LUT in GST (Letter of Undertaking) Explained — Steps to Apply

A letter of Undertaking (LUT) in goods and services tax (GST) is a document exporters can file to export products without paying the integrated GST. Integrated GST is a destination-based tax the centre collects on the interstate import and export of products. It is levied by the centre, which then shares it with the state where the product was consumed.

However, before the products are exported or imported, furnish LUT must be furnished without paying IGST. If the exporter fails to furnish it, they must pay the IGST or an export bond.

One can file LUT online by logging in to the GST portal and filling out the form GST RFD-11. Continue reading to know how to apply for LUT in GST .

Applying for LUT in GST

The LUT form is filled in the GST RFD 11 format . The format contains details of the exporter, the self-declaration, and independent witnesses. The form also requires a digital signature and acceptance by the jurisdictional officer.

Exporters can fill out the LUT online by following these steps:

1. Visit the GST portal and log in with your credentials.
2. Select the' Services' tab from the menu bar on the top of the screen.
3. From the drop-down list, select the User Services option.
4. Now choose the Furnish LUT option from the drop-down menu.
5. In the ‘LUT Applied for financial year’ (FY) option, select the FY you want to apply LUT for. On this screen, you can also upload the previous LUT documents.
6. Tick all the checkboxes.
7. Then fill in all the required information of the independent witnesses, such as name, occupation, and address, and declare the witness.
8. Finally, submit the form with your unique DSC/EVC Note.

Conclusion

LUT in GST ensures exporters comply with the GST norms and pay due tax on their exports. It enables businesses to claim the benefits of no tax liability on exports. It simplifies the compliance process for exporters since they can file LUT online.

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Frequently Asked Questions

1. What is the limit of LUT under GST?

The limit of LUT under GST is that the applicant should not be prosecuted for any offence under the CGST or IGST Act or any other law. And if prosecuted, the amount of tax evaded should not exceed INR 250 lakhs . The exporter must furnish a bond if the conditions are unmet.

2. What are the documents required for LUT under GST?

You require the following documents for filing LUT:

• Photocopy of proof of GST
• Request form for RFD 11 clearance. It should be completed, stamped, and sealed.
• IEC code duplication
• Notarised statement of commitment on a letterhead.
• The document containing every FY’s GST returns
• Certification of category bearer or banking document. It states that the manufacturer has received at least 10% of the total of the past FY and an export value of no less than INR 1 crore.
• Exporting proposal
• An oath that the person hasn’t been punished for any offence under GST Act (CGST worth over INR 250 lakhs).
• PAN and identification of eyewitnesses
• Permission document

3. Who is eligible for the GST composition scheme?

Here are the eligibility criteria for the GST composition scheme:

• Annual turnover of over INR 1.5 crore (and INR 75 lakh for Himachal Pradesh and North Eastern states)
• No inter-state supplies or exports required
• Opt for a composition scheme for all registered entities

Besides this, the business should not be a casual taxable person, nor should they be manufacturing pan masala, ice cream, or tobacco. They shouldn’t supply any non-taxable or exempt products either.