Small Exporters will be able to Export without Bond-Bank Guarantee and IGST

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Small Exporters will be able to Export without Bond-Bank Guarantee and IGST

When exporters export, they are supposed to pay IGST. If they do not, they will have to provide a LUT (Letter of Undertaking)/Bond.

Who has to provide LUT?

Not all exporters can give LUT. Only those exporters who have accumulated foreign currency at least worth 1 Crore last year or has at least 10% of the turnover in foreign currency worth more than Rs. 2 Crore.

Businessmen that don’t pay LUT/IGST will have to give Bond

According to

Circular 4-4-2017 dated July 7, 2017,

the eligibility of a bond comes only when the exporter provides bank guarantee which could be as much as 15% of the bond. Then it was concluded that if the exporter is registered with Export Promotion Council, then the exporter will not have to provide bank guarantee. There are other situations as well where bank guarantee is not required with bond. Please go through the circular or talk to us know to the details.

GST Refund

The Government has claimed that you will received export refund within 7 days, but several crore rupees are in stuck in pool because the GST portal is not functioning properly. Since it would take time for the refund to be processed, the working capital of exporters is blocked and this has caused problems for exporters to run their business smoothly. For the reason, exporters met Finance Minister Shir Arun Jaitley and he assured a solution will soon be brought.

Press Release

To this effect, the Finance Minister has made public a press release which says that the government will soon release a notification according to which even small exporters will be able to release LUT and they won’t have to provide bank guarantee as well.

Facility of furnishing Letter of Undertaking extended to more exporters

Small exporters have brought to the notice of the Government the difficulties in furnishing bond with requisite bank guarantee. To facilitate exports under GST, it has been decided that the facility of furnishing Letter of Undertaking, in place of a bond, for exporting goods or services or both shall be allowed to exporters and no bank guarantee will be required. The relevant notification for this shall be issued in due course. The issue of cash blockage is expected to be partially addressed by this measure. More measures are under consideration.

DSM/SBS
(Release ID :171279)

We will be able to clarify further on the definition of small exporters when the notification is released and will also make efforts to make the information accessible to you as soon as possible.

It is our endeavor to keep you updated, always.