Letter of Undertaking- LUT in GST

The Letter of Undertaking GST  is a crucial document for exporters. It allows them to export goods or services without paying the Integrated Goods and Services Tax (IGST). By submitting the LUT, exporters declare that they have fulfilled all their GST obligations. Previously, LUTs had to be submitted in person at the GST office, but now the process is conveniently available online. This streamlined approach eliminates the need to pay IGST or post an export bond. With the LUT, exporters can confidently navigate international markets, expanding their business horizons and enjoying a seamless export experience.

Leverage the benefits of LUTs as an exporter of goods or services! However, it's important to note that individuals prosecuted for tax evasion exceeding Rs. 2.5 crores are ineligible to provide LUTs.

The validity of LUTs extends for one year, aligned with the financial year. Exporters must provide new LUTs annually to comply with the conditions. Failure to meet the LUT requirements within the specified timeframe results in the revocation of privileges, requiring the posting of bonds.

For exports without IGST payment, bonds are necessary for all assesses, including those prosecuted for tax evasion exceeding Rs. 2.5 crores under GST legislation. LUTs can be conveniently submitted online through the GST portal, while bonds require manual filling and submission of a hard copy to the department.LUT/Bonds can be used in the following transactions:

• Effortlessly make zero-rated supplies to Special Economic Zones (SEZ) without the burden of IGST payment.
• Seamlessly fulfill your IGST obligations when exporting products to countries outside India.
• Provide services to clients located outside of India, all without the requirement of IGST payment.

When it comes to exporting goods or services, it is essential to file and submit a Letter of Undertaking online. In the past, exporters faced the burden of manually submitting the filled and signed RFD-11 on their Business letterhead in duplicate. This time-consuming and costly process created challenges for exporters in terms of compliance. 
 

• One copy of the filled and signed RFD-11 on Business letterhead was traditionally submitted to the Jurisdictional Deputy/Assistant Commissioner who has authority over the exporter's principal place of business. This step involved the verification of export documents using the ICEGATE system.
• The second copy of the RFD-11 was submitted to the Customs clearing authority.
   

However, there is good news. The procedure has now been streamlined and simplified, offering a transparent and efficient experience for all stakeholders involved in the export process. It is important to note that the bond must be presented on non-judicial stamp paper and submitted manually.

To provide LUT on the GST Portal/GSTN, complete these steps:

Step 1: Log in to the GST Portal using your credentials.

Step 2: Navigate to the 'SERVICES' tab and select 'User Services'. From the options, choose 'Furnish Letter of Undertaking(LUT)'.

Step 3: In the 'LUT Applied for Financial Year' drop-down list, select the applicable financial year, such as 2021-22. If you have already submitted a manual Letter of Undertaking for previous periods, you can upload it on the same window using the 'Choose File' option.

Note: Only PDF and JPEG files are accepted, and the file size should not exceed 2 MB.

Step 4: Fill in the required information on the displayed Letter of Undertaking Form/ GST RFD-11. Make sure to complete the following:

• Self-Declaration (a): Check the three boxes to commit to exporting goods/services within the specified timeframe and following GST rules. Failure to export may result in payment of IGST plus interest*.
• Information for Independent Witnesses (b): Enter the names, occupations, and addresses of two independent witnesses in the designated boxes. These witnesses will also be listed on the running Bond/Bank guarantee.

Step 5: Choose a file location, click 'SAVE', and then click 'PREVIEW' to review the form for accuracy before submission. Note that once the form is signed and submitted, it cannot be revised.

Step 6: Sign and submit the form using one of the following methods:

• Digital Signature Certificate (DSC) Submission: Sign the application with the registered Digital Signature Certificate of the authorized signatory. Access this feature by selecting 'SIGN AND FILE WITH DSC' > 'SIGN AND FILE WITH DSC'. Proceed through the warning message and the system will generate a unique Application Reference Number (ARN).
• Authorized Signatory: The Letter of Undertaking can be signed by the primary authorized signature or any additional authorized signatory. The signatory can be the Managing Director, working partner, Firm Secretary, proprietor, or any person authorized by the active partner or the Board of Directors.

OR

Submit With EVC: 

1. To utilize this option, access 'SIGN AND FILE WITH EVC' on the GST Portal.
2. The system will send an OTP to the registered mobile phone number and email address of the authorized signatory.
3. Enter the OTP in the provided pop-up.
4. A submission warning notice will appear, and selecting 'PROCEED' will sign the application.
5. The system will generate a unique Application Reference Number (ARN)** for each company or limited liability partnership.
6. A confirmation message containing this ARN will be sent to the registered email and mobile number of the taxpayer.
7. Download Acknowledgement: The acknowledgment can be obtained by clicking the DOWNLOAD button. Additionally, previously submitted Letters of Undertaking can be viewed on the GST website.
8. View Submitted LUTs: On the landing page, go to 'SERVICES' > 'User Services' > 'View my Submitted LUTs'. Select the desired timeframe to view the list of available LUTs within that period. Click 'VIEW' next to a specific Letter of Undertaking to see its details.
9. LUT and Bonds Format in RFD-11: The RFD-11 form follows the format below for the LUT application:
   
   
   1. Registered Name
   2. GSTIN Number
   3. Address
   4. Date of filing
   5. Date, place, and signature
   6. Witness information (Name, address, and occupation)