LUT under GST

Letter of Undertaking (LUT) is a type of guarantee letter that is submitted by an exporter. In this blog, we will learn everything related to LUT under GST.

What is LUT under GST?

LUT under GST is a document that is filed by the exporter to export goods or/and services without paying GST on such supply. But the exporter needs to complete the export process within the prescribed time limit.

Need of LUT under GST

LUT under GST is needed in the following cases:

1. When the exporter wants to export the goods or/and service without making the payment of IGST and who wants to claim the refund of unutilized Input Tax Credit (ITC).
2. When the exporter wants to export the goods or/and service by making the payment of IGST and when he/she wants to claim the refund.

Who Can File LUT?

Any registered person who is registered under GST needs to mandatorily furnish LUT in the GST RFD-11 form on the common portal of GSTN. He/she can file a Letter of undertaking (LUT) under GST if they:

1. Want to supply goods or/and services overseas or to SEZs
2. Want to supply goods or/and service without making the payment of IGST

Note: Any person prosecuted for tax evasion exceeding INR 2.5 Crores, or for any other offense under the GST Act, or any other prevailing law is not eligible to file LUT.

LUT Validity

LUT under GST needs to be furnished by the eligible taxpayer every financial year. This means the validity of LUT under GST is for one financial year.

Note: The taxpayer needs to furnish a bond instead of LUT if he/she fails to meet the terms and conditions of the Letter of undertaking (LUT).

Documents Required for Filing LUT

Here is the list of documents that are required to file a Letter of undertaking (LUT) under GST

1. LUT cover letter
2. GST registration copy
3. PAN Card of the individual or company/firm
4. An authorized person or signatory KYC
5. GST RFD 11 form
6. Copy of Importer Exporter Code (IEC)
7. Canceled Cheque

Benefits of Filing LUT under GST

Here are the benefits of filing LUT under GST

1. An exporter can export goods or/and services without making payment of taxes.
2. Letter of undertaking (LUT) helps in maintaining positive cash flow in the case if the taxpayer does not pay tax and claim a refund. This will help SME exporters battling with financing and working capital issues.
3. Letter of undertaking (LUT) guarantees that exporters do not experience any difficulty in claiming a refund or circling back to the Income Tax office in case if he/she pays IGST for exporting goods or/and services.
4. LUT once furnished remains active for the whole financial year.
5. The government has eased the filing of a Letter of undertaking (LUT) under GST as it can easily be filed online by the taxpayer.
6. Fewer documents are needed to file the LUT under GST.