File Bond/LUT for exports
under GST in India

Starting from 3,999/- (All inclusive)

Important Points

  • - You need LUT/Bond to export without taxes
  • - Acceptance letter in 3 to 5 working days
  • - Complete documentation

LUT & Bond under GST

Know what is LUT or bond and when they are filed?

What is a LUT or bond under GST?

There are two ways possible to export under GST, one is export with payment of GST and second is export without payment of GST. To chose second option, you need to file the bond or LUT with the tax department stating that you shall fulfill all the export requirements.

When bond or LUT is filed under GST? what all laws govern them?

Filing of bond or LUT depends upon the total foreign receipts in the previous year. If you have received more than 1 Cr foreign exchange then you are required to file LUT instead of bond. Bond is required to be filed in following three cases:

#New Exporter or First Time Export: If you are a first time exporter of goods or services, then also you need to file the bond because you have no exports receipts in the previous year. Hence, if you are a first time exporter, you need to file bond with a bank guarantee.

#Foreign receipts less than 1 Crore: If you have total foreign receipts less than 1 crore, then you cannot file the LUT instead you need to file the bond with 15% bank guarantee.

#Foreign receipts less than 10% : If you have received less than 10% foreign receipts then also you need to file the bond. E.g. if you receive total FE of 2 crore and your total turnover is Rs. 50 Crore, then you shall need to file bond and not LUT.

Documents required for LUT/Bond Filing under GST

Related to Business

  • GST Registration Certificate
  • PAN card and IEC Certificate
  • VAT returns and Export Bill
  • Bank details for Bank Guarantee

Personal Documents

  • PAN and Aadhar card of owner
  • Letter of Authorization
  • ID proof of two witness

LUT/Bond filing procedure for exports under GST

LUT and bond filing procedure is mandatory if you want to export without payment of IGST. As per rule 96A, a bond is required to be filed along with 15% bank guarantee. Here is the brief procedure:

# Step 1 - Arrange all required documents: The first step is to arrange all the documents and send the same over the email to us. We will check it and if everything is fine, you will required to pay us the required fees.

# Step 2 - Signing and Submission: After receiving the required documents and payment we shall start your work. We will prepare all the documents and we shall submit the same to the tax department.

# Step 3 - Letter of Acceptance: Once your application is accepted, the letter of acceptance is issued by the docs.

Time & Cost for LUT and Bond filing under GST

LUT/Bond Cost in Delhi

Items Price
Consultancy Free
Professional Fee 9,999
GST 1800
Total LUT/Bond Filing Cost in Delhi 11,799

LUT/Bond cost other than Delhi

Items Price
Consultancy Free
Professional Fee 3,389
GST 610
Total LUT/Bond Filing Cost 3,999

*For Delhi, documents submission is also done from our side and customer don’t have to visit the tax department.

Is Bond/LUT is also required for Export of Services?

Under GST, the export of services are treated at par with export of Goods and hence, if you want to export the services under GST, then you need to either pay GST before making the payment or file bond or LUT with the tax department to export the services without making the payment of GST.

In other words, there are only two ways possible to export goods or services from India. The two ways are as follows:

  • - Export without payment of GST
  • - Export with payment of GST.

If any taxpayer wants to export without payment of IGST then he shall need to file a bond or a letter of undertaking to the department. A letter of undertaking (LTU) is the documents format of which is being prescribed under form GST RFD 11 under rule 96A.

In simple words, LTU is the document by which the taxpayer declares that he shall fulfill all the requirement of the GST with regard to export.

Requirement of Bank Guarantee under Bond

If you are filing the bond, then a bank guarantee equivalent to 15% of the bond amount is required to be filed. Bond amount is the amount equal to total GST liability on the total export turnover.

Let us understand it by way of example.
Mr. A incorporates a company to start the import export business. He expects the turnover to be around Rs.50 lakh. Calculate the bond amount and the BG required to be filed with the central tax department. (Assume GST rate 18%)

Total bond should be equal to tax liability on export. Hence, the bond amount shall be:

  • Bond Amount = Rs.9 lakh (18% of Rs.10 lakh)
  • Bank Guarantee = Rs.1,35,000/-

Is there any other route available for exports?

Under GST, there are two ways possible to export under GST; one way is to export by paying GST and claiming refund later on. The second way is to export without charging GST. If you choose the second way, then you shall need to file the LUT and bond.

However, if you want to chose the first way, then you shall need to pay IGST on every shipment and the same needs to be claimed as refund later on. Refund under GST can be claimed either by filing return or by filing the form GST RFD 1.

Other than the above two, there are no other way of exporting goods or services in India.

What all compliances to be made after submission of bond?

Once the application is accepted by the tax department, you need to submit the export documents to the tax department on regular basis. You can file the documents either on monthly, quarterly or on every shipment. This is because your application is generally valid for one year and needs to be renewed each year.

Therefore, if you do not renew the bond or LUT, then you shall become ineligible to export without payment of tax.

Important Feature of Bond and LUT filing under GST

There are many compliances which a company needs to follow, however, we would like to discuss few most important aspects about the bond and LUT filings:

NO Taxes

If LUT or bond is filed, then no taxes are required to be paid on exports.

Filings

The filing needs to be done manually and there is no online portal.

Annual

You need to visit tax dept. and submit the documents at regular intervals.

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Advantages & Disadvantages of LUT/Bond filing in India

Advantages of Bond/LUT Filing

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No tax on exports

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Save working capital

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No headache of monthly payment

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No headache of claiming refund

Disadvantages of Bond/LUT filing

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Takes 3 to 5 working days

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Documents submission each month

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CA fees for filing of bond/LUT

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Bureaucracy

FAQs about LUT/Bond Filing in India

Q. When is registration in other state required? Will giving service from Nasik to other state require registration in other state?

This is perhaps the very important question which is directly related to registration under GST. Many people are still confused as to when GST registration is required in India. Government has tried to resolve it by saying that If services are being provided from Nasik then registration is required to be taken only in Maharashtra and IGST to be paid on inter-state supplies.

 

Conclusion

In case you have any query, kindly write to us at info@hubco.in.

 

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Q. Whether civil contractor doing projects in various states requires separate registration for all states or a single registration at state of head office will suffice?

 

This is perhaps the most asked question by the civil contractors or work contractors because GST is not very clear on whether GST registration shall be required or not. Further, even the reply by the government is also not satisfactory. As per the government reply, A supplier of service will have to register at the location from where he is supplying services. This is perhaps the worst answer, we can expect from the government.

However, if you can read and analyse what government said, then we could line up the following points:

  1. The most important thing is to check location from where he is supplying services.

  2. Supplying word involves two ends, the beginning and the end. 

  3.  If a builder registered in Delhi went to
noida to perform a construction activity, in that case, the supply may be treated as IGST, this is because the person is not supplying from Noida as he do not have any fixed place of business there.

 

However, there maybe another view which states that registration should be taken in each state because the person is supplying services from that place i.e. Noida. 

 

Conclusion

The provision relating to civil projects is very confusing and hence we can expect a clarification from the government soon. In case of any doubt, please write to us at info@hubco.in.

 

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Q. A taxable person’s business is in many states. All supplies are below 10 Lakhs. He makes an Inter State supply from one state. Is he liable for registration?

 

The query is relating to the GST registration in India. Section 24 of CGST act deals with the mandatory GST registration in India. As per section 24, if any person makes any interstate supply of goods or services in India, then GST registration shall be mandatory irrespective of the turnover.

 

Exact reply by the government on Twitter

He is liable to register if the aggregate turnover (all India) is more than 20 lacs or if he is engaged in inter-State supplies.

 

Conclusion

In case you have any query, kindly write to us at info@hubco.in.

 

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Q. What if the dealer migrated with wrong PAN as the status of firm was changed from proprietorship to partnership?

This is one of the best query asked by the general public from all the India as many people have done that wrong. Hence, the government has clearly said that the new registration would be required because partnership has a separate legal status under GST from a proprietorship.

 

Exact Reply by government on twitter

New registration would be required as partnership firm would have new PAN. This is because partnership is different from proprietorship.

 

Conclusion

In case you have any query, kindly write to us at info@hubco.in.

 

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Q. Does aggregate turnover include value of inward supplies received on which Reverse Charge Mechanism (RCM) is payable?

Refer Section 2(6) of Central GST Act. Aggregate turnover does not include value of inward supplies on which tax is payable on reverse charge basis.

Section 2(6) of Central GST act is reproduced here below:

 

“Aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;

 

Conclusion

In case of any doubt, please write to us at info@hubco.in

 

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File LUT Bond for exports in India