LUT, an acronym for Letter of Undertaking holds significant relevance within the context of the Goods and Services Tax (GST) framework. This document serves as a powerful tool for exporters, allowing them to engage in the export of goods or services without the obligation of immediate tax payment.
A letter of Undertaking (LUT) in goods and services tax (GST) is a document exporters can file to export products without paying the integrated GST. Integrated GST is a destination-based tax the centre collects on the interstate import and export of products. It is levied by the centre, which then shares it with the state where the product was consumed.
However, before the products are exported or imported, furnish LUT must be furnished without paying IGST. If the exporter fails to furnish it, they must pay the IGST or an export bond.
One can file LUT online by logging in to the GST portal and filling out the form GST RFD-11. Continue reading to know how to apply for LUT in GST.
The LUT form is filled in the GST RFD 11 format. The format contains details of the exporter, the self-declaration, and independent witnesses. The form also requires a digital signature and acceptance by the jurisdictional officer.
Then you need to tick mark by clicking against the three boxes. By doing this, the exporter undertakes
Interest must be paid at the rate of 18% per annum for the period From the date of issue of export invoice up to the date of payment of integrated taxes
Independent Witnesses Information: Fill the name, Occupation, and address of two independent witnesses in the boxes highlighted here.
We need to declare the witnesses of the LUT on running bonds/ Bank guarantee.
Enter Place of Filing your LUT under the place of filing LUT and then click on SAVE after saving your document you can preview your Document by clicking on the preview to verify the form before submission.
We can sign the application with Digital Signature Certificate of the authorized signatory. Click on the ‘Sign and file with DSC’ a warning message box appears, click on PROCEED button. Then the system provides the application reference number
We can also submit with EVC: Click on ‘Sign and file with EVC.’ Then you will receive an OTP to your registered mobile number; you will also get an email notification for the same. Enter the OTP in the pop-up message then you will receive a warning box for submission. You need to click on PROCEED to get your application reference number.
Then you will get an email notification and SMS to your registered mobile number.
You can now download your acknowledgment by clicking on the DOWNLOAD option
You require the following documents for filing LUT:
The limit of LUT under GST is that the applicant should not be prosecuted for any offence under the CGST or IGST Act or any other law. And if prosecuted, the amount of tax evaded should not exceed INR 250 lakhs. The exporter must furnish a bond if the conditions are unmet.
Here are the eligibility criteria for the GST composition scheme:
A person intending to supply goods/services
The LUT submitted is valid for the whole financial year in which it is submitted. You need to submit a new LUT for each financial year. If the goods for export are not exported within three months of Date of Invoice issue, then the Exporter is liable to pay GST along with 18% interest within 15 days according to Section 50 (1). Also in case of payment for services are not received within one year for which the LUT has been submitted, the exporter is liable to pay GST @ 18% within 15 days. Failing to do so will lead to withdrawal of LUT facility and on subsequent payments, it can again be restored.
You can download the FORM GST RFD-11 from www.cbec.gov.in as long as it is available on the portal. Furnish the filled form to the jurisdictional Deputy/Assistant Commissioner with jurisdiction over your place of business.
Self-declaration that the conditions of the Letter of Undertaking shall be accepted unless there is specific permission granted. In such cases, a self-declaration is required by the exporter to the effect that he has not been prosecuted should serve the purpose of notification- 37/2017- Central Tax on 4th October 2017. Verification if required may be carried out on a post-facto basis.
As LUT or Bond is mandatory for export business, including exports to an SEZ unit, so it should be on the top priority list. The LUT/ Bond should be accepted within three working days after it has been received along with the self-declaration by the exporter as mentioned above. Failing to process the LUT within three working days, it shall be considered to be accepted.
In all cases, bonds shall be accompanied by a bank guarantee amounting to 15% of the bond amount.
In case of self-sealing, sealing of containers, is to be exercised under the supervision of the central excise officer having jurisdiction over the place of business. A copy of the report is to be submitted to the Deputy/ Assistant Commissioner having jurisdiction over the place of business.
There are no provisions for issuance of CT-1 form which allows exporters to purchase goods from manufacturers without paying tax under the GST regime. The transaction between the manufacturer and the exporter is like supply, and the same would be subject to GST.
Zero rating does not apply to supplies to EOUs, and there is no special exemption for them under the GST regime. Therefore they are taxable similar to any other taxable supplies. To the extent of exports, EOUs are eligible for zero-rating.