Political News

CBEC relaxes norms on bonds under GST to help exports take off

Dated NEW DELHI, JULY 9, 2017

CBEC relaxes norms on bonds under GST to help exports take off

In a significant relief for exporters who have been facing difficulties under the new tax regime, the Finance Ministry has now relaxed rules for Goods and Services Tax and has said that exports can continue under existing bonds and letters of undertaking till July 31. Exporters can now submit bonds or LUTs in the revised format for GST by the end of the month.
“Various communications have been received from the field formations and exporters that difficulties are being faced in complying with the procedure prescribed for making exports of goods and services without payment of integrated tax with respect to furnishing of bonds or LUT,” said the Central Board of Excise and Customs (CBEC) in a recent circular.
Under rule 96A of Central GST, exporters have to furnish a bond or LUT in Form GST RFD-11 instead of payment of integrated GST to release their consignments. The CBEC has clarified that exporters can submit a running bond instead of a consignment-wise bond, which would cover the amount of tax involved in the export as estimated by the exporter.
Further, the bank guarantee should not exceed 15 per cent of the bond amount and jurisdictional Commissioner can make a relaxation based on the track record of the exporter.
12-month validity
The CBEC has also said that the LUT will be valid for a period of 12 months. The CBEC has notified persons who are eligible to submit an LUT instead of a bond. These are status holders under the Foreign Trade Policy 2015-2020 or those who have received foreign inward remittances of over ₹1 crore in the preceding year. Urging Central tax officers to help exporters, the CBEC further said that exporters can submit the bond or LUT to the jurisdictional Deputy or Assistant Commissioner having jurisdiction over the principal place of business of the exporter.
“The exporter is at liberty to furnish the bond or LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented,” it has said. The existing practice of sealing containers with a bottle seal will also continue till September 1, it said.
“These clarifications bring much needed relief for the exporters with regard to export without payment of IGST… Now, the assessees can continue exports without payment of IGST under the relaxed procedure,”.
The relaxations by the CBEC come after reports that exports were stuck at the factory gate due to a lack of procedural clarity on submitting the bond or LUT. The other option of payment of IGST (which is levied on exports and is refundable later) would have created cash flow problems. While the Commerce Ministry and CBEC were trying to ensure a smooth roll out for exporters, there were worries that the lack of clarity could also impact exports in the coming month.

Source: www.taxindiaonline.com