LUT needs to be executed. The bond shall be furnished on non-judicial stamp paper of the value as applicable in the State in which bond is being furnished. The bond will be a running bond with debit/credit facility & the bond should cover the estimated tax liability as assessed by the exporter. The exporter is required to give a bank guarantee as per the decision of the Commissioner concerned but the BG amount should not be more than 15%.

8. The existing practice of sealing the container with a bottle seal under Central Excise (should read as GST official) supervision or otherwise would continue till 01st September, 2017. Such sealing shall be done under the supervision of the officer having physical jurisdiction over the place of business where the sealing is being done. Subsequently sealing methods will change.

9. In case of direct exports by the manufacturer there is not much of change. The export is treated as inter-state transaction & therefore subject to IGST. The exports can be conducted under LUT/Bond or on payment of IGST & claim refund. The S/B should contain the relevant particulars of GST tax Invoice (pertaining to the removal of goods for export) in the S/B. However, please note that the export invoice should be raised from the address of the place of removal of the goods for export & goods should be sent to the port directly for export. This is essential because if you will export from your any other address then that would result into a domestic trade transaction & tax (CGST/SGST or IGST as applicable) would be payable & that would block your capital for no reason. This is very important & therefore should be strictly adhered to.

10. In case of Merchant exports, the following needs to be strictly followed:

A. The manufacturer will raise Tax Invoice on the Merchant exporter. If the merchant exporter & the manufacturer supplier are in the same state, this transaction is intra-state (within the same state) & will be subject to levy of CGST & SGST.

B. If the merchant exporter & the manufacturer supplier are located in different states, this transaction is inter-state & will be subject to levy of IGST.

Therefore, it is important to determine the transaction category i.e. whether it is intra state or inter-state & then levy tax appropriately. Failing this, there will be problems in claim of Input tax credit, repayment of the incorrect tax & obtain refund of the tax paid earlier. This leg of the transaction is a domestic trade transaction.

C. The merchant exporter will be entitled to take the credit of the applicable taxes paid by the manufacturer (CGST/SGST or IGST as applicable). CGST/SGST can be used for the discharge of IGST in terms of the law in case of same GSTIN. Subsequently, the merchant exporter will have to prepare the final GST tax invoice & conduct exports under LUT/Bond or payment of IGST & claim refund. All export transactions are subject to IGST. Please note that in case of exclusive Merchant exporting transactions, the refund of IGST is the appropriate option to get back the tax & use the same.

11. In case of supplies to SEZ, the manufacturer/exporter can give LUT/Bond or conduct exports under IGST payment under refund provision like in the case of physical exports. Please note that SEZ is a deemed foreign territory therefore supplies to SEZ are treated as inter-state transactions & IGST will be applicable to such transactions.

12. The turnover of export in the previous Financial Year i.e. 2016-17 should be more than Rs. 1 crore & realization of at least 10% i.e. Minimum Rs. 10 Lakhs should have been realized to execute LUT instead of bond.


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  1. RAGHAVAN says:


  2. Ravi says:

    With regards to FAQ on Export Sector from Department of Commerce and Ministry of Finance received on 19th July 2017 ,

    “Question 4: For merchant exporters, is there any change in the Export Procedure under the GST regime?
    Answer: The concept of merchant or manufacturer exporter would become irrelevant under the GST regime. The
    procedure in respect of the supplies made for export is same for both merchant exporter and a manufacturer exporter.”

    As expressed earlier HBP and FTP ( 1st April, 2015 – 31st March, 2020 ) the Manufacturer Exporter is primarily entitled to any and all claim and third party is limited to the international trade profits However GST regime which will coexist will consider Third party as primary beneficiary . Such an approach will create more and more confusion and we are afraid that the GST refund or LUT credit will get delayed creating operational losses.

    HANDBOOK OF PROCEDURES [1st April, 2015 – 31st March, 2020]
    Updated upto 04.08.2015 Government of India , Ministry of Commerce and Industry , Department of Commerce

    1.14 EDI Procedure for claiming benefits in respect of Third Party exports
    For claiming benefits under EDI system in respect of Third Party exports the process will be initiated by the First party who will link shipping bills and BRCs to repository. If the First Party chooses not to claim benefit for a particular shipping bill item/s, it may authorize Third Party to claim benefit for such shipping bill item/s. After such authorization by First party, Third Party will be able to utilize the shipping bill item/s in its application”.

    5.10 Conditions for fulfilment of Export Obligation
    In addition to conditions in paragraph 5.04 of FTP, the following conditions shall also be applicable for fulfilment of export obligation:
    (a) Name of the supporting manufacturer as well as the exporter shall be indicated on export documents.
    (b) EPCG authorisation holder may export either directly or through third party(ies).
    (c) In case the Authorization Holder wants to export through a third party, export documents viz., shipping bills / Bill of exports etc. shall indicate name of both authorization holder and supporting manufacturer, if any, along with EPCG authorization number. BRC, GR declaration, export order and invoice should be in the name of third party exporter. The goods exported through third party should be manufactured by the EPCG Authorisation Holder or the supporting

    FOREIGN TRADE POLICY [1st April, 2015 – 31st March, 2020] Updated upto 30-06-2015

    2.42 Third Party Exports Third party exports (except Deemed Export) as defined in Chapter 9 shall be allowed under FTP. In such cases, export documents such as shipping bills shall indicate name of both manufacturing exporter/manufacturer and third party exporter(s). Bank Realisation Certificate (BRC), export order and invoice should be in the name of third party exporter

    “Third-party exports” means exports made by an exporter or manufacturer on behalf of another exporter(s).
    In such cases, export documents such as shipping bills shall indicate name of both manufacturing exporter /manufacturer and third party exporter(s). Bank Realisation Certificate, Self-Declaration Form (SDF), export order and invoice should be in the name of third party exporter.

    We have some more Questions that are not clear to us.
    1) GST applied to Third party Exporter when the delivery of good is to a foreign port or at Indian port destined for foreign port.
    2) Manufacturer Exporter and third party both need to provide Bond / LUT for the same shipment . how do 2 Bond / LUT get fulfilled with one shipping Bill.
    3) Shipping Bill registers both names Manufacturer Exporter and Third Party Exporter , in the auto GST refund which exporter will be credited the Manufacturer Exporter or Third party exporter.
    4) Payment in this case will be received by the Third party from this customer , how will the IEC / BIN / Pan + Ext confirm fulfilment of Export Obligation for First party being the primary exporter in Shipping Bill.
    5) In case the GST is applied to Third party Exporter how does the Manufacture exporter ( first Party ) claim Import tax input credit ( Licence or Bond ) on Raw Material
    6) Manufacturer Exporter and Third party exporter are from different states which party will get refund and how.
    7) Does LUT / Bond issues in One state ( let says Maharashtra ) be used in another state ( Lets says Gujarat )
    If you

    1. Narasimha Rao says:

      Dear Sir,
      We are the manufacture Exporter and E.O.U.since 1995. Register in GST. We get the LUT in our jurisdiction Central A.C. Earlier We export 5 to 6 containers/month thro’ merchant exporter. Now we have to face the problem to export in GST. Even our merchant exporter agrees to pay IGST we unable to clear the exports due to 100% E.O.U. because as 100% E.O.U.we are liable to pay customs duty in addition IGST on procurement of raw-material used in exported goods. Please advise.

  3. Mayank tyagi says:

    Hi, I am a software consultant exporting software services. My turn over is less than 1 cr. I have service tax number, IEC and already registered for GST. After GST do I need to submit any bond and bank guarantee? Are these things bond and gurantee mandatory for everyone or required in some cases only. I didn’t get any satisfactory reply from GST helpline. Plz help.

  4. Rohit Chawla says:

    Can you give such an explanation for exports and SEZ sales against payment of IGST. How to issue invoice and how to claim refund of IGST ? Small exporters would not like to go through the procedure of Bond or LUT.

  5. ashwani mahajan says:

    If a merchant exporters buys goods from local unregistered dealers/farmers, then how GST will be paid and how to get refund?

  6. Narendra Pitale says:

    GST Tax Invoice as well as Commercial Invoice field is available in the soft copy of Shipping bill but not appearing while submitting shipping bill in the EDI system at ICEGATE

  7. CA.Ravindra bhatt T L says:

    What about the export of services, LUT is to be filed, fine, what documentation is need to prove that it is an export of services. In the case of goods Bills of lading, custom papers are available. But in the case of direct export of services/software what type of documents to be generated.

    1. Nitish says:

      Dear Mr. Bhatt,

      Did you get any update on your question “July 11, 2017 at 10:43 am
      What about the export of services. But in the case of direct export of services/software what type of documents to be generated.” If so please can you share with us.
      Many thanks,

  8. Pradeep Kumar says:

    Merchant Exporter A located in Shimla issues procures material from manufacturer located in other states Goods are being exported from Mumbai / Cheenai Port. Please clarify the situation of Invoice raising and credit mechanism. Is Merchant exporter need to get GSTIN no from other states from where procuring the material and directly sent to port

    1. neeru says:

      We are merchant exporter of auto spare parts.

      Do we need to pay gst to our supplier when we buy for export purpose from supplier within delhi and other states?
      please guide—

  9. Dinesh Batra says:

    For export of service (E.g.Application developmemt or support service) also LUT/Bond is compulsory ?
    As there was no such requirement in service tax regime.

  10. ravikumar says:

    Exporter A located in Maharashtra issues a order for supply to trader B located in Tamilnadu. Trader B identified a manufacturer – C located in Maharashtra. Goods are being exported from Mumbai Port. Please clarify the situation of Invoice raising and credit mechanism.

  11. sampat khurdia says:

    merchant exporter is having head office at Mumbai & branch at tripur ( chenai). goods are purchased from tripur and exports from there only not coming to Mumbai. is it correct to take gst no. at tripur but what about expenditure incurred at mumbai . how claimed set off. all travelling as courier expenditure are incurred at mumbai

  12. Meet Bhavsar says:

    For export of service (E.g.Application developmemt or support service) also LUT/Bond is compulsory ?
    As there was no such requirement in service tax regime.

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November 2020