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Letter of Undertaking (LUT) is a declaration that the exporter submits for the sale of products or services without paying the goods and services tax. The LUT is a document that is not subject to taxation on the goods and services. 

Tax-free exporters have been given the right time to apply a LUT for export of goods/services under the previous tax regime and, subject to some conditions, the central board of export notice 37/2017 – central tax from 4th October 2017 has extended the LUT facilities to all registered exporters.”

What is the Letter of Undertaking?

Benefits in GST by LUT submission 

Export eligibility for LUT: 

Documents for LUT filing 

LUT statement Declarations 

What is the validity of the LUT? 

GST Letter of Undertaking Format

What is the Letter of Undertaking?

Letter of Undertaking is also known as LUT.  The LUT is documentation submitted by the exporter for sale without paying any taxes on products or services. LUT filing is more convenient than reimbursement because exporters do not want to engage in refund problems and block their income. In contrast to the former scheme, LUT eligibility requirements are relaxed. 

The on-line letter is sent via the RFD 11 type of GST. The exporter undertakes, by filing LUT, to comply with all requirements stated for this road.

Benefits in GST by LUT submission

Tax-free exports-

The exporter can export products or services without paying taxes by filing LUT under GST. In cases where LUT has not been filed, the exporter must pay the required tax first in the export and then claim a refund to the export value. 

A Comprehensive Financial Year –

The letter of enterprise once submitted shall be valid for the entire financial year. Unlike a method of reimbursement, any time an export consignment is carried out, an exporter may not have to comply with the procedural requirements.

Saves capital  –

By sending LUT online, the standard exporters profit immensely as a time-consuming mechanism under another path. In the case of a due refund, the bunch of capital is blocked. This mode allows the capital to be used freely for other required needs. The cost of exports is also reduced. 

Simple and quick method. –

Since April 2018, LUT has been submitted and approved on-line. The claimant will not have to go to the officers for approval. You may complete the entire process online by uploading a few required documents.

Export eligibility for LUT:

All licensed suppliers who wish to export goods or services, except for: 

• Person(s) charged under the GST Act for an offence or any other legislation and
• The tax evaded exceeds Rs. 250 lakhs in these cases

Documents for LUT filing –

• PAN Card Entity – A copy of the exporter’s PAN card.
• KYC of the Signatory Approved-Copy of the partners/directors PAN and Aadhar cards.
• Testimonials-Information for at least two witnesses together with evidence of address and PAN.
• GST Registration — The exporter is expected to have a GST Registration Certificate.
• IEC Certificate — IEC must submit a certificate
• Cancellation check – A copy of the cancellation of the Exporter’s current account check

LUT statement Declarations –

• In the duration given under Rule 96A(1) of the CGST Rules to export goods/services without paying the Integrated Goods and Service Tax (IGST)
• Compliance with all GST Act and Regulations for the export of goods/services
• If the goods/services are not exported, IGST must pay the interest at 18% p.a. on the unpaid duty, from the date of the invoice until the date of payment.

What is the validity of the LUT?

For the entire financial year in which it is submitted, the LUT submitted is valid. For each financial year, you will send a new LUT. If the goods are not exported within 3 months of the date of issue of the invoice, the exporter is liable within 15 days under Section 50(1) to pay GST along with 18 percent interest. 

Also, the exporter is liable to pay GST @ 18 percent within 15 days in case of payment for services not rendered for one year of LUT request. If this is not done, the LUT facility can be withdrawn and can be restored once more for subsequent payments.

GST Letter of Undertaking Format

The following letter of undertaking format can be adopted by exporters under GST: