Export Bond for GST

Entities that are not competent to submit a Letter of Undertaking must provide an export bond and a bank guarantee. Based on their projected tax due from their own assessments, the applicant must pay the amount of tax associated with the export.

Export bonds must be delivered on non-judicial stamp paper with the appropriate value according to the state in which they are being provided.

Additionally, exporters can provide a running bond, eliminating the requirement to execute an export bond for each export transaction. However, the exporter is required to provide a fresh bond to pay the extra responsibility if the outstanding tax due on exports ever surpasses the bond amount.

Along with an export bond, a bank guarantee may be required. Generally speaking, no more than 15% of the bond’s value should be covered by the bank guarantee. The bank guarantee that must be included with the export bond may, however, be waived by the jurisdictional GST Commissioner depending on the exporter’s track record.