GST LUT Form: A Comprehensive Guide for Exporters

What is LUT in GST?

GST LUT Form for Exporters

Eligibility Criteria

• 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

• 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

Documents Required for LUT under GST

• 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

• 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.

Key Reminders about LUT Bond 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.

How to apply for LUT in GST?

• 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.

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