Earlier, the facility to export under LUT was provided only to specified persons (Notification No. 16/2017-Central Tax dated 7th July, 2017) i.e.

(a) a status holder as specified in the Foreign Trade Policy 20152020; or

(b) who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than Rs. 1 crore, in the preceding F.Y.

Meaning thereby other exporters i.e. exporters other than those covered under points mentioned supra are required to furnish bond, equivalent to amount of tax, for export of goods/services without payment of tax. In addition, these exporters are also required to furnish bank guarantee equivalent to 15% of bond amount.

In addition to blockage of working capital, procedural difficulties are faced by exporters in furnishing of bond along with bank guarantee. To remove these hurdles, Government vide Notification No. 37/2017-Central Tax dated 4th October, 2017 has extended the facility of export under LUT to all exporters except those who have been prosecuted for any offence under the CGST Act or the IGST Act or any of the existing laws and the amount of tax evaded in such cases exceeds Rs. 250 lakh.

A bond, accompanied by bank guarantee of 15% of the bond amount will be required to be furnished by those persons who have been prosecuted for cases involving an amount exceeding Rs. 250 lakh.