Description

 

📜 What is LUT in GST?

A Letter of Undertaking (LUT) is a document that allows exporters to export goods or services without paying Integrated GST (IGST). It is filed under Rule 96A of the CGST Rules, 2017.

Under GST, exports are considered zero-rated supplies. Without an LUT, the exporter must pay IGST on export invoices and later claim a refund, which ties up working capital. Filing an LUT eliminates this hassle by allowing tax-free exports upfront.

✅ Eligibility to File LUT

Any GST-registered person can file an LUT if:

• They are engaged in the export of goods or services, including exports to SEZ units/developers.
• They have not been prosecuted for tax evasion exceeding Rs. 2.5 crore under any GST law.

If these conditions are not met, a Bond with a Bank Guarantee must be submitted instead.

📋 Documents Required for LUT under GST

1. LUT Cover Letter – Duly signed request on company letterhead
2. Copy of GST Registration
3. PAN Card of the business/entity
4. KYC of Authorized Signatory
5. GST RFD-11 Form
6. Import Export Code (IEC)
7. Cancelled Cheque
8. Authorization Letter (if filed by an agent or consultant)

🔁 Step-by-Step Process to File LUT on GST Portal

1. Login to the GST portal.
2. Navigate to: Services → User Services → Furnish Letter of Undertaking (LUT).
3. Select the relevant Financial Year.
4. Upload previously submitted LUT (if any) in PDF/JPEG format.
5. Provide Self-Declaration that you will:
   • Export goods/services within 3 months
   • Adhere to GST laws
   • Pay IGST with 18% interest in case of non-compliance
6. Enter Details of Two Witnesses (name, address, occupation).
7. Preview and Digitally Sign the application using DSC or EVC.
8. On successful submission, a Reference Number and Acknowledgment will be generated.

🛠️ Benefits of Filing LUT for Exporters

• No upfront tax liability on export invoices
• No delays or hassles in claiming tax refunds
• Saves working capital, essential for MSMEs
• Valid for the full financial year
• Entire process is paperless and online

⚠️ Important Notes on LUT Filing

• LUT is valid for 12 months and must be renewed every financial year.
• Non-compliance or breach of LUT terms can lead to revocation of LUT privileges.
• If LUT is not filed or renewed, exporters must pay IGST and claim refunds.
• Ineligible entities must file a Bond on non-judicial stamp paper with Bank Guarantee (max 15% of estimated tax liability).

🔄 Post-Filing Compliance

After filing LUT:

• Submit export documentation to the tax department at regular intervals—monthly, quarterly, or per shipment.
• Maintain complete records of export invoices, shipping bills, and related documents.
• Renew the LUT every financial year to remain eligible for zero-rated supply without tax payment.

💡 Advantages of LUT Over IGST Refund Route

Particulars	LUT Filing	IGST Refund Route
Tax Payment	Not required	Required initially
Refund Process	Not applicable	Time-consuming
Working Capital Impact	Frees up capital	Blocks capital
Filing Frequency	Annual	Refund filing per period