Exporters: Bank Guarantee not required for bond under GST if you are registered with Export Promotional Council (RCMC)

Introduction

To provide relief to lakh of small exporters of goods or services under GST, government has done away with the requirement for bank guarantee for filing of bond in some cases.

Under GST, if any person wants to export the goods or services without payment of GST, then the same person needs to file LUT or bond to the tax department. Bond is filed when the total export proceeds is less than 1 Cr in the previous financial year.

Previously, to submit bond, a bank guarantee is required to be filed along with the bond which should be equivalent to 15% of the IGST on exports.

However, to remove the genuine hardship, the government has authorised the commissioner to waive off the requirement for bank guarantee. Further the government has also advised the department to implement the guidelines liberally.

Whether exporter registered with EPC (RCMC) does not require bank guarantee?

The government via circular has said that if any exporter is registered with the Export Promotional Council (EPC) can be allowed to submit bond without bank guarantee on submission of a self attested copy of the proof of registration with the Export Promotional Council (EPC).

What if my total receipt in India is more than 1 crore but due to state wise registration, separately it is less than 1 crore?

As per the government circular, if the exporter has a total receipt of more than 1 crore on all India bases but state wise it is less than 1 crore, in that case as well, the exporter may submit bond without bank guarantee.

The relevant aspect is as follows:

“if a person having one Permanent Account Number is registered in more than one State. It may so happen that a registered person may not satisfy the condition regarding foreign inward remittances in respect of one particular registration, because of splitting and accountal of receipts and turnover across different registered person with the same PAN. But the total amount of inward foreign remittances received by all the registered persons, having one Permanent Account Number, maybe Rs. 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.”

For any other case?

If you are not covered in both the above cases, then you need to request the Commissioner to waive off the requirement for bank guarantee and allow you to file the bond without bank guarantee.

Conclusion

In case you want to file the LUT or bond, please write to us at info@hubco.in

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