Export Documentation Under GST

According to Section 16 of IGST:

(1) “zero rated supply” means any of the following supplies of goods or services or both, namely:–

(a) export of goods or services or both; or

(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

(2) A registered person making zero rated supply shall be eligible to claim refund under either of the following options:-

a) he may supply goods or services or both under bond or Letter of Undertaking, without payment of integrated tax and claim refund of utilised input tax credit; or

(b) he may supply goods or services or both, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied.

Let’s understand above mentioned provisions:
Export can be made either:

• on production of LUT / Bond ,or

• with payment of GST,

• In case of IGST payment,

• the said payment can be claimed as Refund in the Return and

• payment means after adjustment of INPUT TAX CREDIT

In case of Non GST payment, Production of LUT / Bond is mandatory.

The following documents are commonly used in exporting:

Pro-forma Invoice

When a potential buyer’s send enquiry to an exporter, requesting to send information regarding price, quality, size, weight, grade, mode of delivery, payment terms, type of packing for export of goods. The exporter then sends a reply to the enquiry in the form of quotation known as pro-forma invoice.

Bill of lading

A bill of lading is a legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the predetermined destination.

Commercial Invoice

The commercial invoice is a legal document between the supplier and the customer that clearly describes’ the sold goods, and the amount due on the customer. The commercial invoice is one of the main documents used by customs in determining customs duties.

Certificate of origin

The certificate of origin acts as a proof that goods have actually being manufactured in the country from where export is taking place. Having received the excise clearance, exporter may have to obtain a certificate of origin from the trade consulate located in the exporter country.

Inspection Certification

Different authorised institutions such as Tedfo, SGS, Intersect, Bureau Varitus provides all necessary quality assurance certificate to ensure that only good quality products are exported from a country.

Dock receipt & warehouse receipt

A dock receipt & warehouse receipt is issued by the warehouse supervisor or port officer certifying that goods have been received by the shipping company. Dock receipt are normally prepared by shippers or forwarders.

Destination control statement

The destination control statement is a legal statement that the goods you are exporting are destined to the country indicated in all the shipping documents.

Insurance certificate

After forwarding the goods the exporting firm gets goods insured with an insurance company to protect against the risks of loss or damage of goods due to the perils of sea during transit.

Export license(ERC)

Having become assured about payment, the exporter needs to apply for export license to the appropriate authority.

The following documents are needed for issuing ERC:

Attested photocopy of valid trade license, Attested photocopy of membership certificate from local chamber of commerce or trade association, Attested photocopy of TIN, Original copy of Treasury Chalan, If a partnership business, partnership deed (Certificate attested copy), If a limited company company, attested copy of certificate of incorporation, articles of association & memorandum of association are needed.Bank certificate.

Export packing list

A packing list is prepared by the shipper & sent to consignee for accurate tallying of the delivered goods which included in each shipping package, giving the quantity, description & weights of the contents.

WHO CAN OPT FOR LETTER OF UNDERTAKING (LUT) ?

LUT can be filed by an exporter who is :

• either a status holder, or

• has received convertible foreign exchange @ 10% of turnover or minimum of Rs. 1 crores in the preceding financial year

and has not contravened any provision of law which attracts evasion of tax of at least Rs. 2.5 crores.

Remember that non-contravention of any provision of law which attracts evasion of tax of at least Rs. 2.5 crores. is a mandatory condition in order to opt LUT.

If an assesses do not fulfil the above conditions, then he can file Bond along with Bank Guarantee.

Now comes the documentation required for facilitation of EXPORTS:

Circular No. 4/4/2017-GST says that every registered person exporting goods or services without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT) in FORM GST RFD-11.

Therefore, As per Department Instruction , For filing LUT, the following should be filed:

(i)  Request Letter on Letter Head,

(ii) GST RFD-11,

(iii) Letter of Undertaking on Letter Head,

(iv) Certificate of status holder or Bank Certificate mentioning the facts that the exporter has received the due foreign remittance amounting to 10% of turnover which would not be less than Rs. 1 crore

(v) Undertaking on Letter Head that the exporter had not been prosecuted for an offence where tax evaded exceeded Rs. 2.5 crores.

(vi) GST Registration Certificate   (vii) IEC Code   (viii) Copy of return filed under DVAT or Service tax for the preceding financial year

(ix) Exports Bill / invoices.

 After filing of these documents, on scrutiny, deficiency shall be informed and after proper satisfaction, Letter of Acceptance shall be issued and that shall be used for each export subsequently.

As per Department Instruction , For filing Bond, the following should be filed:

(i) Request Letter on Letter Head,

(ii) GST RFD-11,

(iii) Bond on Rs. 100/- Stamp Paper

(iv) GST Registration Certificate

(v) IEC Code

(vi) Copy of return filed under DVAT or Service tax for the preceding financial year

(vii) Exports Bill / invoices.

(viii) Bank Guarantee of 15% of tax involved

Bond and Bank Guarantee should be in favor of Commissioner, State Tax, Department of Trade & Taxes, Govt. of NCT of Delhi.

After filing of these documents, on scrutiny, deficiency shall be informed and after proper satisfaction, Bond shall be issued and that shall be used for the facilitation of that export.

Now, here are some common points for LUT and Bond:

• LUT / Bond would be filed by an exporter of an estimated tax liability which shall be valid for a particular financial year.

• LUT / Bond would be a running document with debit and credit amount as per billing and clearing system.

• If conditions of Exports are not fulfilled, then exporter would be liable for consequential Tax and interest and LUT / Bond would become in-operative and further be automatically active on payment of due tax and interest.

• LUT / Bond amount can be up-graded at any time at the option of the exporter.

• This LUT / Bond formalities has to be complied every year in the beginning for full financial year.

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