As per the circular, Any person making zero rated supply (i.e. any exporter) shall be eligible to claim refund under either of the following options, namely: –
(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund un-utilized input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 (Refunds) of the Central Goods and Services Tax Act or the rules made there under (i.e. the Central Goods and Service Tax Rules, 2017).
We are seeking more clarity on LUT and Bond part i.e. Option ‘a’ of above.
We appreciate if you can furnish further clarity in terms of
- Bank guarantee format
- Amount of Bank Guarantee
- Complete procedure to follow with department to obtain permission for Export without payment of duty.
Thanks for your query.
Please find below a recent notification and circular issued by CBEC in relation to furnishing of Bond/ letter of undertaking (‘LUT’).
- Vide Notification no 16/2017-Central Tax dated July 7, 2017 following category of registered persons have been specified who are eligible to give a LUT instead of a Bond for export of goods or services or both without payment of IGST:
- A status holder as specified in paragraph 5 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 he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount of tax evaded exceeds Rs 2.5 crores
- Exports may be allowed under existing LUTs/Bonds till July 31, 2017.
- Exporters to submit the LUTs/Bond in the revised format latest by July 31, 2017.
Procedure for furnishing Bond
- Procedure for submission and acceptance of bond has already been prescribed vide Circular No. 2/2/2017-GSTdated 4th July, 2017 (bond to be furnished manually to the jurisdictional Deputy / Assistant Commissioner in Form RFD-11 till the module for furnishing same is available on common portal).
- To be furnished on non-judicial stamp paper of the value as applicable in the State in which bond is being furnished.
- Running bond to be furnished on self-assessment basis in GST RFD-11 to cover the tax involved in the export. Exporter to ensure that the bond amount is sufficient to cover the liability, in case of shortage, fresh bond to be furnished.
- Jurisdictional Commissioner may decide on value of bank guarantee. If satisfied with track record, bank guarantee may be dispensed with.
- In general, bank guarantee should normally not exceed 15% of bond value.
Procedure for furnishing LUT
- The LUT has to be furnished in duplicate in a financial year in form GST RFD-11. Validity of 12 months.
- To be executed by the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorized by such working partner or Board of Directors of such company or proprietor on the letter head of the registered person.
Acceptance of Bond/ LUT
- To be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter.
- Can be furnished before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented.
- Commissioner of State Tax can direct, by general instruction to exporter, the Bond/LUT in all cases to be accepted by Central tax officer till such time the said administrative mechanism is implemented.
We request you to kindly advise tax liability under GST for import of service product (software) into India and re-expert of same without any modification.
Import of software services / product would be deemed as inter-state supply and thus shall be subjected to IGST @ 18%. Exports of services are treated as the zero rated supply and hence are exempted from GST. Hence, the supplier shall be allowed to export the goods/services without charging any tax, provided the place of supply is outside India, and can avail the CGST/SGST and IGST credits/ refund paid on imported software input cost. However, the procedures prescribed for export without payment of tax would have to be followed. Please note that fixing the place of supply is dependent on facts and it would be best for you to obtain professional advice on this.
I am writing this as a followup to Chetan’s email forwarding rates for GST
My company is a startup and provide Training, Recruitment and Contracting people to Software Services companies in India.
Will you be able to let me know
a) is there any concessions for a start up
b) If no, what are the rates for the above three
I am unable to find details in the doc, may be search does not give out these key words
Please find below our response.
a) is there any concessions for a start up
There are no concessions specific to start-ups under the GST law.
b) The rates for the 3 categories of services provided by you are as follows:
Training: 18% — 999293 Other education and training services and educational support services: commercial training and coaching services
Recruitment: 18% — 99851 Employment services including personnel search, referral service and labour supply service
(6th digit code may be identified from the Schedule annexed to Notification No. 11 on Central Tax Rates, based on the applicability)
Contracting staff: 18% — 998513 Employment services including personnel search, referral service and labour supply service: Contract staffing services