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Letter of Undertaking under GST

Letter of Undertaking (LUT)

According to the Notification no. 37/2017 Central Tax, any registered person who intends to supply goods /services to outside India or units covered under SEZ (Special Economic Zone) or developer of SEZ without payment of integrated tax (IGST) is required to furnish Letter of Undertaking (LUT) in FORM GST RFD-11

Applicability- LUT

Any registered taxpayer exporting goods or services can make use of LUTs except the person who has been prosecuted for tax evasion for an amount of Rs. 2.5 Crores or above under the Central Goods & service Tax Act, 2017 (12 of 2017) or the Integrated Goods and Service tax Act 2017 (13 of 2017) or under any of the existing laws is not eligible to furnish LUTs.

Validity

The validity of such LUT’s is for a period of one year (till the end of respective financial year). An exporter furnishing LUT’s are required to furnish fresh LUT for each financial year.

Implications of not exporting goods or services:

As per the specifications laid in Rule 96A of the CGST Rules,

  • The exporter shall be liable to pay taxes, with interest with in a period of:

a) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange [or in Indian rupees, wherever permitted by the Reserve Bank of India.fifteen days after the expiry of three months[  or such further period as may be allowed by the Commissioner,] from the date of issue of the invoice for export, if the goods are not exported out of India; or

b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange [or in Indian rupees, wherever permitted by the Reserve Bank of India.

  • Form GSTR-1 with details of invoices of export shall be filed with a confirmation of goods have been exported out of India

When to apply/file?

Letter of undertaking has to be filed /submitted online before exporting the goods/services.

How to file Letter of Undertaking (LUT) 

Have to furnish Letter of Undertaking (LUT) in GST RFD-11 form on the common portal of GSTN in order to make exports without payment of IGST.

  1. Login to the GST portal, go to User Service and Select the Tab “Furnishing Letter of Undertaking”
  2. Select the Financial year for which you want to renew the LUT.
  3. If you have already furnished LUT offline/online for the previous period, attach the acknowledgement of the same.
  4. Self-Declaration contains
    • i) Export of goods/services shall be completed within the time prescribed by act
    • ii) To comply with provisions of GST Act related to export of goods or services.
    • iii) To pay IGST along with Interest (18% p.a.) if failed to Export
  5. Give Independent Witnesses Information:
    • i) Mention the Name, Occupation and Address of two independent witnesses
  6. Authorised signatory can sign the application form for renewal.
  7. Click the SIGN AND FILE WITH DSC or SIGN AND FILE WITH EVC button.
  8. An LUT shall be deemed to have accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN) is generated online.