How to execute Bond/LUT/Bank-Guarantee for Export under GST


Exporters can furnish bond or letter of undertaking instead of paying Integrated GST at the time of exporting goods and services with effect from July 1, 2017. In case the IGST has been paid, the exporters can seek refund of the tax paid.


IGST is levied on the supply of any goods and services in the course of inter-state trade or commerce. As per the IGST Act, export and import of goods and services are deemed to be a supply in the course of inter-state trade or commerce. Supplies of goods and services for exports have been categorised as 'Zero Rated Supply' implying that goods could be exported under bond or Letter of Undertaking without payment of integrated tax followed by claim of refund.


To help the exporters, procedure on how to execute Bond/LUT/Bank-Guarantee etc has been laid down. There may be variations in procedure from jurisdiction to jurisdiction. Please do not follow the guidelines below as it is, and make amendments as applicable. We will not be responsible for any kind of damage (monetary, time, personal or any other type) which may take place because of the usage of the content in the article.

How to execute Letter of Undertaking required for exporting without payment of IGST

Following are the instructions on how to execute Letter of Undertaking required for exporting without payment of IGST.

  • All goods and service exporters are eligible to submit LUT except the exporters who have been prosecuted and the amount of tax evaded exceeds Rs. 2.5 Lakhs. The exporters who are not eligible to submit LUT can either avail the option to "Pay GST and then claim Refund" or to "Submit Bond with Bank Guarantee and export without payment of GST".

  • LUT can be executed on your own letter head or can also be executed on non-judicial stamp paper in the favour of President of India, through the concerned Assistant Commissioner.

  • If you choose to execute LUT on Stamp Paper, Stamp Paper for LUT can be of value Rs. 100/- or more (or as prescribed by concerned Assistant Commissioner). Stamp paper should be purchased from your own State (same jurisdiction) i.e. where the concerned Range Office is located. It should be purchased in your own name (with address).

  • LUT-Language does not fit well on single page, so you have to use second page. Second page can be any blank page to print the extra content.

  • You have to self-sign the LUT on first page as well as on second page. Second page has to be signed by two witnesses also who can be any persons like your employees. Then, LUT has to be attested by a Notary.

  • You have to submit self-signed copy of your own ID-Proof (Like Aadhar Card). You also have to submit the copies of ID-Proofs (Like Aadhar Card) of witnesses, which has to be self-signed by them.

  • Download LUT Specimen is here. Text marked with red color need to be modified as per your own context.

How to execute Bond required for exporting without payment of IGST

Following are the instructions on how to execute Bond required for exporting without payment of IGST.

  • In case you are not eligible to execute LUT, you can execute Bond.

  • Bond of amount equivalent to the tax liability (usually annual liability) has to be executed on non-judicial stamp paper in the favour of President of India, through the concerned Assistant Commissioner.

  • In the bond, you have to mention the Bank Guarantee amount which is equivalent to 15% of the bond value (or lesser if allowed by Assistant Commissioner).

  • Stamp Paper for Bond can be of value Rs. 500/- or more (or as prescribed by concerned Assistant Commissioner). Stamp paper should be purchased from your own State (same jurisdiction) i.e. where the concerned Range Office is located. It should be purchased in your own name (with address).

  • Bond-Language does not fit well on single page, so you have to use second page. Second page can be any blank page to print the extra content.

  • You have to self-sign the bond on first page as well as on second page. Second page has to be signed by two witnesses also who can be any persons like your employees. Then, Bond has to be attested by a Notary.

  • You have to submit self-signed copy of your own ID-Proof (Like Aadhar Card). You also have to submit the copies of ID-Proofs (Like Aadhar Card) of witnesses, which has to be self-signed by them.

  • Download Bond Specimen is here. Text marked with red color need to be modified as per your own context.

How to execute Bank Guarantee required for exporting without payment of IGST

Following are the instructions on how to execute Bank Guarantee required for exporting without payment of IGST.

  • Bank Guarantee of amount equivalent to 15% of the bond value (or lesser if allowed by Assistant Commissioner) has to be executed on non-judicial stamp paper in the favour of President of India, through the concerned Assistant Commissioner.

  • Stamp Paper for Bank guarantee can be of value Rs. 50/- or more as prescribed by bank. Stamp paper should be purchased from state where the bank is located. It should be purchased in the name of Bank (with address) which is executing the bank guarantee.

  • In case of purchasing the stamp paper from e-Sampark, you need to fill a small form where you need to mention the 1stparty name and 2nd party name. Your own name (with address) has to be filled in space left for first party, and Bank’s name (with address) has to be filled in the space left for second party. FYI, in this case, Assistant Commissioner (or President of India) is third party.

  • Bank may refuse to execute bank guarantee in the name of President of India. In such case, you can ask bank to refer RBI’s circular on link https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=8129 . Under this link, look at section 2.2.7.2 which states that when bank guarantee is issued in favour of President of India, communication has to be made with concerned department, not President of India. Which does not means that Bank Guarantee cannot be issued in favour of President of India.

  • Download Bank Guarantee Specimen is here. Text marked with red color need to be modified as per your own context.

Additional Instructions on how to execute Bond/LUT required for exporting without payment of IGST

Following are the Additional Instructions on how to execute Bond/LUT required for exporting without payment of IGST.

  • You have to submit Bond/LUT (in original) in the prescribed format.

  • You have to submit Bank Guarantee (in original) in the prescribed format.

  • You have to fill FORM GST RFD-11 and submit the same.
  • You have to submit self-signed copy of your own ID-Proof (Like Aadhar Card).

  • You also have to submit the copies of ID-Proofs (Like Aadhar Card) of witnesses who have witnessed the Bond/LUT. These copied has to be self-signed by them.

  • In case of LUT, you have to submit a declaration on your letter head that you have been prosecuted under any relevant law regarding evasion of tax or the amount of tax evaded did not exceed Rs. 2.5 Lakhs.

  • You have to submit self-signed copy your PAN, and Import-Export-Code (IEC).

  • You have to submit whole set of documents in a file properly mentioning the purpose of bond (i.e. Bond for Exporting Good and Services without payment of IGST), along with your name, address and contact info.

  • You have to submit the file in the concerned range office, where concerned Superintendent and Inspector will inspect the accuracy of file. Once file contents are as required, concerned Superintendent and Inspector will sign the file and also attach a forwarding letter.

  • Once file is signed by concerned Superintendent and Inspector, you have to submit the file in the office of Assistant Commissioner. Upon verification of the file, Assistant Commissioner will issue you a letter about the acceptance of Bond.

  • Once you have received the acceptance letter, you can start exporting.