Form GST RFD-11: Facilitating Exports Without Upfront IGST Payment

Under the Goods and Services Tax (GST) regime in India, exports of goods or services are treated as “zero-rated supplies.” This means that the taxes on these supplies are effectively zero. Exporters have two options to achieve this zero-rating: either export with payment of Integrated Tax (IGST) and then claim a refund of the paid tax, or export without payment of IGST by furnishing a Bond or a Letter of Undertaking (LUT). The mechanism for furnishing this Bond or LUT is through Form GST RFD-11.

This article explains the purpose and significance of Form GST RFD-11, who needs to file it, the difference between a Bond and an LUT, and how it facilitates smooth export operations under GST.

What is Form GST RFD-11?

Form GST RFD-11 is the prescribed form used by registered taxpayers (exporters) to furnish a Bond or a Letter of Undertaking (LUT) to the GST authorities. This is a mandatory requirement for those who wish to export goods or services or make supplies to Special Economic Zone (SEZ) units/developers without paying Integrated Tax (IGST) upfront.

Purpose: The core purpose of RFD-11 is to provide a declaration or guarantee to the government that the exporter will fulfil the conditions of export, primarily ensuring that the goods or services are indeed exported within the stipulated time frame. This allows the exporter to claim the benefit of zero-rated supply without blocking their working capital by paying IGST.

Why is RFD-11 Filed?

Exporters file Form GST RFD-11 to avail the facility of making zero-rated supplies without the requirement to pay IGST. This is crucial for:

• Working Capital Management: By not paying IGST upfront, exporters avoid locking up funds that can be used elsewhere in their business operations.
• Streamlined Process: Exporting under LUT (or Bond) is generally considered a smoother process compared to the IGST refund route, which involves paying tax first and then following up for a refund.

LUT vs. Bond: Who Needs to File Which?

The choice between furnishing an LUT or a Bond through RFD-11 depends on the exporter’s compliance record:

• Letter of Undertaking (LUT): This is a self-declaration by the exporter. It can generally be furnished by registered persons who have a proven track record of compliance, such as those who have not been prosecuted for any offence under the CGST Act, 2017 or the IGST Act, 2017, or any of the existing laws in cases where the amount of tax evaded exceeds two hundred and fifty lakh rupees. Furnishing an LUT is simpler and does not require a bank guarantee.
• Bond: Exporters who are not eligible to furnish an LUT are required to furnish a Bond. This typically involves executing a bond on non-judicial stamp paper and may also require a bank guarantee. The bond amount should be sufficient to cover the estimated tax liability on the intended exports.

Both LUT and Bond furnished through RFD-11 serve as an undertaking to the government that the exporter will fulfil their export obligations.

What Does the Bond or LUT in RFD-11 Entail?

By furnishing a Bond or LUT via Form GST RFD-11, the exporter undertakes the following:

• To export the goods or services within the period specified in the relevant rules (generally within three months from the date of issue of the export invoice, though extensions may be granted by the Commissioner).
• To comply with all the provisions of the GST Act and Rules in respect of exports.
• In case of failure to export within the specified period, to pay the Integrated Tax along with interest at the rate notified under Section 50 of the CGST Act, 2017, from the date of issue of the export invoice till the date of payment.

Information Contained in Form GST RFD-11

Form GST RFD-11 requires the exporter to provide essential details, including:

• GSTIN, Legal Name, and Address of the applicant.
• Reference number and date of the RFD-11 filing.
• Details of the Financial Year for which the Bond/LUT is being furnished.
• A declaration/undertaking affirming compliance with export conditions.
• Details of witnesses (name, occupation, and address of two independent witnesses).
• Details of the Bond, including the amount and bank guarantee details (if furnishing a Bond).

Validity of Bond/LUT Filed via RFD-11

The Bond or LUT furnished in Form GST RFD-11 is generally valid for the entire financial year in which it is submitted. A fresh Bond or LUT needs to be furnished for each subsequent financial year if the exporter wishes to continue exporting without payment of IGST.

Process of Furnishing RFD-11

The process of furnishing Form GST RFD-11 is done electronically on the GST common portal. The exporter needs to log in to their GST account, navigate to the ‘User Services’ section, and select the ‘Furnish Letter of Undertaking (LUT)’ option. They can then fill in the required details, upload any necessary documents (like the previous year’s LUT or the Bond document and bank guarantee details), and submit the form using their Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Upon successful submission, the system generates an ARN (Application Reference Number) and the LUT/Bond is deemed to have been accepted.

Relation to the GST Refund Process

Furnishing a Bond or LUT in Form GST RFD-11 is directly linked to the GST refund process, specifically for exporters. When an exporter exports without paying IGST under a valid Bond/LUT, they are eligible to claim a refund of the accumulated Input Tax Credit (ITC) on the inputs and input services used in making those exports. This is a separate refund claim process (filed using Form GST RFD-01) compared to claiming a refund of IGST paid on exports. RFD-11 enables the ITC refund route by fulfilling the condition for zero-rated supply without payment of tax.

Conclusion

Form GST RFD-11 plays a pivotal role in facilitating exports under the GST regime by enabling eligible taxpayers to export goods and services without the upfront payment of Integrated Tax. By furnishing a Bond or a Letter of Undertaking through this form, exporters can manage their working capital effectively and streamline their export procedures. Understanding the requirements and process of filing RFD-11 is essential for exporters aiming for smooth and tax-efficient international trade operations.