Exports without payment of IGST i.e. either through Bond/LUT.
Author: Taxserve Team
Knowledge partner: YSR & Associates.
Exports without payment of IGST.
As there are many confusions regarding the exports the bonds to be used or the CT-1 which is already submitted before transition period. So, we have attempted to clarify such doubts through this notes along with the notification numbers and circular numbers issued by CBEC.
1.As per the circular No. 4/2017-GST dated, 07th July 2017 it has been clarified that the exporters are allowed to use the existing bonds/LUT till 31st July, 2017. From 01st August onwards, the exporters has to use the new bonds and LUT as per the GST.
2.Further it has been clarified vide circular No. 26/2017- Customs dated 01st July, 2017 that
the existing practice of sealing the container with a bottle seal under Central excise supervision or otherwise would continue till 01st September, 2017. A copy of the sealing report would be forwarded to the Deputy/Assistant Commissioner having jurisdiction over the principal place of business.
3.There is no notification / Circular issued for the merchant exporters. So, when the goods are supplied to a merchant exporter GST has to be charged.
4.The procedure for exports without payment of IGST has been prescribed in rule 96A of GST rules, 2017 in notification no. 15/2017-CGST dated 01.07.2017
- As per rule 96A of GST rules, 2017-
“Any registered person availing option to supply goods or services for export without payment of IGST shall furnish, prior to export, a bond or a LUT in Form GST RFD-11 to the jurisdictional commissioner, binding himself to pay tax along with the interest within
a.Fifteen days after the expiry of three months 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.”
- As per the above rule, the goods has to be exported within 3 months from the date of invoice and for services, the payment must be received in convertible foreign exchange within 1 year from the date of invoice.
- If the time limit has been exceeded as prescribed above, then the IGST along with the interest has to be paid.
- The same rule is applicable for exports to SEZ also.
5.So, the registered person who wants to avail this condition has to file the GST RFD-11 along with the Bond/LUT. The said forms can be submitted physically to the jurisdictional Deputy/Assistant commissioner till the GSTN portal is ready.
6.As per notification No. 16/2017-CGST dated 07.07.2017 states that the following registered person shall be eligible for submission of LUT in place of bond:-
- A status holder as specified in paragraphs 3.20 and 3.21 of the Foreign Trade Policy 2015-2020; or
- 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?
- And who has not been prosecuted under the GST act or under any of the earlier laws where the amount of tax evaded exceeds 250 lakhs rupees.
- It is further clarified that LUT shall be valid for 12 months.
7.The persons who are not covered above has to issue a bond along with the bank guarantee. The bond shall be furnished on non-judicial stamp paper of the value applicable in the state in which the bond is being furnished.
8.The Bond must cover the tax portion of the exports. If the bond amount is not sufficient as per the exports, then he may have to issue a fresh bond to cover the liability.
9.The bank guarantee has to be given along with the bond as a security for the bond.
10.The jurisdictional commissioner may decide about the amount of bank guarantee depending upon the track record of the exporter. If the commissioner is satisfied with the track record of an exporter then furnishing of bond without bank guarantee would suffice.
11.In any case the bank guarantee should normally not exceed 15% of the bond amount.
Details required in the Shipping Bill:
1.Quoting GSTIN in shipping bill is mandatory, if the export product attracts GST for domestic clearance.
2.Quoting PAN, which is authorized as Import Export code by DGFT, would suffice if the exporter exclusively deals with products which are either wholly exempt from GST or out of GST regime.
3.In case of exports by specialized agencies such as United Nations Organisation or notified Multilateral Financial Institutions, Embassies and Consulates, the exporter can quote UIN, instead of GSTIN, in the shipping bill.
4.Without GSTIN or PAN or UIN, the shipping bill cannot be filed.
5.The claim for refund of IGST paid or ITC on inputs consumed in goods exempted cannot be processed without GSTIN and GST invoice details in shipping bill.
6.Taxable value and Tax amount should be mentioned against each item in the shipping bill for processing the refund amount. Multiple tax invoices issued by same GSTIN holder are allowed in one shipping bill for the same consignee.
7.Sate code is part of GSTIN numbering scheme. However, in the shipping bill for the field “State of origin” declare the state code from where export goods originated as it was being done before.
Drawback Scheme availed by the exporters:
1.During the transition period of 3 months i.e. 01.07.2017 to 30.9.2017, composite rates of All Industry Rate (AIR) drawback are available to exporters.
2.Exporter has to produce a certificate to the above effect from jurisdictional GST officer to avail composite rate. This requirement is applicable to supplies made on or after 01.07.2017, as all exporters are required to operate under GST from that date.
3.In case export goods have been cleared from the factory or warehouse etc. prior to 01.07.2017 but let export order has not been given till 30.06.2017, certificate from GST officer is not required. For such goods, only a declaration from exporter or certificate from the then central excise officer, as applicable, is required.
4.In case exporter is unable to produce the requisite certificate for claiming composite AIR at the time of export, then exporter should have the shipping bill amended to claim lower AIR (Customs portion) at time of export. The exporter can claim balance amount of drawback as supplementary claim when he produces certificate.