Filing of LUT in GST for Exporters: A Comprehensive Guide

Filing of LUT in GST for Exporters: A Comprehensive Guide

Are you an exporter looking to streamline your business operations and reduce tax-related hassles? The GST LUT (Letter of Undertaking) Form is a crucial document that enables you to conduct export transactions without paying Integrated Goods and Services Tax (IGST) at the time of supply. At Alliance Tax Experts, we specialize in guiding exporters through the GST LUT Form filing process, ensuring your export journey is as smooth as possible.

What is LUT in GST?

LUT, or Letter of Undertaking, is a critical document within the GST framework that holds significant importance for exporters. It allows registered taxpayers engaged in exporting goods or services to operate without the burden of immediate tax payment, specifically the IGST. Filing a GST LUT Form can save exporters time and money, simplifying the export process.

GST LUT Form for Exporters

Every registered taxpayer engaged in the export of goods or services is required to provide a Letter of Undertaking (LUT) using Form GST RFD-11 on the GST portal. This requirement is mandatory to facilitate exports without paying IGST. By filing the LUT, exporters can carry out zero-rated supplies without the need for upfront tax payments.

Eligibility Criteria for LUT Registration

To be eligible for LUT registration, the following criteria must be met:

1. Registered Taxpayer: The LUT is available to 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.
2. Intention to Supply: The applicant must intend to supply goods or services within India, to foreign countries, or to Special Economic Zones (SEZs).
3. GST Registration: The entity seeking to avail the benefits of an LUT must be registered under the GST framework.
4. Tax-Free Supply: The applicant must desire to supply goods without the imposition of integrated tax to qualify for LUT application.

Exploring the LUT Bond

A Letter of Undertaking (LUT) in GST is valid for one year, requiring the submission of a fresh LUT for each financial year. If the conditions of the LUT are not met within the specified time, the privileges associated with it are withdrawn, and the exporter must provide bonds instead.

Bonds are required for other assessments when conducting exports without IGST payment. LUTs and bonds are particularly applicable in the following cases:

1. Zero-Rated Supply to SEZ: Exporting to Special Economic Zones (SEZs) without IGST payment.
2. Goods Export: Exporting goods to a country outside India without IGST payment.
3. Service Export: Providing services to clients in foreign countries without IGST payment.

Documents Required for GST LUT Registration

To apply for a Letter of Undertaking (LUT) under GST, you will need the following documents:

• LUT Cover Letter: A request letter signed by an authorized person.
• Eligibility Proof: Ensure that you meet the eligibility criteria (no serious tax evasion cases).
• Copy of GST Registration: Proof of your GST registration.
• PAN Card of Entity: The entity’s PAN card for identification.
• 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.
• Canceled Cheque: From your associated bank account.
• Authorized Letter: Granting power to the authorized signatory.

Advantages of Filing LUT for Exporters

Filing a Letter of Undertaking (LUT) offers several benefits to exporters, making the export process more efficient and financially viable:

1. Tax-Free Export: Exporters can conduct their transactions without paying IGST upfront, unlike the alternative where taxes are paid and later claimed as refunds for zero-rated exports.
2. Simplified Process: With an LUT, exporters avoid the complexities of claiming tax refunds or engaging in follow-ups with tax authorities, leading to significant time savings.
3. Unblocked Working Capital: Funds that would otherwise be tied up as tax payments remain available for use, which is particularly beneficial for small and medium-sized enterprises (SMEs).
4. Long-Term Validity: The LUT remains valid for an entire financial year, reducing the need for repetitive filings and allowing exporters to focus on their core business activities.

By leveraging the benefits of an LUT, exporters can navigate international trade with greater ease and flexibility.

Key Reminders About LUT Bond in GST

Here are some important points to keep in mind regarding LUT in GST:

• Validity Period: An LUT is valid for one year from the submission date.
• Conditional Acceptance: LUT acceptance comes with specific terms, and failure to meet these conditions may lead to privilege revocation, requiring the entity to provide a bond.
• Alternative Bonding: Entities ineligible for LUT registration can still furnish a bond, usually on non-judicial stamp paper, along with a bank guarantee to cover anticipated tax liability.
• Official Letterhead: LUT submissions must be on the registered entity's letterhead, specifically for the entity planning to supply goods or services without integrated tax payment.
• Prescribed Form: LUT must be filed using the official GST RFD-11 form, which can be submitted by authorized personnel such as the MD, company secretary, or firm partners.
• Bank Guarantee Limit: The accompanying bank guarantee should not exceed 15% of the bond amount, though this requirement may be waived by the jurisdictional GST Commissioner.

Frequently Asked Questions (FAQs)

1. What should be filed in the Letter of Undertaking (LUT)?

• The GSTIN and the legal name of the taxpayer will be prefilled based on login. The taxpayer needs to select the financial year for which LUT is being filed, and enter the name, address, and occupation details of two independent and reliable witnesses.

2. Is it mandatory to record a manually approved LUT in online records?

• It is not mandatory, but if the taxpayer wishes to record a manually approved LUT in online records, it can be furnished with the online application.

3. Who has to sign the LUT application?

• The primary authorized signatory or any other authorized signatory must sign and file the verification with a DSC/EVC. The authorized signatory could be a working partner, the managing director, the proprietor, or a person duly authorized by the operating partner or Board of Directors.

4. How would I know that the process of furnishing the LUT has been completed?

• After successful filing, the system will generate an ARN and acknowledgment. You will be informed about the successful filing via SMS and email, and you can also download the acknowledgment as a PDF.

5. Is it possible to view the LUT application after filing?

• Yes, the taxpayer will be able to view the LUT after filing.

6. Is it mandatory to file GST LUT?

• Yes, it is mandatory to furnish the Letter of Undertaking (LUT) to export goods, services, or both without paying IGST.

7. What happens if the exporter fails to furnish the LUT?

• If the exporter fails to furnish the LUT, they must pay the IGST or furnish an export bond.

8. Who is eligible to furnish LUT under GST?

• Any person exporting goods or services can furnish the LUT.

9. Who is not eligible to furnish LUT under GST?

• A person prosecuted for evading tax of Rs. 2.5 crore or above under the act cannot furnish the LUT.

10. What documents are required for GST LUT filing?

• The required documents include an LUT cover letter duly signed by an authorized person, a copy of GST registration, and the PAN of the entity.

11. What if the LUT is not furnished on time?

• If the LUT is not filed on time, the exporter is required to pay the tax while carrying out exports and then claim a refund to avail the benefit of zero-rated exports.

12. What is Form RFD 11?

• Form RFD 11 is used for furnishing a bond or a Letter of Undertaking (LUT) for the export of goods or services.

13. What is the full form of LUT?

• LUT stands for Letter of Undertaking, a document within the GST framework that allows Indian exporters to ship goods without paying immediate tax, simplifying the export process.

Simplify LUT Form Filing with Alliance Tax Experts

Navigating the complexities of LUT (Letter of Undertaking) filing for exporters doesn’t have to be difficult. At Alliance Tax Experts, 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 equipped to guide you through the seamless submission of the GST RFD-11 form. From document preparation to online submission, we ensure accuracy and compliance at every step. With Alliance Tax Experts by your side, you can enjoy the benefits of tax-free exports without the hassle of navigating complex procedures.

Contact us today to experience a hassle-free GST LUT filing process that empowers your export ventures like never before.

Related Guides

• GST LUT Form: A Comprehensive Guide for Exporters
• IGST – Integrated Tax under GST
• Importer Exporter Code (IEC)
• GST LUT Form FAQs

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