GST LUT Form: A Comprehensive Guide for Exporters

In the dynamic realm of international trade, exporters are constantly seeking ways to enhance efficiency and streamline their business processes. If you're an exporter looking to navigate the complexities of cross-border transactions, the GST LUT Form emerges as a vital instrument. The GST LUT Form is a crucial document that empowers you to conduct your export transactions smoothly without making Integrated Goods and Services Tax (IGST) payments during the supply. In this article, we will look into the essential role of the GST LUT Form for exporters and its filing procedure in detail. IndiaFilings is here to assist you in efficiently completing the GST LUT Form filing process, making your export journey smoother than ever before.

What is LUT in GST?

LUT, which stands for Letter of Undertaking, is important in the Goods and Services Tax (GST) framework. This document serves as a potent tool for exporters, enabling them to participate in exporting goods or services without the obligation of immediate tax payment.

GST LUT Form for Exporters

For all registered taxpayers engaged in the export of goods or services, providing a Letter of Undertaking (LUT) through the Form GST RFD-11 on the GST portal is mandatory. This requirement is essential to facilitate exports without paying Integrated Goods and Services Tax (IGST).

Eligibility Criteria

The eligibility criteria for applying for an LUT include the following: The Letter of Undertaking (LUT) is available for utilization by any registered taxpayer engaged in exporting goods and services. However, individuals facing prosecution for tax evasion exceeding Rs. 250 lakh or more are not eligible to benefit from this option.

Intent to Supply: The applicant should intend to supply goods or services within India, to foreign countries, or Special Economic Zones (SEZs).
GST Registration: The entity seeking to avail the benefits of an LUT should be registered under the GST framework.
Tax-Free Supply: The desire to supply goods without the imposition of integrated tax is an essential requirement for LUT application.

Validity of LUT (Letter of Undertaking)

The submitted LUT is valid for the entire submitted financial year.
Submit a new LUT for each financial year.
Non-export of goods within three months from the invoice date requires GST payment with 18% interest within 15 days (Section 50(1)).
Non-receipt payment for services within a year of LUT submission necessitates GST payment @ 18% within 15 days.
Failure leads to LUT facility withdrawal, with possible restoration upon subsequent payments.

Exploring the LUT Bond

LUTs remain valid for one year, necessitating the submission of a fresh LUT for each subsequent financial year. Suppose the terms outlined in the LUT fail to be met within the designated timeframe. In that case, the privileges associated with it will be revoked, prompting the need for the exporter to provide bonds. For other scenarios, bonds are necessary for exports without Integrated Goods and Services Tax (IGST) payment. LUTs and bonds are applicable in the following cases:

Zero-rated supply to SEZ: Exporting to Special Economic Zones (SEZs) without IGST payment.
Goods Export: Exporting goods to a country beyond India without IGST payment.
Service Export: Providing services to clients in foreign countries without IGST payment.

Timeline for LUT/Bond Processing

LUT/Bond is mandatory for export business, including SEZ unit exports, prioritize processing. Accept LUT/Bond within three working days after receipt, along with the exporter's self-declaration. Failure to process within three days is deemed acceptance.

Documents Required for LUT under GST

To apply for a GST LUT registration , you'll need the following documents:

LUT Cover Letter: A request letter signed by an authorized person.
Eligibility: Ensure you meet eligibility criteria (no serious tax evasion cases).
Copy of GST Registration: Proof of your GST registration.
PAN Card of Entity: Identification using PAN card.
KYC of Authorized Person: ID and address proof of the authorized person.
GST RFD 11 Form: Application form for LUT.
Copy of IEC Code: If involved in exports.
Cancelled Cheque: From your associated bank account.
Authorized Letter: Granting power to the authorized signatory.

Benefits of GST LUT for Exporters

Opting to file a Letter of Undertaking (LUT) brings a plethora of benefits to exporters, streamlining their export activities and optimizing their financial operations:

Tax-Free Export: Choosing the LUT option enables exporters to conduct their export transactions without the burden of immediate tax payment. This differs from the alternative, where taxes are paid and later claimed as refunds for zero-rated exports.
Simplified Process: By utilizing the LUT, exporters bypass the complexities of claiming tax refunds or dealing with follow-ups from tax authorities. This results in significant time savings and operational ease.
Unblocked Working Capital: Funds that would otherwise be tied up as tax payments remain accessible for exporters. This is especially crucial for small and medium-sized enterprises (SMEs) dealing with financing and working capital constraints.
Liberated Resources: Regular exporters find consistent advantages with the LUT. Once filed, the LUT remains valid for the entire financial year. This extended validity reduces the need for repetitive filings, allowing exporters to concentrate on their core activities.

By leveraging the benefits of GST LUT, exporters can navigate international trade with enhanced efficiency and flexibility.

Key Reminders about LUT Bond in GST

Here are some crucial points to remember concerning LUTs (Letter of Undertaking) in GST:

Validity Period: An LUT remains valid for a year, starting from the submission date.
Conditional Acceptance: The acceptance of an LUT comes with specific terms. Failing to meet these conditions might lead to the revocation of privileges. In such cases, an entity may need to provide a bond.
Alternative Bonding: Entities ineligible for LUT can still provide a bond. This bond, usually on non-judicial stamp paper, requires a bank guarantee. The guarantee should cover the anticipated tax liability based on exporter assessment.
Official Letterhead: LUT submissions must be on the registered entity's letterhead. This letterhead is from the entity planning to supply goods/services without integrated tax payment.
Prescribed Form: An LUT must be applied through the official GST RFD-11 form. This form can be submitted by authorized personnel like the MD, company secretary, or partners in a firm.
Flexible Filing: In the case of a company, the form can be submitted by a partner in a partnership firm or the proprietor.
Bank Guarantee Limit: The accompanying bank guarantee should not exceed 15% of the bond amount. The jurisdictional GST Commissioner might waive this requirement.

Keeping these details in mind ensures a smooth process while dealing with LUT bonds under GST regulations.

How to apply for LUT in GST?

GST LUT Registration Procedure for filing a LUT (Letter of Undertaking) is explained in detail below:

Access the GST Portal and log in using the user credential.
Navigate to the "Services" tab, choose "User Services," and then select "Furnish LUT."
Under "LUT applied for the financial year," pick the desired financial year for LUT submission.
If your previous LUT was furnished offline, attach it by clicking the "Choose File" option and proceed.
Complete the form displayed on the screen.
Tick the three boxes to signify:
- Commitment to export goods within three months from the export invoice date, extendable with the Commissioner's approval.
- Adherence to GST regulations for exports.
- Agreement to pay Integrated tax with Interest in case of non-export. *Interest rate: 18% per annum from the export invoice to the tax payment date.
Provide details for generating LUT witnesses:
- Fill in the names, occupations, and addresses of two independent witnesses as highlighted.
- Declare LUT witnesses for running bonds or Bank guarantees.
- Preview the Letter of Undertaking (LUT):
Enter the "Place of Filing LUT."
Click "SAVE" and "Preview" to review the form before submitting it.
Sign the Letter of Undertaking:
- Either the exporter or an authorized signatory can sign.
- Authorized signatories: partners, MD, company secretary, proprietor, or authorized individuals.
Sign using a Digital Signature Certificate (DSC):
- Click "Sign and file with DSC," confirm the warning message, and note the application reference number.
Sign using Electronic Verification Code (EVC):
- Click "Sign and file with EVC."
Enter the OTP sent to your registered mobile and email.
Click "PROCEED" to obtain the application reference number. *LLPs and companies can only use DSC for filing.
Receive LUT Confirmation:
- You'll receive an email and SMS on your registered mobile number.
- Download your GST Letter of Undertaking:
Click "DOWNLOAD" to obtain your acknowledgment.

Simplify LUT Form Filing with IndiaFilings

Navigating the complexities of LUT (Letter of Undertaking) filing for exporters has always been challenging. At IndiaFilings, we specialize in streamlining the process, allowing you to focus on expanding your export operations. Our experienced professionals understand the nuances of GST regulations and are well-equipped to guide you through the seamless submission of the GST RFD-11 form. We offer end-to-end support, from document preparation to online submission, ensuring accuracy and compliance at every step. With IndiaFilings by your side, you can unlock the benefits of tax-free exports without the hassle of navigating complex procedures. Simplify your LUT filing today and begin a smoother export journey with us. Contact us to experience a hassle-free GST LUT filing process that empowers your export ventures like never before.