LUT in GST (Letter of Undertaking) Overview

LUT in GST (Letter of Undertaking) Overview

Do you want to know what the LUT number in GST is? Here in this article, you will learn an overview of LUT in GST.

LUT full form in GST is a Letter of Undertaking. When exporting without paying IGST, the exporter guarantees that they will adhere to all GST regulations. 

This declaration must be filed in the form GST RFD 11 in accordance with Rule 96A.

Who is required to submit LUT using GST RFD-11?

Exporters of goods and services who are GST-registered are required to submit a GST LUT. 

Exporters are unable to submit a GST LUT if they have been charged with a felony or engaged in tax evasions totalling more than Rs 250 lakhs in violation of the CGST Act, the Integrated Goods and Services Act of 2017, or any other applicable laws. 

In this case, they would have to offer an export bond. In this case, the government aimed to increase the export market by offering export subsidies. 

Under the CGST Rules, 2017, any registered person is permitted to submit an Export Bond or LUT for GST RFD 11 without having to pay the Integrated Tax. If:

  1. They are GST-registered and plan to provide products or services to India, other countries, or SEZs.
  2. They want to sell items without having to pay the incorporated tax.

Required Documents for LUT under GST

Any person registered under GST who has not been executed for tax evasion exceeding Rs. 250 lakh or for any other felony may submit a LUT.

  1. Request for acceptance in LUT, in writing - properly executed by a designated individual
  2. Copy of the entity's PAN card for GST registration, together with KYC information for the signer's authorisation
  3. a replica of the IEC code
  4. Unpaid Cheque
  5. approved letter

The LUT GST Filing Procedure

Below are the processes for submitting and providing bonds when the exports are done without paying taxes to file a Letter of Undertaking (LUT).

Verify the jurisdictional and supply requirements. Additional documentation about the bank guarantee must be prepared if a bond is to be issued.

Prepare the Bonds' required paperwork. The following paperwork must be submitted with bonds:

Regarding bonds:

  • RFD 11 form.
  • Stamp paper with a bond.
  • Bank assurance.
  • authorisation letter
  • other supporting records

It is optional to provide a separate bond for every consignment. He may instead offer a running bond. 

A running bond makes it easier for the exporter to apply the same terms and conditions to the bond for the subsequent shipment.

Along with an official document, a duplicate copy should be made.

The following step is to provide the papers to the department and have them examined by an appropriate person to prevent any rejection.

The officer must provide a letter acknowledging receipt of the document after filing it.

Qualifications for GST LUT Filing

The Letter of Undertaking is available to every registered taxpayer who exports goods and services. 

Anyone who has faced legal action for tax evasion involving Rs. 250 lakh or more is disqualified.

These LUTs are only valid for a year, and exporters must provide a new LUT for each fiscal year. 

The rights will be removed, and the exporter will be required to post bonds if the requirements outlined in the LUTs are met after the allotted time frame.

Other assesses you must provide bonds if the export is made without the IGST being paid. Bonds and LUTs can be applied to:

  • Zero-rated supplies made without GST payments to SEZ.
  • exporting products to a nation outside of India without paying IGST
  • Without paying IGST, it provides services to a client in a non-Indian nation.

Submission of a Letter of Engagement (FORM GST RFD-11)

The following format is used to file Form RFD-11:

  • Incorporated Name.
  • Address.
  • GST No.
  • furnishing date
  • Date, location, and signature.
  • Witness information (Name, address, and occupation).

Bond for Export of GST

Based on the abovementioned requirements, entities not qualified to submit a Letter of Undertaking must provide an export bond and a bank guarantee. 

Based on the self-assessed estimated tax liability, the applicant is required to pay the amount of tax associated with the export.

A non-judicial stamp paper with the value that is appropriate in the State where the export bond is being provided should be used.

Additionally, exporters may provide a running bond, which eliminates the requirement that an export bond is performed for each export transaction. 

However, the exporter must provide a new bond to cover the increased responsibility if the unpaid export tax due at any point exceeds the original bond amount.

It is possible to need both an export bond and a bank guarantee. Usually, the bank guarantee's worth shouldn't be more than 15% of the bond's total value. 

The jurisdictional GST Commissioner, however, has the authority to waive the bank guarantee that must be presented with the export bond depending on the exporter's track record.

Bond Form:

  • Registered Name.
  • Address.
  • The amount of the supplied bond.
  • Date of furnishing.
  • Amount of the bank guarantee provided.
  • Date, time, and location of signature.
  • Information about the witnesses (Name, address, and occupation).

Read more,

How to File GSTR 10 Final Return

What is Inter State GST and Intra State Supply Under GST

Conclusion

The GST Letter of Undertaking is an excellent tool for exporters; thus, it is important to take precautions to ensure that the exporter does not postpone IGST payments. 

If this occurs, the exporter may be required to pay the amount that was not paid at a rate of 18% each year. 

The exporter also needs to be careful not to evade taxes by more than Rs. 250 lakhs since this will prevent him from being eligible for LUT advantages. 

But even if the exporter loses out on the benefits of the GST Letter of Undertaking for one of the reasons mentioned above, he can still use the export bond benefit.

FAQs on LUT in GST

What belongs in the letter of undertaking?

Upon logging in, the Taxpayer's GSTIN and Name (Legal Name) will already be filled in. The Taxpayer must first choose the fiscal year for which the LUT is being filed and then provide the names, addresses, and occupations of two trustworthy and impartial witnesses.

The LUT application must be signed by whom?

Any additional approved signatories and the primary authorised signatory must sign and submit the verification to DSC/EVC. The person legally permitted by the firm's operating partner, board of directors, or proprietor to sign the document may be the operating partner, managing director, or proprietor.

How am I going to know when the LUT provisioning procedure is finished?

The system will generate an ARN and an acknowledgement after a successful filing. You may download the acknowledgement as a PDF and receive SMS and email notifications when your filing is successful.

Do manually authorised LUTs have to be entered into online records?

It is not required, but if the Taxpayer wishes to include the manually authorised LUT in the online records, he can do so while submitting the online application.

If you are looking for any GST services, Secretarial ServicesDue Diligence services  in Noida, Delhi, Gurgaon or anywhere in India, write to us at accounts@especia.co.in. Or Call On :(+91)-9711021268 +91-9310165114

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