LUT in GST Furnish LUT in GST, to Sell without Payment of IGST

LUT in GST stands for Letter of Undertaking. It is a document that exporters can file to carry out exports without payment of IGST. Earlier, exporters had to pay IGST on exports and then claim a refund of the same. This caused cash flow problems for exporters as the refund process was time-consuming. To address this issue, the government introduced LUT in GST. Apply for Letter of Undertaking for GST

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LUT in GST: Understanding the Concept

What is LUT is GST?

An LUT, or Letter of Undertaking, is a document that exporters need to furnish to make exports without payment of integrated tax. Essentially, it is a bond that exempts exporters from paying taxes on their outbound shipments.?

Why is an LUT Necessary for Exporters?

Exporters need an LUT because it helps them avoid the hassle of paying taxes upfront and then claiming refunds later. By providing an LUT, exporters can streamline their export process and save time and resources.

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Apply for LUT in GST @ Rs1999/-

Validity of LUT (Letter of Undertaking)

An LUT remains valid for current financial year from the date of its submission. Example- If LUT was furnished in FY 2023-2024, then the date of expiry of the validity of such LUT is 31st March 2024. Therefore, you need to file fresh LUT for FY 2023-2024.
If the goods for export are not exported within three months of Date of Invoice issue, then the Exporter is liable to pay GST along with 18% interest within 15 days according to Section 50 (1). Also in case of payment for services are not received within one year for which the LUT has been submitted, the exporter is liable to pay GST @ 18% within 15 days. Failing to do so will lead to withdrawal of LUT facility and on subsequent payments, it can again be restored.

What are the benefits of LUT in GST?

There are several benefits of availing LUT in GST. Some of them are:

  1. Cash Flow: With LUT in GST, exporters can carry out exports without payment of IGST. This means that they do not have to block their working capital in paying IGST and waiting for its refund. This improves their cash flow and helps them to invest the same in their business.
  2. Time-Saving: Earlier, exporters had to pay IGST on exports and then claim a refund of the same. This process was time-consuming and caused delays in the cash flow. With LUT in GST, exporters can carry out exports without payment of IGST, thereby saving time and increasing efficiency.
  3. Competitive Advantage: LUT in GST provides a competitive advantage to exporters. It helps them to reduce their transaction costs and offer competitive prices to their customers. This makes them more competitive in the global market.

Documents Required for LUT Filing under GST?

  1. Copy of GST registration.
  2. Pan Card of the entity.
  3. KYC of authorised person/signatory.
  4. Cancel Cheque of Entity
  5. KYC documents of two witnesses
  6. Nature of employment of witnesses
  7. Copy of last year LUT (if any).
GST Registration, gstin number

Important Point To Remember for filing of LUT

  1. An LUT remains valid for current financial year from the date of its submission. Example- If LUT was furnished in FY 2023-2024, then the date of expiry of the validity of such LUT is 31st March 2024. Therefore, you need to file fresh LUT for FY 2024-2025.
  2. NO bank guarantee required in case of letter of undertaking in GST.
  3. The LUT must be duly applied and signed by the authorised signatory of the company, firm, etc.
Apply for GST Registration @ Rs999/-

FAQ's on LUT in GST

Can all exporters avail of the LUT facility?

No, only exporters who meet certain criteria set by the GST department are eligible for an LUT

How long is an LUT valid for?

An LUT is typically valid for one financial year and needs to be renewed annually.

What happens if an exporter fails to comply with the conditions of an LUT?

If an exporter fails to comply with the conditions of an LUT, they may be required to pay taxes on their exports and face penalties.

Do you want to Apply for LUT in GST?

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