What is the GST Letter of Undertaking?

The letter of undertaking is the document that the user submits indicating compliance with all GST obligations. It is provided in the event of an export without the payment of IGST. Furthermore, Notification No. 37 /2017 – Central Tax It is necessary to provide LUT in order to export products, services, or both without paying IGST. If the exporter fails to supply the LUT, he must pay IGST or post an export bond. Previously, LUT could only be lodged offline at the relevant GST office. However, in order to make the process even easier, the government has made LUT filing available online.

What are the eligibility criteria to apply for LUT?

A person who intends to provide goods or services

• To or outside India or
• Places covered under Special Economic Zone
• Without paying integrated tax and
• Is also registered under goods and services tax

An individual is eligible to apply for LUT if the below-mentioned conditions are fulfilled.

• The person has never been prosecuted under the Central Goods and Services Tax Act (CGST), the Integrated Goods and Services Tax Act (IGST), or any other current legislation. Where the tax imposed surpasses Rs. 250 lakhs.
• The LUT must be issued on the letterhead of the person registered for goods and services tax. It must be provided in duplicate for each fiscal year. LUT is included as an annexure to form GST RFD-11 and can be issued by the partner, MD, Firm Secretary, or by a person lawfully authorised by the company or the proprietor.
• If a person fails to pay the tax within the time specified by the Central Goods and Services Act, the ability to export without paying IGST is revoked until it is paid.

The jurisdiction for the submission of LUT

The LUT must be acknowledged by the Assistant or Deputy Commissioner with jurisdiction over the location of the exporter’s business. Until a specific administrative officer is assigned, the Exporter may present the LUT to any central or state officer.

Validity of LUT (Letter of Undertaking)

The filed LUT is valid for the entire fiscal year in which it is submitted. Each fiscal year, you must submit a new LUT. If the products for export are not exported within three months of the invoice date, the exporter is obligated to pay GST plus 18% interest within 15 days under Section 50. (1). In addition, if payment for services is not received within one year of submitting the LUT, the exporter must pay GST at 18% within 15 days. Failure to do so will result in the withdrawal of the LUT facility, which can be recovered with successive payments.

As long as the FORM GST RFD-11 is available on the web, you can download it from www.cbec.gov.in. Return the completed form to the Deputy/Assistant Commissioner with jurisdiction over your location of business.

Document of LUT (Letter of Undertaking)

Self-declaration that the terms of the Letter of Undertaking will be accepted unless express authorization is provided. In such circumstances, the exporter must self-declare that he has not been prosecuted, which will serve the objective of notification- 37/2017- Central Tax on October 4, 2017. If verification is required, it can be done after the fact.

Time for acceptance of LUT/Bond

Because LUT or Bond is required for export activity, including exports to a SEZ unit, it should be prioritized. The LUT/ Bond shall be acknowledged within three working days of receipt, coupled with the self-declaration specified above by the exporter. If the LUT is not processed within three working days, it is considered approved.

Bank guarantee

Bonds must always be accompanied by a bank guarantee in the amount of 15% of the bond value.

Purchases from Manufacturer

There are no provisions in the GST framework for the issuance of CT-1 forms, which allow exporters to purchase items from manufacturers without paying tax. The transaction between the manufacturer and the exporter is considered a supply, and therefore is liable to GST.