Any registered person availing the option to supply goods or services for export /Sezs without payment of integrated tax has to furnish, prior to export/SEZs supply, A Letter of Undertaking (LUT), if he has not been prosecuted for tax evasion for an amount of Rs. 2.5 Crore or above under the CGST Act/ IGST Act.
Eligibility to export under LUT
The facility of export under LUT has been now extended to all registered persons who intend to supply goods or service for export without payment of integrated tax except those who have been prosecuted for any offence under the CGST Act or the IGST Act or any of the existing laws and the amount of tax evaded in such cases exceeds INR 250 lakhs.
Validity of LUT
- The LUT shall be valid for the whole financial year in which it is tendered.
- However, in case the goods are not exported within the time specified in rule 96A(1) of the GST Rules and the registered person fails to pay the amount mentioned in the said sub-rule, the facility of export under LUT will be deemed to have been withdrawn.
- If the amount mentioned in the said sub-rule is paid subsequently, the facility of export under LUT shall be restored.
- As a result, exports, during the period from when the facility to export under LUT is withdrawn till the time the same is restored, shall be either on payment of the applicable IGST or under bond with bank guarantee.
Time for acceptance of LUT/Bond
As LUT/Bond is a priori requirement for export, including exports to a SEZ developers or a SEZ unit, the LUT/bond should be processed on top most priority. It is clarified that LUT/bond should be accepted within a period of three working days of its receipt along with the self-declaration.
If the LUT/bond is not accepted within a period of three working days from the date of submission, it shall deemed to be accepted.
Delay in furnishing of LUT/Bond- Condonation
In some cases, zero rated supplies were made before filing the LUT, and refund claims for unutilized input tax credit got filed. In this regard, it is emphasized that the substantive benefits of zero rating may not be denied, where it has been established that exports in terms of the relevant provisions have been made. The delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed on ex post facto basis considering the facts and circumstances of each case.
If the goods or services are actually exported, the commissioner may consider granting extension of time limit for export as provided in the said sub-rule on post facto basis keeping in view the facts and circumstances of each case.
Furnishing of LUT at the time of export (Rule 96A)
Any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or a LUT, binding himself to pay tax due along with the interest specified under sec 50(1) i.e. 18 %, within a period of—
- 15 days after the expiry of 3 months or such further period as may be allowed by the commissioner, from the date of issue of the invoice for export, if the goods are not exported out of India; or
- 15 days after the expiry of 1 year, or such further period as may be allowed by the commissioner, from the date of issue of the invoice for export, if the payment of such service is not received by the exporter in convertible foreign exchange.
As per rule 96A(3), where the goods are not exported within the time period specified above and the registered person fails to pay the amount mentioned in the said sub-rule, the export as allowed under LUT shall be withdrawn forthwith and the said amount shall be recovered from the registered person in accordance with the provisions of sec 79.
Form for LUT
- The LUT is filed electronically in Form RFD-11 on the GST-Portal.
- The LUT shall be executed by the working partner, the Managing Director or the Company Secretary or the Proprietor or by a person duly authorized by such working partner or board of directors of such company or proprietor.
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