What is the process of filing a Letter of Undertaking (LUT) under Goods & Service Tax (GST)?

[Ishita Ramani]

Introduction

All registered taxpayers who wish to export goods or services without paying IGST (Integrated Goods and Service Tax) must submit a Letter of Undertaking (LUT) in GST RFD-11 form through the GST website. This article is going to focus on “What is a Letter of Undertaking under GST?”, “Process for Filling LUT under GST,” “Documents Required for LUT under GST,” and “Eligibility requirements for Filing LUT under GST (Goods and Service Tax).

What is a Letter of Undertaking under GST?

Exporters can use a letter of undertaking to export goods or services without paying taxes. Under the new GST system, all exports are subject to IGST, which may then be reclaimed through a refund against the tax paid. By applying for a LUT (Letter of Undertaking), exporters can avoid the effort of requesting a refund and avoid the freezing of cash through tax payments.

Who is eligible to file LUT under GST?

Any exporter of goods or services who has registered for GST is required to submit a GST LUT. Exporters who have been accused of committing a crime or tax evasion totaling more than INR 250 lakhs in violation of the CGST Act, the IGST Act, 2017, or any other applicable law are disqualified from submitting a GST LUT. In this case, they would have to offer an export bond. According to the CGST Rules, 2017, any registered person may submit an export bond or LUT under GST RFD 11 without having to pay the integrated tax. They could apply for LUT if:

• They want to offer goods or services to India, other nations, or SEZs (Special Economic Zones) and have registered for GST.
• They wish to avoid paying the integrated tax when they sell goods.

What is the process of filing LUT under GST?

The following is the process of filing LUT under GST:

• Navigate to the GST Portal and sign in using your authorized credentials.
• The “USER SERVICES” drop-down menu under “SERVICE TAB” offers the option to furnish a Letter of Undertaking (LETTER OF UNDERTAKING (LUT).
• You must next choose the financial year for which you want to file the letter of undertaking after choosing this option.
• Next, attach a PDF of the LUT from the previous financial year, if applicable.
• Next, include two witnesses’ names, addresses, and occupations.
• The next step is to fill in the filing location. You can view a preview of the form after this process is finished.
• The application can be signed using an electronic verification code or a recognized digital signature certificate. On the form, both options are present. The form cannot be changed after it has been signed and submitted.

What are the documents required for filing LUT?

The following documents are required for filing LUT under GST:

• PAN Card of the Company
• Authorized Person’s KYC
• Certificate of IEC Code
• Form GST RFD 11
• LUT Cover Letter with an official signature serving as an acceptance request
• Returned/ Canceled Cheque

How will the GST Letter of Undertaking help exporters?

The following are the benefits of GST LUT for exporters:

• Regular exporters gain a lot by filing LUT electronically because doing so saves time compared to the alternative.
• The applicant does not have to show up in person for approval in front of the officials. The entire process can be finished more quickly and easily.
• An exporter may export products or services tax-free if they submit a LUT under the GST.
• The Letter of Undertaking is effective for the whole financial year for which it was submitted.

GST filing charges are the fees incurred when individuals or businesses file their Goods and Services Tax (GST) returns with tax authorities. These charges vary based on tax laws, filing frequency, and transaction complexity, covering preparation, verification, and submission of GST returns, along with any professional services fees if needed. Staying informed and seeking professional guidance can aid in a smooth and accurate GST filing process.

Summary

LUT is necessary if you want to export goods, services, or both without paying IGST. If exporters fail to provide the LUT, they must pay IGST or release an export bond. Previously, LUT could only be delivered in person to the appropriate GST office. But in order to make the process simpler, the government has made LUT filing available online.

Discussions to this article

[Raja Krishnan]

Excellent article, But so far we have received only online acknowledgement instead of LUT order, which was previously obtained from the department manually. This is my opinion.