Goods and Services Tax – GST – By: – CASanjay Kumawat – Dated:- 18-8-2017 Last Replied Date:- 19-8-2017 – I am posting this article in continuation to my earlier article on 'ZERO RATED SUPPLY WITH EXPORT PROCEDURES (BOND/LUT OR REFUND ROUTE)- Part- I'. The Central Government vide Circular No. 5/5/2017 – GST dated 11th August 2017 has clarified issues related to the furnishing of Bond/Letter of Undertaking for Exports. A large number of communications have been received from the field formations and exporters citing variation in the interpretation 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. Therefore, in exercise of powers conferred under section 168 (1) of the Central Goods and Services Tax Act, 2017, for the purpose of uniformity in the implementation of the Act, following issues are being clarified hereunder: Que. 1 Who is eligible to export under Letter of Unde
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ar. A few illustrative cases are as follows: · Case 1 : An exporter had a turnover of ₹ 15 crore in the previous financial year. He would be eligible for LUT facility if remittance received against this export is ₹ 1.5 crore or more (10% of export turnover is more than ₹ 1 crore) · Case 2 : An exporter had a turnover of ₹ 5 crore in the previous financial year. He would be eligible for LUT facility if remittance received against this export is ₹ 1.0 crore or more (10% of export turnover is less than ₹ 1 crore) · Case 3 : An exporter has an export turnover of ₹ 2 crore. He has received ₹ 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 ₹ 1 crore. · Case 4 : An exporter has export turnover of ₹ 40 crore. He has received ₹ 2 Crores as foreign inward remittances in FY 2016-17 which
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s. b) 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. c) 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. d) 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 : 3 $ · Two Star Export House : 25 $ · Three Star Export House : 100 $ ·
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without payment of central excise duty. The scheme holds no relevance under GST since transaction between a manufacturer and a merchant exporter is in the nature of supply and the same has not been exempted under GST even on submission of LUT/bond. Therefore, such supplies would be subject to GST. The zero rating of exports, including supplies to SEZ, is allowed only with respect to supply by the actual exporter under LUT/bond or payment of IGST. Que. 5 What is the GST impact on transactions with EOUs ? Clarification: Zero rating is not applicable to supplies to EOUs and there is no special dispensation for them. Therefore, supplies to EOUs are taxable under GST just like any other taxable supplies. The EOUs, to the extent of exports, are eligible for zero rating like any other exporter. Que. 6 What is the treatment of forward inward remittance in Indian Rupee under GST regime? Clarification: Various representations have been received with respect to receipts of proceeds of supplies in
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LUT instead of a bond for supplies of goods to Nepal or Bhutan or SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or convertible foreign exchange as long as they are in accordance with applicable RBI guidelines. It may also be noted that supply of services to SEZ developer or SEZ unit will also be permissible on the same lines. The supply of services, however, to Nepal or Bhutan will be deemed to be export of services only if the payment for such services is received by the supplier in convertible foreign exchange. Que. 7 What are the different requirements of furnishing bank guarantee under GST regime for export ? Clarification: Circular No. 4/4/2017 dated 7th July, 2017 provides that bank guarantee 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 provis
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ered persons, having one Permanent Account Number, maybe ₹ 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. Que. 8 Who will be the Jurisdictional officer for submission of LUT/Bond? Clarification : It has been clarified in Circular Nos. 2/2/2017 – GST dated 4th July, 2017 and 4/4/2017 – GST dated 7th July, 2017 that Bond/LUT shall be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter. The exporter is at liberty to furnish the bond/LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. It is reiterated that the Central Tax officers shall facilitate all exporters whether or not the exporter was registered with the Central Government in the earlier regime. Que. 9 What is the requirement fo
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