LUT Filling

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Background to Exports and GST

The goal of any developing country's government is to increase the amount of goods and services it sells to other countries. Governments help this by giving benefits and relief to exporters, making trade easier. Exporters can use these benefits to trade more freely and profitably. Similarly, the government in India offers benefits to exporters under the GST system. When exporters sell goods or services from India, they don't have to pay extra taxes, which means they can trade without any tax burden.

Under GST regime, the exporter has either of the two options:

  • Export under bond (LUT) without payment of tax
  • Export along with tax payment and claim refund later

1. WHAT IS LETTER OF UNDERTAKING?

A Letter of Undertaking (LUT) is a document that exporters can submit to export goods or services without needing to pay taxes upfront. With the new GST rules, all exports are initially subject to Integrated Goods and Services Tax (IGST), which can later be reclaimed through a refund. By using an LUT, exporters avoid the hassle of seeking a refund and prevent their funds from getting tied up due to tax payments. Therefore, the GST LUT Form is an essential document that allows exporters to carry out their export transactions smoothly without having to make IGST payments during the process.

Under CGST Rules, 2017, any registered person can furnish LUT in form GST RFD 11 and export goods or services without payment of integrated tax. Any person can apply for LUT if they

  • Are registered under GST
  • Intended to supply goods or services to India or Overseas or to SEZs
  • Wish to supply goods or services without payment of an integrated tax

2. DOCUMENTS REQUIRED FOR LUT FIILING UNDER GST?

  • KYC documents of two witnesses
  • Nature of employment of witnesses
  • Copy of last year LUT (if any).

3. BENEFITS OF FILING LUT

An exporter can export goods or services without having to pay taxes if they choose to use the LUT. In the event that the exporter chooses not to choose this option, they will be required to pay export taxes and then request a refund for their zero-rated exports. Exporters can avoid the hassles of filing tax returns and responding to IRS inquiries by using the LUT. Operational ease and huge time savings follow from this. Exporters can handle international trade with greater efficiency and flexibility by utilising the advantages of GST LUT.

4. KEY THINGS TO REMEMBER

  • An LUT remains valid for current financial year from the date of its submission. Example- If LUT was furnished in FY 2021-2022, then the date of expiry of the validity of such LUT is 31st March 2022. Therefore, you need to file fresh LUT for FY 2022-2023.
  • NO bank guarantee required in case of letter of undertaking.
  • The LUT must be duly applied and signed by the authorised signatory of the company, firm, etc.
  • Non-export of goods within three months from the invoice date requires GST payment with 18% interest within 15 days (Section 50(1))
  • Non-receipt payment for services within a year of LUT submission necessitates GST payment @ 18% within 15 days
  • Failure leads to LUT facility withdrawal, with possible restoration upon subsequent payments.
  • The acceptance of an LUT comes with specific terms. Failing to meet these conditions might lead to the revocation of privileges. In such cases, an entity may need to provide a bond
  • Entities ineligible for LUT can still provide a bond. This bond, usually on non-judicial stamp paper, requires a bank guarantee. The guarantee should cover the anticipated tax liability based on exporter assessment.

Simplify LUT Form Filing with Karfile

It has never been easy to navigate the complexity of exporters' LUT (Letter of Undertaking) filing requirements. Karfile specialises in expediting the procedure so you may concentrate on growing your export business. Our knowledgeable Team is equipped to help you submit the GST RFD-11 form with ease because they are aware of the subtleties of the tax laws. From document preparation to online submission, we provide end-to-end support, guaranteeing correctness and compliance at every turn. You shall enjoy the advantages of tax-free exporting without having to deal with the headache of complicated procedures when Karfile is on your side. Simplify your LUT filing right now, and work with us to start your export path more smoothly. Get in touch with us to enjoy a simple and effective GST LUT filing process that will enable your export endeavours like never before.

FAQs > Filing of Letter of Undertaking for Export of Goods or Services (FORM GST RFD-11)

Any registered person availing the option to supply goods or services for export /SEZs without payment of integrated tax has to furnish, prior to export/SEZs supply, a Letter of Undertaking (LUT), if he has not been prosecuted for tax evasion for an amount of Rs 2.5 Crore or above under the CGST Act/IGST Act/Existing law. Example of transactions for which LUT can be used are:

  • Zero rated supply to SEZ without payment of IGST.
  • Export of goods to a country outside India without payment of IGST.
  • Providing services to a client in a country outside India without payment of IGST.

All registered taxpayers who have zero-rated supply of goods or services have to furnish LUT in Form GST RFD-11 on the GST Portal before affecting such supply. Access the GST portal and login using valid credentials. Navigate to Services > User Services > Furnish Letter of Undertaking (LUT) command to file LUT.

If a taxpayer has any LUT which was furnished manually and got approved by the Tax Authority for current Financial Year, then he can upload that LUT and file this online application for furnishing LUT to seek the online approval for that previous LUT.

It is not mandatory, but if you want to record the manually approved LUT to be available in online records then you can furnish it with online application.

Only one previous LUT document not exceeding 2 MB in size can be uploaded in one application. To upload another LUT, taxpayer needs to file a new application.

Taxpayer will have the facility to save the application at any stage for 15 days. Saved application can be retrieved from Dashboard > Services > User Services > My Saved Applications.

Before signing and filing the application, taxpayer will have an option to Preview the application and save it in PDF format.

Primary authorized signatory/Any other Authorized Signatory needs to sign and file the verification with DSC/EVC. Authorized signatory can be the working partner, the managing director or the proprietor or by a person duly authorized by such working partner or Board of Directors of such company or proprietor to execute the form.

After successful filing, system will generate ARN and acknowledgement. You will be informed about successful filing via SMS and Email and you can also download the acknowledgement as PDF.

Taxpayer will be able to see his ARN under the Services > User Services > View My Submitted LUTs.

The processing of LUT is available online for Model 2 States. For Model 1 States, Tax Official may process LUT manually/ online, depending on the facility available at backend of Model 1 States to process the LUT.

Navigate to Dashboard > Services > User Services > View Additional Notices/Orders to reply to notice issued by Tax Official.

Navigate to Dashboard > Services > User Services > View Additional Notices/Orders to view the order issued by Tax Official.

If the LUT application is not processed by Tax Official, or any notice for clarification is not issued by the Tax Official within 3 working days, then the application will be deemed approved and the status of LUT application will change to “Deemed Approved”. When the application is deemed approved, then an order copy will be generated through the GST Portal and order will be available to the taxpayer in the downloadable form under Dashboard > Services > User Services > View Additional Notices/Orders option.

The list below provides the list of statuses of the LUT application in Form GST RFD-11 ARN, filed by the taxpayer:

  1. Submitted: Status of LUT application after Taxpayer submits the application successfully
  2. Pending for Clarification: Status of LUT application after LUT Processing officer issues notice for seeking clarification
  3. Pending for Order: Status of LUT application after Taxpayer submits the reply for notice within 15 working days Or Taxpayer does not submit the reply for notice after completion of 15 working days and then GST Portal changes the status from pending for clarification to pending for order
  4. Approved: Status of LUT application after Tax Official accepts the undertaking furnished by Taxpayer
  5. Rejected: Status of LUT application after Tax Official rejects the undertaking furnished by Taxpayer
  6. Deemed Approved: Status of LUT application in case Tax Official doesn't take any action within 3 working days
  7. Expired: The status of the LUT application will get changed to Expired at the end of the respective FY.

A Tax Official who is LUT Processing Officer, may disable LUT filing functionality for a taxpayer on the GST Portal. When Tax Official has disabled LUT filing for a taxpayer, taxpayer is intimated through SMS and email.

If LUT Processing Officer has disabled the furnishing of LUT for some taxpayer, then to get it enabled, taxpayer has to communicate this request to LUT Processing Officer manually. From GST Portal, taxpayer cannot raise the request to enable furnishing of LUT.