What is the GST Letter of Undertaking (LUT)?
The user certifies in the letter of undertaking that all GST obligations have been satisfied. If an export is made without paying the IGST, it is given. Additionally, Central Tax Notification No. 37 (2017) You must offer LUT in order to export goods, services, or both without paying IGST. The exporter is required to pay the IGST or post an export bond if the LUT is not provided. LUTs could previously only be submitted in person at the relevant GST office. However, by making the LUT filing procedure available online, the government has improved accessibility.
Who can utilise Letters of Undertaking (LUT) and Bonds?
Any registered taxpayer exporting products or services may use LUTs. Anyone who has been charged with tax evasion under the legislation for an amount of Rs. 2.5 crore or more is ineligible to offer LUTs.
Such LUTs have a one-year (or until the end of the fiscal year) expiration date. An exporter who offers LUTs must offer fresh LUTs each fiscal year. The benefits are taken away and the exporter is forced to post bonds if the LUT requirements are not fulfilled in the allotted period.
All other assesses (along with those who have been prosecuted for tax evasion of Rs. 2.5 crores or more under the GST legislation) should receive bonds if the export is made without payment of IGST. Online submission of letters of the undertaking is possible through the GST portal.
The bonds must also be physically completed because a hard copy needs to be provided to the department. The following transactions allow for the usage of LUT/Bonds:
- Zero-rated supplies to SEZ without IGST payment
- Payment of IGST on products exported to a country outside India
- Providing services to a client outside of India without paying the IGST
When should you apply for/file a LUT, and what was the situation before GST?
A letter of undertaking needs to be filed/submitted online before exporting products or services. Previously, exporters were required to manually submit two completed and signed RFD-11 forms on business letterhead-
One was sent to the jurisdictional deputy or assistant commissioner with oversight over their primary place of business, where the export documents were examined using the ICEGATE system.
The other to the agency in charge of clearing customs.
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Similar to the previous excise scheme, this cost exporters a lot of time and money to comply with. Finally, this process has been streamlined and rationalised to give all parties involved in an exporter’s entire export process transparency. Keep in mind that the bond must be manually submitted and provided on paper without a judicial stamp.
How to fill out a LUT on the GST portal
To provide LUT on the GST Portal/GSTN, complete these steps:
Step 1:First, sign up for a GST Portal account.
Step 2: From the ‘SERVICES’ tab > ‘User Services’, choose ‘Furnish Letter of Undertaking(LUT)’.
Step 3: Select the financial year for which the Letter of Undertaking is applied from the drop-down list next to “LUT Applied for Financial Year.” E.g., 2021-22.
Please upload the Letter of Undertaking using the ‘Choose File’ option on the same window if you have already manually submitted one for any of the prior months.
Make sure of the following:
The only allowed file types are PDF and JPEG.
The maximum upload file size is 2 MB.
Step 4: Complete the necessary information on the Letter of Undertaking Form/ GST RFD-11 that appears on the screen. The following fields on the form must be filled out:
(a) Self-Declaration By clicking on each of the three boxes, you can mark them.
By doing this, the exporter agrees to the following:
The export of goods or services must be finished within three months of the date the export invoice was issued, or within any other time frame the Commissioner may specify.
- Following the GST rules when it comes to exports.
- If you fail to export, IGST plus interest must be paid.
(b) Give Information to Independent Witnesses: In the red boxes, list the names, jobs, and addresses of two independent witnesses.
It is significant that the Witnesses indicated on the running Bond/Bank guarantee match those listed on the Letter of Undertaking (LUT).
Step 5: Choose a location for the file. Before submitting the form, double-check its accuracy by clicking “SAVE” > “PREVIEW.” Please be aware that at this time, forms that have been signed and submitted cannot be changed.
Step 6: Use one of the following procedures to sign and return the form.
The principal authorised signature or any other authorised signatories may both sign the Letter of Undertaking. Authorised signatories may include the Managing Director, the working partner, the Firm Secretary, the proprietor, or a person duly designated by the active partner or the Board of Directors of the company or proprietor to execute the form.
DSC Submission: Sign the application using the registered digital signature certificate of the approved signatory.
Go to ‘SIGN AND FILE WITH DSC’ > ‘SIGN AND FILE WITH DSC’ to use this feature. A caution message box displays. ‘PROCEED’> has been chosen. A distinct ARN (Application reference number) is generated by the system.
OR
‘SIGN AND FILE WITH EVC’ > ‘Submit With EVC’ is the option you want to use. To the registered mobile phone number and email address of the authorised signatory, the system will issue an OTP. Enter the OTP in the pop-up box > A submission caution notice box opens > The option to sign the application is chosen, ‘PROCEED’. Each business or limited liability partnership receives a special ARN (Application reference number)** created by the system. A confirmation message is received. The GST Portal sends this ARN to the Taxpayer’s registered email and mobile number by email and SMS.
By selecting the DOWNLOAD option, the acknowledgement can be downloaded. You can also view the previously published Letters of Undertaking on the GST website.
‘SERVICES’ > ‘User Services’ > on the landing page Check out my submitted LUTs Select a time period > View the list of LUTs that are accessible during the specified time> Click ‘VIEW’ next to a Letter of Undertaking to view its information.
Bonds Format and LUT in RFD-11
The following is the format of the RFD-11:
LUT application form:
- Registered Name
- GSTIN Number
- Address
- Date of filing
- Date, place, and signature
- Witness information (Name, address and occupation)