LUT – Overview
Any registered taxpayer exporting products or services may use LUTs. Anyone who has been charged with tax evasion under the legislation for an amount of Rs. 2.5 crore or more is ineligible to offer LUTs.
Such LUTs have a one-year expiration date (till the end of the financial year). An exporter who offers LUTs must offer fresh LUTs each fiscal year. The benefits are taken away and the exporter is forced to post bonds if the LUT requirements are not fulfilled in the allotted period.
Bonds should be issued to all other assesses in the event that the export is made without payment of the IGST (together with those who have been prosecuted for tax evasion of Rs. 2.5 crores or more under the GST legislation). Online submission of letters of the undertaking is possible through the GST portal.
The bonds must also be physically completed because a hard copy needs to be provided to the department. The following transactions allow for the usage of LUT/Bonds:
- Supplies to SEZ that are zero-rated without IGST payment
- IGST must be paid on goods exported outside of India
- without paying the IGST when providing services to a client outside of India
When should a LUT be submitted?
A letter of undertaking needs to be filed/submitted online before exporting products or services. Previously, exporters were required to manually submit two completed and signed RFD-11 forms on business letterhead.
- One was sent to the jurisdictional deputy or assistant commissioner with oversight over their primary place of business, where the export documents were examined using the ICEGATE system.
- The other to the agency in charge of clearing customs.
Similar to the previous excise scheme, these cost exporters a lot of time and money to comply with. Finally, this process has been streamlined and rationalised to give all parties involved in an exporter’s entire export process transparency. Keep in mind that the bond must be manually submitted and provided on paper without a judicial stamp.
How to file for LUT?
Follow these steps to apply for LUT on the GST Portal/GSTN:
Step 1: Login to GST Portal account.
Step 2: From the ‘SERVICES’ tab > ‘User Services’, choose ‘Furnish Letter of Undertaking(LUT)’.
Step 3: Select the financial year for which the Letter of Undertaking is applied from the drop-down list next to “LUT Applied for Financial Year.” E.g., 2021-22.
Please upload the Letter of Undertaking using the ‘Choose File’ option on the same window if you have already manually submitted one for any of the prior financial year.
Make sure of the following:
The only allowed file types are PDF and JPEG.
The maximum upload file size is 2 MB.
Step 4: Complete the necessary information on the Letter of Undertaking Form/ GST RFD-11 that appears on the screen. The following fields on the form must be filled out:
(a) Self-Declaration By clicking on each of the three boxes, you can mark them.
(b) Give Independent Witnesses Information: Mention the two independent witnesses’ names, jobs, and addresses in the red boxes.
It is significant that the Witnesses indicated on the running Bond/Bank guarantee match those listed on the Letter of Undertaking (LUT).
Step 5: Choose a location for the file. Before submitting the form, double-check its accuracy by clicking “SAVE” > “PREVIEW.” Please be aware that at this time, forms that have been signed and submitted cannot be changed.
Step 6: Use one of the following procedures to sign and return the form.
The principal authorised signature or any other authorised signatories may both sign the Letter of Undertaking. Authorized signatures may include the Managing Director, the working partner, the Firm Secretary, the proprietor, or a person duly designated by the active partner or the Board of Directors of the company or proprietor to execute the form.
DSC Submission: Sign the application using the registered digital signature certificate of the authorised signatory.
Go to “SIGN AND FILE WITH DSC” > “SIGN AND FILE WITH DSC” to use this functionality. A caution message box displays. ‘PROCEED’> has been chosen. The system creates a distinct ARN (Application reference number).
To use this option, select “SIGN AND FILE WITH EVC” > “Submit With EVC.” To the registered mobile phone number and email address of the authorised signatory, the system will issue an OTP. Type the OTP into the pop-up box, click “PROCEED,” and then click “Submit” to sign the application. Each business or limited liability partnership receives a special ARN (Application reference number)** created by the system. A confirmation message is received. The GST Portal sends this ARN to the Taxpayer’s registered email and mobile number by email and SMS.
By selecting the DOWNLOAD option, the acknowledgement can be downloaded. You can also view the previously published Letters of Undertaking on the GST website.