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The letter of undertaking is lut full form and is a document, like that of a bank guarantee, meanwhile in which a bank allows its customers to raise funds from other Indian Financial Institutions' foreign branches as short-term credit. This lut under GST comes up with a different meaning as from usually defined. Before that, you must know how to apply for gst.

In other words, letter of undertaking gst is known as LUT and prescribed to be furnished in form GST RFD 11 under rule 96A of CGST Rules, 2017. Now it is important to define furnish for that you should take the help of experts like Tax Advisory-India’s Leading Legal Service Provider.  The lut certificate is a document declaring that all the requirements are checks under the GST or as per the GST regime by the user. It is a grant in case of export without paying IGST. 

Letter Of Undertaking: As per Notification no. 37/2017

Lut meaning according to Notification No.37/2017 – Central Tax it is necessary to grant a Letter of undertaking is lut full form and it is to export goods or services or both without paying IGST. If in case, the exporter is unable to provide the lut, then he has to provide an export lut bond or has to pay IGST, which can now be done on both in online and offline modes and claim the refund of tax paid. To avoid chaos and trouble, mostly exporters go with filing a LUT to neglect the tax refund hassles.

What is LUT IN GST: An insight 

To understand what is lut in gst, you must know the basics of GST and then check further. A letter of undertaking or lut in gst is defined as an indenture that is required to be filed by exporters to export goods and services without paying any taxes (this is the full form of gst). Under the new GST regime, all exports can later be retrieved via a refund against the tax paid which is subject to Integrated goods and services tax (it is igst full form). Therefore, to understand lut full form and what is lut, you need to take the help of experts like Tax Advisory who can help you in getting all necessary information and allow you to take the benefits.

Filing lut in gst is now accessible due to online mode. It is making it extremely convenient and quick. A letter of undertaking eliminates blocking of funds by way of tax payments and supplements exporters the effort of pursuing a refund. Below is a letter of undertaking format-

Validity of LUT IN GST

The Letter of undertaking when issued is valid for the whole financial year. Every next year a new LUT has to be filed. When the Invoice is issued for exporting the goods, the exporter needs to trade them within three months from the issued date or and also the services should be rendered within a year, if not, then the exporter is liable to pay GST along with 18% interest within 15 days according to the Section 50 (1) in both the situations. For that, you must know how to apply for gst. Then you will get a letter of authorization for gst. If a person fails to do so it can lead to the withdrawal of the lut number facility and on subsequent payments, it can again be restored.

Benefits of Letter of undertaking: For exporters

• An exporter can easily trade without paying tax. If he hasn’t filed the Letter of an undertaking, then first, he has to pay the required tax and then would be able to claim a refund to avail Benefit of zero-rated exports.
• A Letter of the undertaking has validity for one whole financial year. Once it is filed the exporter may not go through the procedural requirements every year.
• The regular exporters reap a huge advantage of filing LUT as the refund process in itself is a very time-consuming process. In this duration, a large amount of capital could be blocked as a form of a due refund. But by filing lut under gst this capital can be utilized for other mandatory needs. It is cost-effective as it reduces the cost of exports and export procedures under gst. 
• Filing a Letter of the undertaking can now be done by both online and offline modes. From April 2018, the government introduced an online way or process for filing LUT so that the inconvenience faced by the several exporters could be eliminated.

Documents required for filing Letter of undertaking

The self-declaration is the basic requirement when an exporter files a letter of undertaking without paying IGST. This must show that the registering entity has not been prosecuted for any offense under the Central goods and services tax act or CGST and Integrated goods and services tax act or IGST with regards to the evasion of tax exceeding Rs.2.50 Crores. This clears the igst meaning. Some other documents needed are as follows: - 

• Entity’s pan card
• Witnesses with id
• IEC Certificate
• KYC of Authorized Signatory
• GST Registration
• Canceled Cheque

Method of filing Letter of undertaking

1. Log in to the official website of GST.
2. Click on the services tab and then select the user services and then select furnish LUT.
3. Select the financial year you want to file LUT in under the “LUT applied for financial year”.
4. Fill in the details in the form which are available on the screen.
5. Mention witnesses for generating LUT.
6. Then preview the Letter of the undertaking.
7. The signing of the Letter of the undertaking.
8. Getting lut number confirmation.
9. You can download your lut under gst.

Accepting Letter Of Undertaking

Filing a letter of undertaking is the first and foremost thing when the export of goods or services has to be done without payment of IGST as per the GST Law. The lut has to be accepted within 3 working days from the date of filing the LUT. Here is the proforma of filing clarifications-

And if you want to cancel your application, then fill Application For Cancellation of Registration-

Who can apply for LUT IN GST? 

A person who is legal under GST intending to supply goods and services-

The following are the conditions that are important to file LUT: -

• The person applying must not be prosecuted under the IGST Act or CGST Act where the tax levied exceeds 250 lakhs.
• The person has to avail of this with the help of an online portal of GST (you must get a consent letter for gst). The secretary, MD, partner, or any legal entity is permissible to file GST RFD-11 through this portal.
• The goods have to be traded within the Period to avail Benefits of LUT.

The Intent of LUT IN GST

According to Section 16 of Integrated goods and services tax act 2017 of IGST Act, the export of goods and services that is zero-rated supply, does not come under the Goods and Services Act. In such cases, exporters can demand a refund accordingly, by either alternative mentioned below: -

1. The person may supply goods and services under the letter of undertaking or bond without paying Integrated tax and can claim a refund of any unutilized input tax credit.
2. The individual can supply goods or services on paying of integrated tax and claim refund of such tax paid on goods or services or both supplied. For the grounds of payment of GST on goods/services exported, exporters may utilize corresponding ITC claims.

Essential Things to Remember For LUT

1. Cover Letter requesting acceptance of LUT
2. GST registration Certificate’s copy.
3. Form GST-RFD-11- Original two sets.
4. PAN card of the individual
5. KYC of authorized entity/signatory
6. Copy of IES code
7. Canceled cheque
8. Authorized letter
9. Self-declaration

Eligibility To Apply For Lut Certificate

An entity registered under the Goods and Services Act, who is intending to supply goods or services. The following are the conditions that a person registered under GST filing LUT must match: - 

• The person who is applying for a letter of the undertaking must not be summoned under the Central goods and services tax act.
• The facility of exporting goods and services without paying the IGST will not be available if the exporter fails to export goods or services under the period mentioned within GST law.

Procedure for Filing LUT certificate

1. Firstly, click on the official link https://services.gst.gov.in/services/login To login to the account using the owner credentials.
2. Click on the “User Services” option under the “Services” tab.
3. Now the person has to fill all the details in the form displayed on the screen followed by clicking on the three boxes given below on the same page.
4. Lastly, the form then has to be signed with a digital signature certificate or via electronic verification code. Both options appear on the form.

Note: Once the form is submitted, you cannot edit it.

Closure

When everything has been done, a person will receive a confirmation mail for LUT filed along with the SMS on the mobile phone registered for the same. The lut bond is the most beneficial feature for the regular exporters as they can trade goods and services without paying any kind of taxes and avoid claiming a refund. A lut certificate is valid for one entire financial year. It even helps the exporter to reduce his working capital who struggle with financial and working capital issues. So, filing a lut number is the most favorable way to enhance exporting for any exporter. 

At Tax Advisory- India’s Leading Legal Service Provider, you will get it done easily without facing any problem as if you are doing it on your own, then there are many chances of rejection and as a result, you may not be able to provide all necessary data and information. Hence, why not take the help of an expert? Get your LUT Certificate now and avoid troublesome conditions.

By Kanchan Pandey

Content Production & Graphic Designer

Tax advisory

Contact us for further inquires

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