Letter of Undertaking (LUT) in GST

From 04thOct 2017, CBIC has an open LUT route for all exporters with no bar on the turnover limit. As per Notification No. 37/2017- Central Tax by CBIC, the exporters are provided with an option to export their goods or services without payment of IGST by furnishing LUT over GST Portal.

LUT i.e., Letter of Undertaking is required to be furnished in the form GST- RFD 11 under rule 96A, whereby the exporter declares all the requirements that are prescribed under GST Act while making exports without payment of IGST.

A LUT is required to be filed online by an exporter who intends to make exports without the payment of IGST irrespective of Export of Goods or Services.

Under GST Act, there are 2 options provided to exporters of goods or services or both while making exports

• Option 1: Payment of IGST on exports and after that, claim refund for the same.
• Option 2: Filling of LUT or Bond to Commissioner of GST online. If a registered person chooses option 2, there is no need to pay tax on exports and also can claim a refund of Input Tax Credit (ITC).

Every person who evaded a tax for an amount of Rs. 250 Lakhs or more and also has been prosecuted is not eligible under the act to furnish LUTs.

The persons who are not eligible to file LUT can choose any of the below-mentioned options to

• File the Bond with Bank Guarantee and export without payment of GST or,
• Payment of IGST on exports and after that claim refund for the same.

By opting LUT route, an exporter can export goods and services without paying taxes subject to such conditions, safeguards and procedures as may be prescribed and claim a refund of unutilized Input Tax Credit.

If the LUT route is not opted for, the exporter will have to pay tax on export and later claim a refund on the zero-rated exports.

When the exporter files LUT, he isn't required to pay IGST during export which results in no blockage of funds. When the exporter chooses not to file LUT, he is required to pay IGST during export and later on claim refund of GST paid which results in blockage of funds. Follow-ups are required from the department for refund of GST paid on exports on the second option. Much time can be saved by opting for LUT route.

The following documents must be required to complete the application: -

• Identity proof of the witnesses
• Address proof of the witnesses
• Consent letter of witnesses agreeing on terms for such LUT
• Acceptance letter from department acknowledging Letter of Undertaking of any previous year.

Steps that are required to follow are mentioned below to file LUT online over the GST Portal:

GST experts from Wellcorp can help you with GST LUT filing with ease.

• Log in to the GST Portal by entering a valid username & password.
• Then select the 'Service' option in Menu Bar. Clicking onthe 'Service' option thereafter go to the 'User Service' option and then navigate on "Furnishing Letter of Undertaking".
• Thereafter Form GST RFD-11 will be displayed.
• Select the Financial Year for which LUT is to be furnished.
• Upload the LUT Order (if any) of the Previous Year in PDF format by choosing the file option.
• If LUT is already furnished Offline for the previous period, attach the same here and continue to file the application.
• If filing LUT in online mode read and select all the 3 checkboxes for agreeing with the conditions prescribed in LUT.
• Next step is to enter the name, address, and occupation of the independent witnesses of two witnesses in the prescribed columns.
• In the 'Place field', enter the place from where the form is filed.
• Thereafter select the name of the Primary Authorized signatory or another signatory who can sign the Application form.
• Then click the PREVIEW button to preview the draft form.
• Click on the SAVE button to save the form whichcan also be accessed later.
• Click on SIGN AND FILE with EVC orDSC button (as applicable).
• Once filed after signing, the Form cannot be edited. Rechecking is to be done at least once before signing and submitting.

As per Circular No. 40/14/2018-GST, LUT shall be deemed to have been accepted after receiving an acknowledgment containing Application Reference Number (ARN) which is generated online.

Format of Letter of Undertaking (LUT) Filing in GST is given below:

 

GST LUT Filing due date

The LUT would be required to be submitted separately for each financial year. LUT is valid from the date of filing till 31st March of the financial year.

For instance, Mr. P has filed LUT on 30/06/2021 , hence the LUT is valid till 31st March 2022.

LUT for the exports to be supplied is required to be filed on the GST portal prior to the export.

Late Fee/ Penalties for Not Filing GST LUT

Since LUT is always furnished for the future export consignment, not for the past consignments. The department may issue SCN for the imposition of penalty under Section 125 of the CGST Act, thus the exporter shall be liable to a penalty which may extend to TWENTY-FIVE THOUSAND RUPEES.