CBEC issued clarification on furnishing of Bond/ Letter of Undertaking for Exports under GST

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CBEC has released Circular No. 5/5/2017-GST dated 11th August 2017 providing additional clarification on issues related to furnishing of Bond/ Letter of Undertaking for Exports. The said Circular is in extension of Notification No. 16/2017 – GST dated 7th July 2017 and Circular No. 2/2/2017 – GST dated 5th July 2017 and Circular No. 4/4/2017 – GST dated 7th July 2017 issued earlier.

The brief highlights of the said Circular are appended below for ease of reference:

  • Any registered person who has received a minimum foreign inward remittance of 10% of export turnover in the preceding financial year is eligible for availing the facility of LUT provided that the amount received as foreign inward remittance is not less than Rs. one crore. This implies that, both the conditions should be cumulatively satisfied to avail the facility of LUT.

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.

  • Bond has to be furnished on the non-judicial stamp paper, LUT on the letterhead of the Company containing signature and seal of the authorized person.
  • LUT/ bond is to be submitted prior to export and it is a prior requirement for export.
  • CT-1 form has no relevance as supplies from manufacturer to merchant exporter are subject to GST.
  • Supplies to Export Oriented Units (“EOU”) will not qualify as export and are to be treated as taxable supply.
  • Supplies of goods to Nepal or Bhutan or SEZ unit or developer can be done under LUT instead of bond provided RBI guidelines are followed. Further, supply of services to SEZ unit or developer is permissible to be made in Indian currency as long as they are in accordance with RBI guidelines.
  • Supply of service to Nepal or Bhutan to be considered as export of service when consideration is received in convertible foreign exchange (subject to satisfaction of other conditions).
  • Exporter can furnish bond / LUT to Central or State Tax Authority till administrative authority is assigned to taxpayer.
  • Circumstances where Bond can be submitted without bank guarantee are –

a)    Where self-attested copy of the proof of registration with a recognized Export Promotion Council have been submitted.


b)   Where the total amount of inward foreign remittances received by all the registered persons, having one Permanent Account Number, is Rs.1 crore or more and it also be 10% or more of total export turnover.

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