The government will allow the export of goods and services without payment of integrated goods and services tax provided exporters furnish a letter of undertaking in lieu of a bond.Exporters will have to furnish a letter of undertaking on the letterhead of the registered taxpayer, and will have to pay the IGST liability if they fail to export goods or don’t receive payment for such exports, the government said in an official notification. The letter of undertaking will act as a guarantee that if there is a demand to pay tax, the exporter will be liable to pay, it added.If the exporter fails to export goods or receive payment for exports within the period prescribed by the government, and does not pay the IGST with interest within 15 days of that prescribed period, the facility of export without payment of IGST will be withdrawn till the time the tax is paid, PwC India said in a note, quoting another government circular.
The decision came after smaller exporters said they were facing difficulties in furnishing a bond with bank guarantee. Abhishek Jain, indirect tax partner at EY India, said this would bring a relief to small exporters (having export turnover of less than Rs 1 crore) who were earlier required to submit a bond along with bank guarantee, which was resulting in procedural hassles and cash flow issues.Under GST, exporters are required to pay Integrated GST on exports and then claim refunds. They face working capital crunch as the government is yet to process refunds. Earlier, no duty was paid at the time of exports.
The exemption facility will not be available to those who have been prosecuted for any offence under GST and where the amount of tax evaded is Rs 2.5 crore.“The provisions of this notification shall mutatis mutandis apply in respect of zero-rated supply of goods or services or both made by a registered person (including a special economic zone developer or SEZ unit) to an SEZ developer or SEZ unit without payment of integrated tax,” the notification said.