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Under GST regime, export of goods and services has been treated as a “zero rated supply”. This implies that no tax would be payable on such supplies and the exporter will be able to claim the corresponding input tax credits.

Indian Government has specified the following procedures for export of goods/services

  1. Export of goods/services on payment of IGST and claiming refund of the same.
  2. Export of goods/services without payment of IGST under bond or letter of undertaking (LUT) and claim refund of unutilized input tax credit.

As per Rule 96A of CGST Rules, any registered person availing the option to export goods/services without payment of IGST has to furnish, prior to export, a Bond or LUT in Form GST RFD-11 to the jurisdictional commissioner.

Export by issue of LUT

In the existing Central Excise provisions, LUTs were limited to manufacturer exporters only. But in the GST regime, the facility of LUT has been extended to all suppliers who are exporters.

The following exporters will be required to file LUT:

  1. Status holders as mentioned in the Para 3.20 and 3.21 of Foreign Trade Policy 2015-2020.
  2. Registered person who has received foreign currency for at least a total of 10% of the exports turnover and such value is more than Rs.1 Crore in the preceding financial year would be required to file a letter of undertaking (LUT).

The applicant shall not have been prosecuted under the CGST Act 2017 or any other current laws for an amount exceeding Rs 250 Lakhs.


Understanding status holders

As per para 3.20 of Foreign Trade Policy (1st April 2015 to 31st March 2020), Status holder is

  1. Status Holders are business leaders who have excelled in international trade and have successfully contributed to country’s foreign trade. Status Holders are expected to not only contribute towards India’s exports but also provide guidance and handholding to new entrepreneurs.
  2. All exporters of goods, services and technology having an import-export code (IEC) number shall be eligible for recognition as a status holder. Status recognition depends upon export performance. An applicant shall be categorized as status holder upon achieving export performance during current and previous two financial years, as indicated in paragraph 3.21 of Foreign Trade Policy. The export performance will be counted on the basis of FOB value of export earnings in free foreign exchange.
  3. For deemed export, FOR value of exports in Indian Rupees shall be converted in US$ at the exchange rate notified by CBEC, as applicable on 1st April of each Financial Year.
  4. For granting status, export performance is necessary in at least two out of three years.

3.21 Status Category

Status Category

Export Performance FOB / FOR (as converted) Value (in US $ million)

One Star Export House


Two Star Export House


Three Star Export House


Four Star Export House


Five Star Export House


Understanding foreign inward remittance eligibility for LUT

Only such exporters, are eligible to LUT facilities who have received a remittance of Rs.1.00 crore or 10% of export turnover, whichever is higher in the previous financial year.


Few illustrations explaining the above point, is given as under :

  1.  An exporter had a turnover of Rs. 15 crore in the previous financial year. He would be eligible for LUT facility if remittance received against this export is Rs. 1.5 crore or more (10% of export turnover is more than Rs. 1 crore).
  2. An exporter had a turnover of Rs. 5 crore in the previous financial year. He would be eligible for LUT facility if remittance received against this export is Rs. 1.0 crore or more (10% of export turnover is less than Rs. 1 crore).
  3. An exporter has an export turnover of Rs. 2 crore. He has received Rs. 80 lacs as foreign inward remittances in FY 2016-17 which is 40% of the export turnover. He will not be eligible for LUT facility as remittance received is less than Rs. 1 crore.
  4. An exporter has export turnover of Rs. 40 crore. He has received Rs. 2 Crores as foreign inward remittances in FY 2016-17 which is 5% of the export turnover. He will not be eligible for LUT facility as remittance received is less than 10% of export turnover, even though it is in excess of Rs. 1 crore.
  5. An exporter has received Rs. 1 Crore 10 lacs as foreign inward remittances in FY 2016-17 which is 20% of the export turnover. In this scenario, he will be eligible for LUT facility.

*Source – Government of India circular no. 5/5/2017-GST, dated 11th August 2017.

It may however be noted that a status holder as specified in paragraphs 3.20 and 3.21 of the Foreign Trade Policy 2015-2020 is eligible for LUT facility regardless of whether he satisfies the above conditions.

Export by Issue of Bond

Any other registered person other than mentioned above doing exports without the payment of IGST would need to file a bond which is available in the form GST RFD-11 under GST. Small exporters should file GST RFD-11 prior to the export if they want to avoid the blocking of working capital.

A running bond will be submitted and the bond amount should cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter. A fresh bond is to be submitted if the amount in the bond is less than the outstanding tax liability on exports.

Form for LUT/Bond

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.

Time for acceptance of LUT/Bond

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 along with complete documents by the exporter.

Bank Guarantee

Bank guarantee is necessary only in case of Bond and 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. It is expected that this provision would be implemented liberally.

Some of the instances of liberal interpretation are as follows:

  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 registered person, having one PAN number is registered in more than one state, then it may so happen that such registered person may not satisfy the condition regarding foreign inward remittances in respect of one particular registration, because of splitting and accounting of receipts and turnover across different registered person with the same PAN. But the total amount of inward foreign remittances received by all the registered persons, having one Permanent Account Number, maybe Rs. 1 crore or more and it also maybe 10% or more of total export turnover. In such cases, the registered person can be allowed to submit bond without bank guarantee.

Documents for filing of LUT under GST

  1. All documents evidencing fulfilment of conditions of LUT
  2. Self declaration shall be expected unless there is specific information otherwise. For example, a self-declaration by the exporter to the effect that he has not been prosecuted should suffice for the purposes of notification No. 16/2017 - Central tax dated 7th July, 2017. Verification, if any, may be done on post facto basis.
  3. Status holder exporters who have been given the facility of LUT,a self-attested copy of the proof of Status should be sufficient.
  4. The LUT should be executed by the working partner, the Managing Director, the Company Secretary, the proprietor or by a person duly authorised by such working partner or Board of Directors of such company or proprietor.
  5. Authority letter.
  6. UT 1 bond on stamp paper.
  7. The LUT (Form RFD-11) should be executed on the letter head of the registered person.
  8. The LUT should be furnished in duplicate for a financial year in the prescribed format.

Documents required for filing of Bond under GST

  1. Form RFD-11 should be executed on the letter head of the registered person.
  2. Bond on stamp paper
  3. Bank guarantee
  4. Authority letter
  5. Other supporting documents
  6. After all the above documents are prepared in line, a duplicate copy of the same has to be prepared along with the office copy.


For all the goods/services which are exported under bond/LUT, the exporter can claim refund of accumulated ITC on account of export. With GST in place, the export industry in India would be able to have internationally competitive prices due to the smooth process of claiming input tax credit and the availability of input tax credit on services.

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