Page 66 - Chemexcil NEWS August - September 2017 for web

Taking cognizance of the queries from the trade/industry, CBEC (GST Policy Wing) has issued Circular
No. 5/5/2017 – GST on the issues related to RCMC instead of Bank Guarantee, Documents for LUT, INR
receipts etc.

For the sake of your convenience, the major points from the Circular are reproduced/ highlighted as
follows:

a. Eligibility to export under LUT:

It is hereby clarified that any registered person who has received a minimum foreign inward
remittance of 10% of export turnover in the preceding financial year is eligible for availing the
facility of LUT provided that the amount received as foreign inward remittance is not less than Rs.
one crore. This means that only such exporters are eligible to LUT facilities who have received a
remittance of Rs. one crore or 10% of export turnover, whichever is a higher amount, in the previous
financial year. It may however be noted that a status holder as specified in paragraphs 3.20 and 3.21
of the Foreign Trade Policy 2015-2020 is eligible for LUT facility regardless of whether he satisfies
the above conditions.

b. Form for LUT:

Bonds are furnished on non-judicial stamp paper, while LUTs are generally submitted on the
letterhead containing signature and seal of the person or the person authorized in this behalf as
provided in said Notification.

c. Time for acceptance of LUT/Bond:

As LUT/bond is a priority requirement for export, including supplies to a SEZ developer or a SEZ
unit, the LUT/bond should be processed on top most priority and should be accepted within a period
of three working days from the date of submission of LUT/bond along with complete documents by
the exporter.

d. Purchases from manufacturer and form CT-1:

The scheme holds no relevance under GST since transaction between a manufacturer and a
merchant exporter is in the nature of supply and the same has not been exempted under GST even
on submission of LUT/bond. Therefore, such supplies would be subject to GST. The zero rating of
exports, including supplies to SEZ, is allowed only with respect to supply by the actual exporter
under LUT/bond or payment of IGST.

e. Transactions with EOUs:

Zero rating is not applicable to supplies to EOUs and there is no special dispensation for them.
Therefore, supplies to EOUs are taxable under GST just like any other taxable supplies. The EOUs,
to the extent of exports, are eligible for zero rating like any other exporter.

f. Forward inward remittance in Indian Rupee:

In terms of Para 2.52 of the Foreign Trade Policy (2015-2020), all export contracts and invoices shall
be denominated either in freely convertible currency or Indian rupees but export proceeds shall be
realized in freely convertible currency. However, export proceeds against specific exports may also
be realized in rupees, provided it is through a freely convertible Vostro account of a non-resident
bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal

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