LUT in GST: How to File LUT in RFD-11 on GST Portal
In the ever-changing world of global trade, exporters are always looking for methods to improve productivity and simplify their operations. The GST LUT Form becomes an essential tool for exporters attempting to manage the difficulties of cross-border transactions. With the use of the GST LUT Form, you may handle your export transactions with ease and avoid having to pay the Integrated Goods and Services Tax (IGST) at the time of supply. This post will go into great detail on the GST LUT Form's crucial function for exporters as well as the filing process.
Table of content
What is Letter of Undertaking (LUT) under GST?
The letter of undertaking that the user submits certifies that all GST obligations have been met. It is provided if exports are made without IGST being paid. Additionally, under Central Tax Notification No. 37 (2017) To export products, services, or both without paying IGST, LUT must be provided. The exporter must pay IGST or offer an export bond if he is unable to furnish the LUT. In the past, LUT could only be submitted offline to the relevant GST office. However, the government has made the LUT filing online to further streamline the procedure.
Eligibility Criteria to Apply for LUT
A person planning to provide products or services
In or out of India or
Locations included in the Special Economic Zone
Not making integrated tax payments and
also has a goods and services tax registration.
An individual who meets the requirements listed below may submit an application for LUT:
Under the Central Goods and Services Tax Act (CGST), the Integrated Goods and Services Act (IGST) 2017, or any other current law, the individual has never been prosecuted, wherever the tax levied above Rs. 250 lakhs.
The LUT must be sent on the official letterhead of the individual who has registered for the goods and services tax. It must be provided for a fiscal year in duplicate. The LUT is provided in the annexure to form GST RFD-11 and may be provided by the proprietor, partner, MD, or company secretary, or by any other person who has been properly signed by the business.
The Central Goods and Services Act stipulates that if a person does not pay the tax within the allotted time, they will not be able to export goods without paying the IGST until they do.
When to Apply/File an LUT?
Before exporting products or services to a nation outside of India or to Special Economic Zones (SEZs), a Letter of Undertaking must be completed and submitted online. Exporters had to manually submit the completed and signed RFD-11 in duplicate on business letterhead before this.
One goes to the Deputy/Assistant Commissioner with Jurisdiction over their major place of business, where ICEGATE is used to verify the export documentation.
Another to the authority in charge of clearing customs along with the export documentation.
Similar to the previous excise system, exporters had to spend a lot of time and money on operating costs to comply with this. Ultimately, this procedure has been streamlined, expedited, and rationalised, providing all parties involved with transparency throughout the exporter's whole export process. Keep in mind that the bond must be furnished on non-judicial stamp paper, necessitating a manual submission.
Steps to Furnish LUT on the GST Portal
The steps to furnish LUT on the GST portal/GSTN are as follows:
Step 1: Log in to the GST Portal first.
Step 2: Select "User Services" under the "SERVICES" tab. Choose "Letter of Undertaking (Furnish)"
Step 3: From the "LUT Applied for Financial Year" drop-down list, choose the financial year that the Letter of Undertaking is being requested for. For instance, 2021–2022. The only file formats accepted are PDF and JPEG. The uploadable file size limit is 2 MB.
Step 4: When the Letter of Undertaking Form/GST RFD-11 shows on the screen, complete the required fields. The form must have the following completed:
(a) Self-Declaration: Click each of the three boxes to indicate your agreement with it. The exporter commits to the following by doing this:
The export of products or services must be finished within three months of the export invoice's issuance date, or within any additional time the commissioner may grant.
Follow the GST law with regard to exports.
To pay IGST plus interest if exporting is not successful. Interest is due at the rate of 18% annually from the moment the export invoice is issued until the IGST payment date.
(b) Provide Information to Independent Witnesses: It is mandatory to mention the names, occupations, and addresses of two independent witnesses. The witnesses listed on the running bond and bank guarantee should be the same as the ones included in the LUT.
Step 5: Type in the filing location Click "SAVE" > "PREVIEW" to check the form's accuracy before submitting it. Please take note that a signed or submitted form cannot be revised at this time.
Step 6: Use one of the following methods to sign and file the form:
The Letter of Undertaking may be signed by the Primary Authorised Signatory or any additional Authorised Signatory. An authorised signatory may be the proprietor, the managing director, the company secretary, or a person officially authorised to execute the form by the proprietor, the working partner, or the board of directors of the business.
Submit using DSC: Sign the application with the designated authorised signatory's registered digital signature certificate. To utilise this feature, select "SIGN AND FILE WITH DSC" >. A warning message box opens. Select "PROCEED." The application reference number (ARN) is generated uniquely by the system.
Submit with EVC: To utilise this feature, click "SIGN AND FILE WITH EVC." The system will then send an OTP to the authorised signatory's registered email address and cell phone number. To sign the application, enter that OTP in the pop-up window. A submission warning notice box displays. Select "PROCEED." The application reference number (ARN) that the system generates is unique. Companies and LLPs can only file using the DSC.
A message of confirmation displays. This ARN is sent by email and SMS from GST Portal to the taxpayer's registered email address and cellphone number.
To download the acknowledgement, click the DOWNLOAD button. The previously provided Letter of Undertakings is also available for viewing on the GST portal. Navigate to "SERVICES" > "User Services" > on the main page. See the LUTs I've Submitted > Choose a time frame > View the list of LUTs provided for the chosen time frame. To view the specific Letter of Undertaking in detail, click "VIEW."
Validity of LUT
The filed LUT is good for the entire fiscal year that it is submitted for. Every financial year, a new LUT must be submitted. According to Section 50 (1), the Exporter is required to pay GST and 18% interest within 15 days if the items for export are not exported within three months of the Date of Invoice issuing. Additionally, the exporter is responsible for paying GST at the rate of 18% within 15 days if payment for the rendered services is not received within the year after the LUT was submitted. If this isn't done, the LUT facility will be withdrawn; however, with further payments, it can be reinstated. As long as the form is accessible on the website, you can download it from www.cbec.gov.in. Give the completed form to the Assistant Commissioner or Deputy Commissioner in charge of your place of business.
Benefits of LUT for Exporters
Exporters who choose to file a Letter of Undertaking (LUT) can streamline their export procedures and improve their financial performance in a number of ways.
Tax-Free Export: Exporters can carry out their export transactions without having to worry about having to pay taxes right away by selecting the LUT option. As opposed to the other option, which entails paying taxes and then claiming them back as refunds for exports that are zero-rated.
Simplified Process: Exporters can avoid the hassles of chasing tax refunds or responding to tax authorities' inquiries by using the LUT. Operational ease and huge time savings are the best outcomes they can avail of.
Unblocked Working Capital: Exporters can still access funds that would otherwise be restricted as tax payments. For small and medium-sized businesses (SMEs) that are constrained by funding and working capital, this is extremely important.
Resource Optimization: Using the LUT consistently benefits regular exporters. The LUT is valid for the full fiscal year after it is filed. Exporters can focus on their core business while fewer repetitive filings are required thanks to this longer validity. Exporters can manage international trade with greater flexibility and efficiency by utilising the advantages of LUT.
Conclusion
It has never been easy to address the complexity of LUT filing requirements. However, experts can help you by expediting the procedure so you may concentrate on growing your export business. From document preparation to online submission, they provide end-to-end support, guaranteeing correctness and compliance at every turn. You can take advantage of tax-free exports without having to deal with the difficulties of complicated paperwork.
FAQ
Q1. What is LUT in GST?
A Letter of Undertaking is the complete form of the LUT. This document is utilised in relation to India's Goods and Services Tax (GST). It streamlines the export procedure by enabling Indian exporters to send goods without having to pay taxes right away.
Q2. What is the role of LUT?
Exporters can mainly use the LUT capability to enable the export of products or services without having to pay IGST. There shouldn't be any unpaid taxes or arrears for the exporter. Making sure that all tax obligations are met is crucial before submitting an application for a LUT under the GST.
Q3. What is the GST rate for LUT?
The exporter is responsible for paying GST at the rate of 18% within 15 days if payment for the rendered services is not received within the year after the LUT was submitted. If this isn't done, the LUT facility will be withdrawn; however, with further payments, it can be reinstated.
Q4. Is it mandatory to mention the LUT number on the invoice?
Yes, in order to receive the benefit of LUT for GST, you must provide the LUT number on your invoice. This makes it easier to determine if your export services are GST-exempt.
Q5. Can LUT be cancelled?
Every fiscal year, an exporter providing LUTs must provide a new LUT. Exporter rights are withdrawn and bonding requirements are met if the conditions outlined in LUT are not met in the allotted period.
Q6. Can we export without LUT?
Export businesses, particularly those that export SEZ units, must have a LUT or bond in order to prioritise processing. After receiving the LUT/Bond and the exporter's self-declaration, accept them within three working days. Acceptance is presumed if processing takes more than three days.
Q7. What is the penalty for not taking LUT in GST?
10% of the monthly tax payable will be assessed as a penalty for filing the GST LUT after the deadline. This implies that a late filing penalty of Rs. 100 per month will apply if the tax owed is Rs. 1,000.
Q8. What is the rule of LUT?
The GST Under rule 96A, LUT is required to be provided in form GST RFD 11, wherein the exporter certifies that he or she will comply with all GST regulations when exporting without paying IGST. Learn more about GST-regulated exports. GST RFD-11.
Q9. Who can be a witness in LUT GST?
The authorised signatory of the business must sign the LUT, and two independent witnesses must attest to it, according to Indian GST legislation. An independent witness is a person who is not a party to the LUT and has no connection to the company or the authorised signatory.
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