What is the Letter of Undertaking under GST?
Letter of undertaking is the document that the user provides declaring fulfillment of all requirements under GST. It is furnished in case of export undertaken without paying IGST. Also, according to the Notification No. 37 /2017 – Central Tax It is mandatory to furnish LUT to export goods or services or both without paying IGST. If the exporter fails to provide the LUT, then he has to pay IGST or provide an export bond. Earlier LUT could only be filed offline at the concerned GST office. But to further ease the process the Government has made the LUT filing online.
What are the eligibility criteria to apply for LUT?
A person intending to supply goods/services
- To or outside India or
- Places covered under Special Economic Zone
- Without paying integrated tax and
- Is also registered under goods and services tax
An individual is eligible to apply for LUT if the below-mentioned conditions are fulfilled.
- There has never been the prosecution of the person under the Central Goods and Services Tax Act (CGST) or the Integrated Goods and Services Act (IGST) 2017 or any other existing laws. Where, the amount of tax levied exceeds Rs. 250 lakhs.
- The LUT shall be provided on the letterhead of the person registered under goods and services tax. It should be furnished in duplicate for a financial year. LUT is presented in the annexure to form GST RFD-11 and can be issued by the partner, MD, Company Secretary or by the person duly signed by the company or the proprietor.
- If a person fails to pay the tax within the stipulated time as mentioned under the Central Goods and Services Act, the facility of exporting without payment of IGST is withdrawn till it is paid.
The jurisdiction for the submission of LUT
The LUT shall be accepted by the Assistant or Deputy Commissioner having Jurisdiction over the place where the exporter does his business. The Exporter can furnish the LUT before any central or state officer till any specific administrative officer is assigned.
Process of Filing LUT (Letter of Undertaking)
1. Login to https://services.gst.gov.in/services/login
2. Click on the services tab and under that select the User services and the select Furnish LUT
3. Under the “LUT applied for Financial year” select the financial year you want to file your LUT for.
If your LUT for the previous period is furnished offline, then you are required to attach it by clicking choose file as shown on the screen below and continue.
4. Fill the details in the form appearing on the screen
Then you need to tick mark by clicking against the three boxes. By doing this, the exporter undertakes
- Export of goods will be done within three months from the date of issue of export invoice or this time may be extended if allowed by the Commissioner.
- The exporter needs to abide by GST law in respect of exports.
- To pay Integrated tax along with Interest if failed to export.
*Interest must be paid at the rate of 18% per annum for the period From the date of issue of export invoice up to the date of payment of integrated taxes
5. Mention witnesses for generating LUT
Independent Witnesses Information: Fill the name, Occupation, and address of two independent witnesses in the boxes highlighted here
We need to declare the witnesses of the LUT on running bonds/ Bank guarantee.
6. Preview Letter of Undertaking (LUT)
Enter Place of Filing your LUT under the place of filing LUT and then click on SAVE after saving your document you can preview your Document by clicking on the preview to verify the form before submission
7. Signing of Letter of Undertaking
File the form after signing it.
- 1. The exporter or any other authorized signatory can sign the letter of Undertaking
- 2. Authorized signatories include partners, MD or company Secretary or the proprietor or any other person authorized by these people.
We can sign the application with Digital Signature Certificate of the authorized signatory. Click on the ‘Sign and file with DSC’ a warning message box appears, click on PROCEED button. Then the system provides the application reference number
We can also submit with EVC: Click on ‘Sign and file with EVC.’ Then you will receive an OTP to your registered mobile number; you will also get an email notification for the same. Enter the OTP in the pop-up message then you will receive a warning box for submission. You need to click on PROCEED to get your application reference number.
*LLPs and companies can only use DSC for filing
8. Getting LUT confirmation
Then you will get an email notification and SMS to your registered mobile number.
9. Download your GST Letter of Undertaking
You can now download your acknowledgment by clicking on the DOWNLOAD option
Validity of LUT (Letter of Undertaking)
The LUT submitted is valid for the whole financial year in which it is submitted. You need to submit a new LUT for each financial year. 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.
You can download the FORM GST RFD-11 from www.cbec.gov.in as long as it is available on the portal. Furnish the filled form to the jurisdictional Deputy/Assistant Commissioner with jurisdiction over your place of business.
Document of LUT (Letter of Undertaking)-
Self-declaration that the conditions of the Letter of Undertaking shall be accepted unless there is specific permission granted. In such cases, a self-declaration is required by the exporter to the effect that he has not been prosecuted should serve the purpose of notification- 37/2017- Central Tax on 4th October 2017. Verification if required may be carried out on a post-facto basis.
Time for acceptance of LUT/Bond-
As LUT or Bond is mandatory for export business, including exports to an SEZ unit, so it should be on the top priority list. The LUT/ Bond should be accepted within three working days after it has been received along with the self-declaration by the exporter as mentioned above. Failing to process the LUT within three working days, it shall be considered to be accepted.
Bank guarantee-
In all cases, bonds shall be accompanied by a bank guarantee amounting to 15% of the bond amount.
Sealing by officers-
In case of self-sealing, sealing of containers, is to be exercised under the supervision of the central excise officer having jurisdiction over the place of business. A copy of the report is to be submitted to the Deputy/ Assistant Commissioner having jurisdiction over the place of business.
Purchases from Manufacturer-
There are no provisions for issuance of CT-1 form which allows exporters to purchase goods from manufacturers without paying tax under the GST regime. The transaction between the manufacturer and the exporter is like supply, and the same would be subject to GST.
Transactions with EOUs (Export Oriented Units)-
Zero rating does not apply to supplies to EOUs, and there is no special exemption for them under the GST regime. Therefore they are taxable similar to any other taxable supplies. To the extent of exports, EOUs are eligible for zero-rating.
