This circular provides clarifications on various issues relating to export of goods or services without payment of integrated tax under Bond or Letter of Undertaking (LUT), with a view to ensure uniform implementation of GST provisions.

It clarifies the eligibility for LUT, stating that any registered exporter who has received foreign inward remittance of at least ₹1 crore or 10% of export turnover in the preceding financial year, whichever is higher, is eligible to export under LUT. Status holder exporters under the Foreign Trade Policy are eligible irrespective of these limits. Exporters not meeting these conditions are required to furnish a bond.

The circular explains the form and execution of LUT and bonds, confirming that LUTs may be furnished on the exporter’s letterhead, while bonds must be executed on non-judicial stamp paper. LUT or bond should be accepted within three working days, and priority is to be given since it is a pre-condition for exports.

It further clarifies that CT-1 procedure is not applicable under GST, supplies to EOUs are taxable like normal supplies, and zero rating applies only to actual exports. Exports to SEZs, Nepal and Bhutan may be made under LUT subject to RBI guidelines on realization of export proceeds. Guidance is also provided on bank guarantees, jurisdictional authority for acceptance, acceptance of self-declarations, and retrospective applicability of the instructions from 1 July 2017.

Overall, the circular aims to simplify procedures and reduce procedural hurdles for exporters during the initial phase of GST implementation.