What do you understand by the term Letter of undertaking LUT in GST?

Under rule 96 A, the exporter must provide a Letter of Undertaking/LUT in the Form GST RFD 11, in which exporter declares that he will comply with all GST requirements while exporting without paying IGST.

The advantages of submitting a LUT under GST

Tax-free exports

An exporter can export goods or services without paying taxes if they file a LUT under GST. If the LUT is not filed, the exporter must first pay the appropriate tax while exporting before claiming a refund to be eligible for zero-rated exports.

Working Capital is saved

Regular exporters benefit significantly from filing LUT online because the reimbursement process via another way is time-consuming. During this time, the sum of money is held in reserve in the shape of a due refund. The capital is free to be used for other essential purposes in this method. It also lowers the price of exports.

Validity for an Entire Financial Year

Once submitted, the Letter of Undertaking is valid for the whole fiscal year it was filed. As a result, unlike the return procedure, an exporter does not have to go through all procedural requirements every time an export consignment is completed.

The method is easy and can be completed        entirely online

Both the filing and acceptance of LUT have been done online. The applicant is not required to appear before the officials for approval. By uploading a few essential documents online, the entire process can be finished.

Documents needed to file a LUT

PAN Card of Entity
  • A copy of the exporter's PAN card is required.
Authorized Signatory's (KYC) procedure
  • A copy of the partners'/directors' PAN card and Aadhar card.
Certificate issued by the IEC
  • It is necessary to submit an IEC certificate.
Witnesses
  • At least two witnesses' information, as well as confirmation of address and PAN.
Cancelled cheque
  • A copy of the exporter's cancelled check on his current account

WHO IS REQUIRED TO FILE A GST (FORM GST RFD-11) LETTER OF UNDERTAKING (LUT)?

Exporter who file GST LUT, they would be required to post an export bond. The GST LUT does not apply to any offenses or tax evasions totalling more than Rs 250 lakhs under the CGST Act, the Integrated Goods, and Services Act, 2017, or any other legislation.

The government's goal here was to broaden the export base by granting export tax breaks.

GST professionals can assist you with GST LUT filing and export bond filing.

Any registered person can submit an Export bond or LUT under GST RFD 11 without paying the combined tax under the CGST Rules, 2017. They can apply for LUT if they meet the following criteria:

  • They are GST-registered if they aim to supply goods or services to India or other countries or if they are SEZs.
  • They want to be able to supply items without having to pay the IGST.

Plans

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FAQ's

Exports of goods and services can be made either with or without the payment of applicable GST. The taxes paid are returned to exporters in the first part, subject to export conditions. Exporters must file a Letter of Undertaking if they are not paying taxes on their exports.

Any exporter who wants to export without paying taxes can now file a Letter of Undertaking under GST online.

No, the obligation to post a bond is no longer in effect. A Letter of Undertaking must be filed online for exports that do not include the payment of taxes.

The Letter of Undertaking is valid for the entire fiscal year in which it is submitted. However, if the conditions relating to exports are not met, LUT is withdrawn.