Letter of Undertaking (GST)

1. WHAT IS LETTER OF UNDERTAKING?

Letter of Undertaking is a document that exporters can file to export goods or services without having to pay taxes. Under the new GST regime, all exports are subject to IGST, which can later be reclaimed via a refund against the tax paid.

An LUT (Letter of Undertaking) spares exporters the effort of pursuing a refund and eliminates the blocking of funds by way of tax payments.

Under CGST Rules, 2017, any registered person can furnish LUT in form GST RFD 11 and export goods or services without payment of integrated tax.
Any person can apply for LUT if they:-

• Intended to supply goods or services to India or Overseas or to SEZs
• Are registered under GST
• Wish to supply goods or services without payment of an integrated tax

2. DOCUMENTS REQUIRED FOR LUT FIILING UNDER GST?

• KYC documents of two witnesses
• Nature of employment of witnesses
• Copy of last year LUT (if any).

3. PROCESS FOR FILING LUT CERTIFICATE.

• First you have to logon to GST portal for filing LUT certificate
• Under “SERVICE TAB”, select “USER SERVICES” drop down has option of FURNISH LETTER OF UNDERTAKING (LUT)
• After selecting this option, you have to select the financial year for which you want to file letter of undertaking
• Than upload pdf copy of last financial year LUT (if any).
• Fill the name of two witnesses along with their address and occupation
• Next you have to fill the place of filing. once this procedure complete, you may preview the form
• The application can be signed with a registered digital signature certificate or via electronic verification code. Both options appears on the form. Once signed and submitted, the form cannot be edited.
• You can download the letter of undertaking application from the GST portal.

4. BENEFITS OF FILING LUT – FOR EXPORTERS

By opting for the LUT, an exporter can export goods or services without having any payment of taxes. If this option is not opted by the exporter will have to pay taxes on their export and later claim a refund on the zero rated exports.

5. KEY THINGS TO REMEMBER

• An LUT remains valid for current financial year from the date of its submission. Example- If LUT was furnished in FY 2020-2021, then the date of expiry of the validity of such LUT is 31st March 2021. Therefore, you need to file fresh LUT for FY 2021-2022.
• NO bank guarantee required in case of letter of undertaking.
• The LUT must be duly applied and signed by the authorised signatory of the company, firm, etc.

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You may contact the author for further information at 8285558644 or taxwizersconsultant@gmail.com

Disclaimer: The above article is only for information purpose and is on based on the author’s interpretation of the relevant provision. The same should not be considered as professional advice.