What is letter of undertaking??
A Letter of Undertaking (LUT) is a legal document issued by an exporter to the government authorities declaring their intention to export goods or services without paying the Goods and Services Tax (GST), specifically the Integrated Goods and Services Tax (IGST).
Typically, when goods are exported, they are considered as zero-rated supplies under GST, meaning that no GST is levied on them. However, to facilitate this, exporters are required to furnish a Letter of Undertaking to the authorities. By submitting an LUT, the exporter assures the government that they will abide by all the rules and regulations regarding the export of goods or services, including the payment of any applicable taxes or duties if circumstances change or if they fail to meet the specified conditions.
Submitting an LUT eliminates the need for exporters to pay IGST on exported goods and later claim a refund, streamlining the export process and reducing administrative burdens. It is an essential document for exporters seeking to conduct their business internationally while remaining compliant with tax regulations.
Who Can Submit LUT and Its Benefits: The Letter of Undertaking (LUT) is a prerequisite for exporters aiming to export goods without GST (IGST) payment. The LUT facility has now been extended to all registered individuals intending to supply goods or services for export without paying integrated tax. To comply, individuals are required to submit LUT using Form GST RFD 11 under rule 96A.
However, it’s important to note that exporters who have faced prosecution for any offense under the CGST and the Integrated Goods and Services Tax Acts, 2017, or any other existing law, and where the amount of tax evaded exceeds ?250 lakh, are ineligible to furnish LUT. Consequently, they cannot export goods without payment of GST (IGST).
Navigation Guide for LUT Submission: To facilitate the submission of LUT, users can follow the navigation steps outlined below:
- Dashboard
- Services
- User Services
- Furnish Letter of Undertaking
- Select Financial Year & Submit Application
Disclaimer: It is imperative to consult a certified Chartered Accountant (CA) or a tax consultant before making any decisions based on the above information. The author assumes no responsibility for any losses incurred due to decisions made solely on the basis of this article.
About the Author: The author is a practicing Chartered Accountant and the founder of Durgesh Pal & Co. located in Nagpur, Maharashtra. For further inquiries, the author can be reached at +91-9850964812.
