Understanding Circular No. 8/8/2017-GST: Key Highlights for Exporters

02March

Understanding Circular No. 8/8/2017-GST: Key Highlights for Exporters

<p class="sc-44py6y-2 lfCyiX" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:16px;font-style:normal;font-weight:400;margin:0px 0px 16px;word-spacing:0px;">The Circular No. 8/8/2017-GST, issued by the Government of India on October 4, 2017, provides essential clarifications regarding the procedures for exporters concerning the submission of Bonds and Letters of Undertaking (LUT) under the Goods and Services Tax (GST) regime. Here are the key highlights that every exporter should be aware of:</p><h1 class="sc-44py6y-1 cFuFxz" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:18px;font-style:normal;line-height:24px;margin:16px 0px 12px;word-spacing:0px;"><strong>1. </strong><strong style="font-weight:bolder;">LUT Submission and Acceptance</strong></h1><p class="sc-44py6y-2 lfCyiX" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:16px;font-style:normal;font-weight:400;margin:0px 0px 16px;word-spacing:0px;">Exporters can now submit LUTs to export goods or services without paying integrated tax. The circular mandates that LUTs must be processed on a priority basis and accepted within three working days; if not, they are deemed accepted. This streamlines the export process and reduces delays.</p><h1 class="sc-44py6y-1 cFuFxz" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:18px;font-style:normal;line-height:24px;margin:16px 0px 12px;word-spacing:0px;"><strong>2. </strong><strong style="font-weight:bolder;">Self-Declaration for LUT</strong></h1><p class="sc-44py6y-2 lfCyiX" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:16px;font-style:normal;font-weight:400;margin:0px 0px 16px;word-spacing:0px;">A significant change is the acceptance of self-declaration by exporters, confirming that they meet the conditions for LUT. This simplifies the documentation process, allowing exporters to focus on their core business activities while ensuring compliance.</p><h1 class="sc-44py6y-1 cFuFxz" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:18px;font-style:normal;line-height:24px;margin:16px 0px 12px;word-spacing:0px;"><strong>3. </strong><strong style="font-weight:bolder;">Bond Requirements</strong></h1><p class="sc-44py6y-2 lfCyiX" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:16px;font-style:normal;font-weight:400;margin:0px 0px 16px;word-spacing:0px;">For exporters who have been prosecuted for tax-related offenses exceeding ₹250 lakhs, a bond is mandatory, accompanied by a bank guarantee of 15% of the bond amount. This measure aims to mitigate risks associated with tax evasion while still facilitating legitimate exports.</p><h1 class="sc-44py6y-1 cFuFxz" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:18px;font-style:normal;line-height:24px;margin:16px 0px 12px;word-spacing:0px;"><strong>4. </strong><strong style="font-weight:bolder;">Running Bond Clarification</strong></h1><p class="sc-44py6y-2 lfCyiX" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:16px;font-style:normal;font-weight:400;margin:0px 0px 16px;word-spacing:0px;">Exporters are required to furnish a running bond that covers their self-assessed estimated tax liability on exports. If the bond amount is insufficient, exporters must provide a fresh bond, ensuring that their tax liabilities are adequately covered.</p><h1 class="sc-44py6y-1 cFuFxz" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:18px;font-style:normal;line-height:24px;margin:16px 0px 12px;word-spacing:0px;"><strong>5. </strong><strong style="font-weight:bolder;">No Special Provisions for EOUs</strong></h1><p class="sc-44py6y-2 lfCyiX" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:16px;font-style:normal;font-weight:400;margin:0px 0px 16px;word-spacing:0px;">The circular clarifies that zero rating does not apply to supplies to Export Oriented Units (EOUs), which are treated like any other taxable supplies under GST. However, EOUs are eligible for zero rating on their exports, aligning them with other exporters.</p><h1 class="sc-44py6y-1 cFuFxz" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:18px;font-style:normal;line-height:24px;margin:16px 0px 12px;word-spacing:0px;"><strong>6. </strong><strong style="font-weight:bolder;">Documentation and Compliance</strong></h1><p class="sc-44py6y-2 lfCyiX" style="background-color:rgb(229,238,255);color:rgb(26,26,26);font-family:'Source Sans 3', 'Adjusted Arial Fallback', sans-serif;font-size:16px;font-style:normal;font-weight:400;margin:0px 0px 16px;word-spacing:0px;">Exporters must ensure that all documentation, including the bond and LUT, is correctly filled and submitted. The bond should be executed on non-judicial stamp paper, and the LUT must be on the registered person's letterhead, signed by authorized personnel.<a href="https://cms.plasament.com/storage/circular-08.pdf">Circular 08</a><br> </p>

Understanding Circular No. 8/8/2017-GST: Key Highlights for Exporters

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