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To give relief to small exporters, the government has decided to exempt them from furnishing bank guarantee for shipping goods and services, the finance ministry said on Friday. The decision comes a day after exporters met Finance Minister Arun Jaitley for resolution of GST-related problems to boost overseas shipments. Under the Goods and Services Tax (GST), an exporter can be exempted from payment of IGST if he submits bonds or a letter of undertaking (LUT). The finance ministry in a statement said that small exporters have brought to the notice of the government the difficulties in furnishing bond with the requisite bank guarantee. "To facilitate exports under GST, it has been decided that the facility of furnishing a letter of undertaking (LUT), in place of a bond, for exporting goods or services or both shall be allowed to exporters and no bank guarantee will be required," the statement said. The relevant notification will be issued in due course. "The issue of cash blockage is expected to be partially addressed by this measure.
More measures are under consideration," the ministry said.The Federation of Indian Export Organisations (FIEO) has expressed fear that a staggering Rs 65,000 crore could get stuck in GST refunds and asked the government to fast-track the refund process.