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Letter Of Undertaking (LUT) or Bond in Form GST RFD 11 for Exporters,
how to file, Documents Required
All registered taxpayers who wish to export goods or services without paying IGST (Integrated Goods and Service Tax) must submit a Letter of Undertaking (LUT) in GST RFD-11 form through the GST portal.
The GST LUT Form is an essential document that enables you to seamlessly conduct your export transactions without paying Integrated Goods and Services Tax (IGST) at the time of supply. DisyTax is here to assist you in efficiently completing the GST LUT Form filing process, making your export journey smoother than ever.
What is Letter of Undertaking (LUT) under GST
All registered taxpayers who export goods or services to a country outside India or to Special Economic Zones (SEZs) will need to furnish a Letter of Undertaking (LUT) in Form GST RFD-11 on the GST portal, in order to make these exports without the payment of IGST.
Who is eligible to file LUT under GST?
Eligibility criteria to obtain a LUT certificate includes the following:
The Letter of Undertaking (LUT) is open for any registered taxpayer engaged in export of goods or services. However, individuals facing prosecution for tax evasion exceeding Rs.2.5 crore or more are ineligible to take benefit of this option.
- Intent to Supply: The applicant should intend to supply goods or services within India, to foreign countries, or to Special Economic Zones (SEZs).
- GST Registration: The entity seeking to avail the benefits of an LUT should be registered under the GST framework.
- Tax-Free Supply: The desire to supply goods or services without the payment of integrated tax is an essential requirement for LUT application.
Validity and Use of LUT Bond under GST
LUT in GST holds a validity of 1 year, necessitating the submission of a fresh LUT for each subsequent financial year. The terms and condition outlined in the LUT fail to be met within the designated timeframe; the privileges associated with it will be withdrawn.
For other assessments, bonds are required when conducting exports without Integrated Goods and Services Tax (IGST) payment. LUTs bonds are applicable in the following cases:
- Zero-rated supply to SEZ: Exporting to Special Economic Zones (SEZs) without IGST payment.
- Goods Export: Exporting goods to a country beyond India without IGST payment.
- Service Export: Providing services to clients in foreign countries without IGST payment.
Documents required for GST LUT registration
To apply for a Letter of Undertaking (LUT) under GST, you’ll need the following documents:
- LUT Cover Letter: A request letter signed by an authorized person.
- Eligibility: Ensure you meet eligibility criteria (no serious tax evasion cases).
- Copy of GST Registration: Proof of your GST registration.
- PAN Card of Entity: Identification using PAN card.
- KYC of Authorized Person: ID and address proof of authorized person.
- GST RFD 11 Form: Application form for LUT.
- Copy of IEC Code: If involved in exports.
- Cancelled Cheque: From your associated bank account.
- Authorized Letter: Granting power to the authorized signatory.
How to File Letter Of Undertaking (LUT) Bond Form 11 under GST
- Login to GST
- Go to the menu bar and select service option and under service options go to the user service option
- Under user service select the tab Furnishing letter of undertaking
- Now First you will have to select the financial year for which you are applying LUT and also upload the previous LUT if filled
- Now you will have to click the each and every self-declaration box
- Now you will have to add the details of Independent witness
- At last step you will have to sign the application form i.e. RFD 11 by DSC or through EVC
- Now LUT Filling process is complete
Advantages of Filing LUT for Exporters
Choosing to file a Letter of Undertaking (LUT) brings a host of benefits to exporters, streamlining their export activities and optimizing their financial operations:
- Tax-Free Export: Opting for the LUT certificate enables exporters to carry out their export transactions without the burden of immediate tax payment. This contrasts the alternative, where taxes are paid and later claimed as refunds for zero-rated exports.
- Simplified Process: By utilizing the LUT certificate, exporters avoid the complexities of claiming tax refunds or engaging in follow-ups with the tax authorities
- Unblocked Working Capital: Funds that would have otherwise been locked as tax payments remain accessible for exporters. This is especially vital for small and medium-sized enterprises (SMEs) grappling with financing and working capital constraints.
- Liberated Resources: Regular exporters find a consistent advantage of the LUT certificate. Once filed, the LUT remains valid for the entire financial year. This longevity minimizes the need for repetitive filings, allowing exporters to focus on their core business activities.
By leveraging the benefits of the LUT certificate, exporters can navigate the realm of international trade with greater efficiency and flexibility.
Key point Reminders about LUT Bond under GST
Here are some crucial points to keep in mind regarding LUT in GST:
- Validity Period: An LUT remains valid for 1 year, starting from the submission date.
- Conditional Acceptance: The acceptance of an LUT comes with specific terms. Failing to meet these conditions might leads to privilege revocation. In such cases, an entity may need to provide a bond.
- Alternative Bonding: Entities ineligible for LUT registration can still furnish a bond. This bond, usually on non-judicial stamp paper, requires a bank guarantee. The adhesive should cover the anticipated tax liability based on exporter assessment.
- Official Letterhead: LUT submissions must be on the registered entity’s letterhead. This letterhead is from the entity planning to supply goods/services without integrated tax payment.
- Prescribed Form: An LUT must be applied through the official GST RFD-11 form. This form can be submitted by authorized personnel like the MD, company secretary, or partners in a firm.
- Flexible Filing: In the case of a company, the form can be submitted by a partner in a partnership firm or the proprietor.
- Bank Guarantee Limit: The accompanying bank guarantee should be at most 15% of the bond amount. The jurisdictional GST Commissioner might waive this requirement.
Staying mindful of these details helps ensure a smooth process while dealing with LUT bonds under GST regulations.
Simplify Letter of Undertaking (LUT) Filing with DisyTax
Navigating the complexities of LUT (Letter of Undertaking) filing for exporters has always been challenging. At DisyTax, we specialize in streamlining the process, allowing you to focus on expanding your export operations. DisyTax understand the GST rules & regulations and are well-equipped to guide you through the seamless submission of the GST RFD-11 form. We offer end-to-end support, from document preparation to online submission, ensuring accuracy and compliance at each step. Simplify your filing of LUT under GST today and begin a smoother export journey with us.
Contact us to experience a hassle-free GST LUT filing process that empowers your export ventures like never before.
Frequently Asked Questions (FAQs)
What should be filed in the letter of undertaking?
GSTIN and Name (Legal Name) of the Taxpayer will be prefilled based on login. The Taxpayer needs to select the financial year for which LUT is being filed, enter the name, address, and occupation details of two independent and reliable witnesses.
Is it mandatory to record them manually approved LUT in online records?
It is not mandatory, but if the Taxpayer wants to record the manually approved LUT to be available in online records, he can furnish it with the online application.
Who has to sign the LUT application?
Primary authorized signatory/Any other Authorized Signatory needs to sign and file the verification with DSC/EVC. The authorized signatory can be the working partner, the managing director, or the proprietor or by a person duly authorized by such operating partner or Board of Directors of such company or proprietor to execute the form.
How would I know that the process of furnishing the LUT has been completed?
After successful filing, the system will generate ARN and acknowledgment. You will be informed about successful filing via SMS and Email, and you can also download the acknowledgment as a PDF.
Is it possible to view the LUT application after filing?
Yes, the Taxpayer will be able to see his LUT after filing.
Is it mandatory to file GST LUT?
It is mandatory to furnish the Letter of undertaking (LUT) to export the goods, services, or both without paying the IGST.
What happens when the exporter fails to furnish the LUT?
In case if the exporter fails to provide the LUT then he has to pay the IGST or furnish an export bond.
Who is eligible to furnish LUT under GST?
Any person who is exporting goods or services can furnish the LUT.
Who is not eligible to furnish under GST?
A person who has been prosecuted for evading tax of Rs. 2.5 crore or above under the act cannot furnish the LU
What documents are required for GST LUT filing?
LUT cover letter- duly signed by an authorized person Copy of the GST registration PAN of the entity.
What if the LUT is not furnished on time?
If the LUT is not filed on time the exporter is required to pay the tax while carrying out exports and then claim a refund to avail the benefit of the zero-rated exports.
What is Form RFD 11?
Furnishing of the bond or letter of the undertaking for export of goods or services in Form RFD 11.
What is full form of LUT under GST?
The LUT full form is Letter of Undertaking. It is a document used in the context of the Goods and Services Tax (GST) in India. It allows Indian exporters to ship goods without paying immediate tax, simplifying the export process.
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