Letter Of Undertaking
Deliverables - Timeline
Get information by Email
Deliverables
Letter Of Undertaking/Acknowledgement
Timeline
10 Days
(from receipt of all documents)
What is a Letter of Undertaking (LUT) in India?
A Letter of Undertaking (LUT) in India is an export document required under the Central Goods and Services Tax (CGST) Act, 2017, enabling exporters to supply goods or services without paying Integrated Goods and Services Tax (IGST). By submitting an LUT in Form GST RFD-11 or export bond, exporters declare they will comply with all GST requirements while undertaking exports. This provision helps avoid the blockage of funds by eliminating upfront tax payments and facilitates a tax refund mechanism under GST law. The LUT facility is available to all registered persons except those prosecuted for offences involving tax evasion exceeding ₹250 lakh as per Rule 96A of the CGST Rules, 2017.
When to apply/file an LUT and what was the scenario before GST?
A Letter of Undertaking has to be filed /submitted online before exporting goods/services to a country outside India or to Special Economic Zones (SEZs). Prior to this, exporters had to manually submit the filled-in and signed RFD-11 on a business letterhead in duplicate –
1. One to the Jurisdictional Deputy/Assistant Commissioner having jurisdiction over their principal place of business where the verification with the Export documents happens through ICEGATE medium.
2. Another along with the Export documents to the Customs clearing authority.
Eligibility to Obtain a Letter of Undertaking (LUT)
To be eligible for a Letter of Undertaking (LUT), the exporter must meet specific criteria:
1. Export Locations: Exports should be made either outside or within India. It can also be from places under the Special Economic Zones (SEZs).
2. Registered Taxpayer: The exporter must be a registered taxpayer under the Goods and Services Tax (GST) Act. The exporting goods or services should also be registered under GST.
3. Disqualification Due to Prosecution: Exporters who have been prosecuted under the Central Goods and Services Tax (CGST) Act, 2017 or the Integrated Goods and Services Tax (IGST) Act, 2017, for tax evasion of Rs. 2.5 crore or above are not eligible to submit an LUT.
4. LUT Submission Requirements: The LUT should be provided on the exporter’s letterhead that is registered under GST. If the exporting entity is a company, the LUT must be digitally signed by a partner, company secretary, managing director, or any person duly authorised by the company.
5. Compliance with Tax Payment Timelines: If an exporter fails to pay the tax within the prescribed time, the facility of supplying without IGST payment will be revoked.
6. Validity: The LUT is valid for one financial year. A fresh LUT must be generated every financial year to continue availing the benefits under the scheme.
Who should sign a LUT Application?
The LUT application must be signed by the primary authorised signatory or any other authorised signatory responsible for filing the verification. This can include the working partner, managing director, proprietor, or any person duly authorised by the working partner or the Board of Directors of the company or proprietor. The authorised signatory must use a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC) to complete the filing process. This ensures that the application is legally binding and complies with GST regulations.
Steps to furnish LUT on the GST portal
Step 1 : Login to GST Portal.
Step 2 : Go to ‘SERVICES’ Tab > ‘User Services’ > Select ‘Furnish Letter of Undertaking(LUT)’
Step 3 : Select the financial year for which Letter of Undertaking is applied for from the ‘LUT Applied for Financial Year’ drop-down list. Eg: 2021-22.
Step 4 Fill up the necessary details on the Letter of Undertaking Form/ GST RFD-11 that appears on the screen The following needs to be done on the form:
(a) Self-Declaration: Tick mark by clicking against each of the three boxes
By doing this, Exporter undertakes the following :
Export of goods/services will be completed within a period of three months from the date of issue of Export invoice or further period allowed by the Commissioner if any.
To abide by GST law in respect of exports
To pay IGST along with Interest* if failed to Export
(b) Give Independent Witnesses Information: Mention the Name, Occupation and Address of two independent witnesses in the boxes highlighted in red color mandatorily.
Step 5 : Enter the Place of filing > Click on ‘SAVE’ > click on ‘PREVIEW’ to verify the correctness of the form before submission Note that currently, the revision of a signed/submitted form is not possible.
Step 6 Sign and file the form using either of the below options:
The Primary authorised signatory/ any other authorised signatory can sign the Letter of Undertaking. Authorised signatory can be the working partner, the Managing Director, the Company Secretary or the proprietor or by a person duly authorised by such working partner or Board of Directors of such company or proprietor to execute the form.
Submit with DSC: Sign the application using the registered Digital Signature Certificate of the selected authorized signatory.
OR
Submit with EVC: To use this option, Click on ‘SIGN AND FILE WITH EVC’ > The system will trigger an OTP to the registered mobile phone number and e-mail address of the authorized signatory. Enter that OTP in the pop-up to sign the application > Warning message box for submission appears > Click ‘PROCEED’> System generates a unique ARN (Application reference number)
You can click on the DOWNLOAD button to download the acknowledgement. You may also check out the Letter of Undertakings previously furnished on the GST portal.
Recent Post
Why choose LineupTax ?
10+ years of experience
Economical and Fast
Tech Enabled
Expert Assistance
FAQs
LUT (Letter of Undertaking) filing is mandatory for export businesses in India as it allows exporters to export goods or services without having to pay Integrated Goods and Services Tax (IGST). As per the Central Goods and Services Tax (CGST) Act of 2017, exporters must file an LUT to ensure they can avail of the tax exemption on IGST. This document helps save on taxes, making it an essential requirement for export businesses.
