India's Goods and Services Tax (GST) is a unified tax system that has replaced various state and central taxes. GST is levied on the supply of goods and services within India, and it is also applicable to exports. Exporters are eligible for various benefits under GST, but they need to follow certain procedures to avail those benefits.
One of the most important procedures for exporters is to furnish a bond or a Letter of Undertaking (LUT) to the authorities. In this article, we will discuss the requirements for furnishing a bond or a LUT in detail.
A bond is a financial instrument that acts as a guarantee for the payment of taxes and duties. In the context of GST, a bond is required to be furnished by exporters to the authorities to ensure that they pay the tax dues on time. The bond is a legal commitment by the exporter to pay the tax dues within the specified period.
An LUT is a written undertaking by the exporter that they will fulfill their tax obligations without furnishing a bond. LUT is an alternative to the bond, and it is available only to certain categories of exporters.
Exporters can furnish LUT instead of a bond if they satisfy the following conditions:
The format of the LUT and bond to be furnished by the exporters is specified in Form RFD-11. The form has two parts- Part A and Part B. Part A is the bond/LUT, and Part B is the acknowledgement.
The procedure for furnishing the bond/LUT in RFD-11 is as follows:
The procedure for furnishing a bond or a LUT under GST is an essential compliance requirement for exporters. Exporters need to ensure that they fulfill the eligibility conditions and furnish the bond/LUT in the prescribed format to avail the benefits under GST. The format of the bond/LUT is specified in Form RFD-11, and exporters need to follow the procedure specified by the authorities for furnishing the bond/LUT.
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