Letter of Undertaking or LUT is an undertaking submitted by an exporter of goods or services. It allows the exporter to export goods or services without payment of IGST, given that he completes the process of export of goods or services within the prescribed time limit.
In this article, you will understand:
What Is LUT Under GST?
A LUT is a guarantee that a bank provides to its customer (exporter in this case). Through LUT, the bank allows the exporter to raise short-term credit from a foreign branch of any other Indian bank. In case the exporter fails to pay the credit, the bank undertakes to pay on its customer’s behalf.
Why Is LUT Needed?
As per the IGST Act 2017, the export of goods and services (zero-rated supply) does not fall under the GST Act. Here, the options available for exporters are:
- Export under Bond/LUT without paying IGST where the refund can be claimed for the unutilised ITC.
- Export along with the payment of IGST where the refund can be claimed for IGST paid on export of goods or services.
Hence, LUT is required so that the exporters can avail refunds.
Who Can File LUT?
holders (taxpayers registered under GST) meeting the following conditions can file LUT:
- A registered person intending to supply goods and services outside India, including special economic zones (SEZs) without paying integrated tax (IGST).
- A registered person who is not involved in litigation under the Integrated Goods and Service Tax Act or Central Goods and Service Tax Act where the levied tax amount exceeds INR 2,50,00,000.
- LUT must be filed on the letterhead of the registered person for the specific financial year in the Annexure to Form GST RFD-11.
- LUT must be applied or executed by the working partner of the entity, company secretary (CS), Managing Director (MD), proprietor or a person authorised by the working partner or board of directors of the respective company.
Validity Of LUT
The LUT furnished for exports under GST is valid for one year. This means, for every financial year, LUT has to be filed by eligible exporters.
It is also important to understand that in case the registered person filing LUT for export fails to meet the conditions of furnishing LUT, then he has to file a Bond instead of the LUT.
Documents Required For Filing LUT And Acceptance Of LUT
- A self-declaration stating that the applicant accepts the required conditions to apply for LUT given that there is no special permission given to him.
- A self-declaration stating that he is not prosecuted under the Integrated Goods and Service Tax Act or Central Goods and Service Tax Act should be attached.
Further verification may take place after the application is submitted.
Acceptance of LUT may take three working days after it is submitted along with the declarations.
Process of filing LUT
Step 1: Access GST Portal
Step 2: Fill Form GST RFD-11
- Login to the GST portal using a valid user ID and password
- Click ‘Services’
- Select ‘User Services’ as the sub-category
- Select the ‘Furnish Letter Of Undertaking (LUT)’ option from the drop-down
Step 3: Save Application
- Select the FY from the given options in the drop-down list
- Select ‘Choose File’ to upload the previous LUT
Note: only JPEG and PDF formats are accepted up to 2mb size.
- Select the ‘Declaration’ checkboxes
- Provide the details in various fields - Name, address, and occupation of the ‘Independent and Reliable Witnesses’
- Enter the ‘Place of Filing LUT’
- ‘Name of Primary/Other Authorized Signatories
- ‘Place’ where the form is filed
Step 4: Retrieving the Application
- Click the ‘Save’ button
- A confirmation message is received, communicating that the application is successfully saved
Step 5: View GST RFD-11
- Click the ‘Services’ Tab
- Select ‘User Services’ as the sub-category
- choose ‘My Saved Applications’
Step 6: Sign and File With DSC/EVC
- Click the ‘Preview’ button to preview form RFD 11
- Choose the name of the Authorized Signatory
- Enter the ‘Place’ of filing of form
- Sign and File with DSC or with EVC option
- Enter the OTP*
*The system generates and sends an OTP to the registered mobile number and email address of the authorised signatory.
Once the OTP is validated, the GST portal generates an Application Reference Number (ARN) and shows the applicant a confirmation message. Further, it sends the ARN on the registered email ID and the mobile number of the taxpayer.
Step 7: Download the Acknowledgement
- Click ‘Download’ to download the Acknowledgment for LUT.