India is one of the fastest-growing economies in the world, and as such, it is an attractive destination for businesses looking to expand their operations overseas. If you are one of the many SME business owners or startup founders in India looking to export your products, it is important to understand the procedures for doing so under the GST regime.
One of the key requirements for exporting under GST is the submission of a Letter of Undertaking (LUT) or a bond. This is a document that allows exporters to ship their goods without paying any GST upfront. It is important to note that this facility is available only to those exporters who have a proven track record of exports and have not been found to have committed any tax evasion in the past.
To apply for an LUT, exporters must first ensure that they are registered under GST and have a GSTIN. They must then submit an application for an LUT on the GST portal. This application must be accompanied by a bank guarantee or a bond, as specified by the GST authorities. Once the application has been verified and approved, the exporter will be able to export their goods without paying any GST upfront.
It is important to note that the LUT is valid for a period of one year and must be renewed annually. Failure to renew the LUT can result in the payment of GST upfront on all exports.
Another important aspect of exporting under GST is the refund of Integrated Goods and Services Tax (IGST). When an exporter exports goods, they are eligible for a refund of the IGST paid on the inputs used in the production of those goods. To claim this refund, the exporter must file a refund application on the GST portal within two years from the date of export.
The refund application must be accompanied by various documents, including an invoice, a packing list, a bill of lading, and a shipping bill. It is important to ensure that all the details in these documents are accurate and match the details entered in the GST portal. Any discrepancies can result in delays or even rejection of the refund claim.
Once the refund application has been filed, it will be processed by the GST authorities. The exporter can track the status of their refund application on the GST portal. If the refund is approved, the exporter will receive the refund amount in their bank account within a specified period.
In conclusion, exporting under GST involves various procedures and requirements, including the submission of an LUT or bond and the filing of a refund application for IGST paid on inputs. SME business owners and startup founders must ensure that they understand these procedures and comply with all the requirements to avoid any delays or penalties.
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