GST LUT Filing
Exporting goods and services can be a profitable venture, but it comes with its own set of challenges, particularly when it comes to GST compliance. One important requirement for those who export goods or services from India is to file a Letter of Undertaking (LUT). But the good news is that submitting a LUT just got a lot easier thanks to the GST portal. In this blog post, we’ll guide you through the steps to furnish LUT on the GST portal effortlessly. Read on to learn more about this essential requirement for exporters in India.
1. What is GST LUT Filing?
GST LUT Filing refers to the process of submitting a Letter of Undertaking, or LUT, for exporters who wish to export goods or services without paying IGST. This LUT needs to be filed on the GST portal and is valid until 31st March 2021. Prior to GST, exporters had to submit a filled and signed RFD-11 application form in duplicate, which was a time-consuming and expensive process. However, the LUT process has now been simplified and made online, making it much quicker and transparent for all involved parties.
A crucial benefit of filing LUT is that it saves exporters the trouble of requesting tax refunds, which can be complicated and time-consuming. In addition, filing LUT can reduce the risk of cash being blocked due to tax payments. Every certificate holder can submit a guarantee or LUT in GST quests Eleven and transport products avoiding paying consolidated duty underneath the Rules Of civil procedure. The abbreviation LUT stands for Letter of Undertaking. The statement of commitment is paperwork that the exporters submit to be able to distribute items and services without paying taxes.
In order to file LUT, an individual needs to meet certain criteria. For instance, the person or business should be incorporated with VAT and propose to offer products and services to India or other countries or Special Economic Zones. Alternatively, they should be willing to provide products while needing to pay an incorporated fee. All in all, the LUT process has been simplified and is much quicker and efficient, making it easier for exporters to do business.
2. Who needs to file LUT for exports?
A Letter of Undertaking (LUT) is an essential document required for any registered person planning to export goods or services from India without payment of the integrated tax. As per GST laws, the LUT should be furnished before the export, and the validity will expire on 31st March of the subsequent financial year. But the question arises, who needs to file the LUT?
Any registered person with an annual turnover of Rs. 1.5 crores or more and planning to undertake the export supply without paying IGST can file the LUT on the GST portal. Meanwhile, if the registered person is less than Rs. 1.5 crores, they can opt for a bond instead of LUT. The LUT can also be furnished by the registered person availing the facility of zero-rated supplies to SEZ units under Section 16 of the IGST Act.
Moreover, the registered person opting for the LUT facility should not have been prosecuted for tax evasion under the CGST Act/IGST Act/Existing law for an amount of Rs. 2.5 crores or above.
“The facility to furnish LUT for FY 2021-22 is readily available on the GST portal. The process of filing LUT online is simplified and completely automated, and the department issues approval within a few days,” said a GST expert.
Filing LUT online has many benefits, such as no need for manual intervention, reduced processing time, and makes claiming IGST refunds easier for the exporters. Additionally, filing LUT online avoids the physical submission of documents and reduces the compliance burden for the taxpayers.
3. Benefits of online LUT filing
Online LUT filing is a game changer for businesses that want to export their products or services while reducing the compliance burden. Here are some benefits of filing LUT online:
– Time-saving: Filing LUT online is a hassle-free and time-effective process. It saves the precious time of taxpayers, because otherwise, they would have to go through the manual filing process which is more time-consuming and resource-intensive.
– Convenience: Online LUT filing is more convenient as compared to the traditional way of filing, as now taxpayers can complete the process without even stepping out of their office or home. One of the benefits of filing the LUT online is that it eliminates the chances of making any mistakes like typos, and the chances of errors are reduced significantly.
– Money-saving: Online LUT filing is cost-effective, which helps businesses save money in terms of third-party costs such as notary, lawyer, or courier fees.
According to Online Legal India™, which is recognized by the Govt. of India: “Online Legal India™ expert team of highly qualified CA/CS will guide you through the rest of the process for LUT filing. We are economical and give budgeted services for ones who are willing to start a business.”
However, it should be noted that while online LUT filing may have several benefits, it is critical to ensure that the process is followed correctly and all required documents are submitted accurately and on time. This is where EbizFiling comes in, as it provides comprehensive LUT filing guidance to businesses, simplifying the compliance process and improving their financial position.
4. Expiry date & validity of LUT
The Letter of Undertaking (LUT) has been a significant tool for exporters post-GST implementation. It is a fortification for the taxpayer to export goods without payment of tax and provides relief to exporters in terms of cash flow. However, it is important to note that the LUT has a validity period of one financial year, and its expiry date for the current financial year is 31st March 2021. It must be renewed for the upcoming financial year to continue the benefit.
“Renewal of LUT is essential to ensure continuity of exports. Non-renewal of LUT within the validity period can lead to various compliance issues,” says Nandita Mishra, GST expert at IndiaFilings. Moreover, the LUT must be furnished electronically on the GST portal. Failure to comply and furnish an LUT electronically can be detrimental to taxpayers as refunds and benefits provided will not be received. “The LUT facility is more beneficial, as it is simpler to furnish and manage as compared to a Bond,” adds Mishra.
The LUT simplifies the export process and provides relief to exporters by avoiding payment of integrated taxes. However, it is important to note the expiry and validity of the LUT and renew it in due time to avoid any compliance errors. By renewing the LUT, exporters can continue to enjoy the benefits of exporting without payment of tax.
5. Manual vs Online filing before GST
Before the implementation of the Goods and Services Tax (GST), exports were subject to various taxes like Excise Duty, Service Tax, VAT, and Customs Duty. The process of filing for Letter of Undertaking (LUT) was a time consuming and cumbersome task, involving a lot of manual paperwork. But with the introduction of GST, the process has been simplified and streamlined for both manual and online filing.
Manual filing can be a tedious process. Taxpayers are required to visit the concerned department and submit the necessary documents physically. The process was slow and error-prone, as there were no automated checks to ensure accuracy. Online filing, on the other hand, is much more efficient and user-friendly. The GST portal provides taxpayers with a simplified, step-by-step procedure for filing LUT online.
As stated in GST law, taxpayers opting for the bond or LUT facility can make exports without payment of tax. The facility to furnish LUT for FY 2021-22 is available on the GST portal, making it easy for taxpayers to undertake their trade activities. In case of online filing, a taxpayer can save the application at any stage for 15 days and retrieve the saved application from the GST portal. The taxpayer can preview the LUT application before signing and filing it.
Not only is online filing a more efficient way to submit LUT applications, it also ensures that there are no errors or mistakes. Additionally, taxpayers can track the status of their LUT application online, making it easier to keep track of their application. Overall, online LUT filing provides a hassle-free and time-saving experience for taxpayers.
6. Simplification of LUT process under GST
The process of filing a Letter of Undertaking (LUT) under GST can seem cumbersome and time-consuming for exporters, especially those who are new to the business. However, to promote exports, the government of India has introduced a simplified process for LUT filing. One of the significant steps taken in this regard is the introduction of the online filing system, which is making the process accessible and saving time and effort.
Moreover, the LUT filing process has become more straightforward due to the elimination of the requirement for a bond submission on non-judicial stamp paper. This change has helped reduce the documentation burden on exporters. The process has been further simplified by the incorporation of self-declaration into the application process. The applicant can now self-certify that the export of goods will be completed within three months of the issue of the Export invoice, and that they will abide by all provisions of the applicable GST laws. Additionally, if the export does not take place due to any reason, the applicant will pay IGST with applicable interest.
The government has made continuous efforts to make the LUT filing process more accessible for exporters. To achieve this, the government has introduced a step-by-step guide to filing LUT on the GST portal. This guide helps exporters understand the complete process and makes filing more comfortable and hassle-free. Overall, the government of India’s moves to simplify the LUT filing process are helping promote exports and making business for exporters more comfortable and less taxing.
7. Bond submission on non-judicial stamp paper
To furnish a bond for exports, it is necessary to use a non-judicial stamp paper. This is a process that involves manually submitting the bond along with other necessary documents. The bond submission on non-judicial stamp paper is a crucial step that exporters must follow to fulfill the requirements prescribed under GST for exports.
According to GST rules, any registered person can furnish an Export bond or LUT in GST RFD-11 without paying the integrated tax. A separate bond is not needed to be furnished for each consignment; instead, a running bond can be filed that carries forward the same terms and conditions for the next consignment. The bond submission process involves preparing necessary documents such as the KYC of the authorized signatory, LUT cover letter request for acceptance duly signed by an authorized person, and additional documents relating to the bank guarantee, if applicable.
After preparing the documents, the exporter has to submit them to the department for verification by a relevant officer to avoid rejection. Once the document is filed, a signed letter is issued by the officer acknowledging the same. It is important to note that if the exporter fails to satisfy the conditions mentioned in the LUT within the specified time limit, the privileges will be revoked, and the exporter will have to furnish bonds.
In the case of bond submission, the non-judicial stamp paper is necessary to fulfill the legal requirements under GST. Thus, exporters must ensure that they comply with all the regulations and rules for successful bond submission. As GST experts from IndiaFilings can help with GST LUT filing or Export bond filing, it’s recommended to take their assistance for a hassle-free process.
8. Step by step guide to filing LUT on GST portal
Filing a Letter of Undertaking (LUT) is required for businesses that export goods or services without paying IGST. The good news is that this process has been made simple and quick with the GST portal. Here is a step-by-step guide to filing LUT on the GST portal:
1. Log in to the GST portal with valid credentials.
2. Go to Services > User Services > Furnish Letter of Undertaking (LUT).
3. Form GST RFD-11 will be displayed, select the financial year for which LUT is applied for from the button to upload the previous LUT. Only PDF or JPEG file formats are allowed. Maximum file size for upload is 2 MB.
4. Enter the name and address of two independent and reliable witnesses in the Name Address and occupation section.
5. Select the name of the authorized signatory from the drop-down list.
6. Enter the place where the form is filed.
7. Review the form and save it if you need to retrieve it later.
8. Sign the application using the registered Digital Signature Certificate of the selected authorized signatory or by entering the OTP in the pop-up if the EVC option is selected.
9. The system generates an Acknowledgement Reference Number (ARN) and sends it through email and SMS at your registered email and mobile number.
10. Download the acknowledgement for your records.
By following these simple steps, you can easily file your LUT on the GST portal without any manual tasks, giving transparency in the entire process of exports by an exporter to all the stakeholders involved.
9. Requirements to file LUT
To file for a Letter of Undertaking (LUT), one must be a registered exporter of goods or services under the Goods and Services Tax (GST) regime in India. This document is essential for those planning to export goods without paying IGST. As a GST-registered individual, you may submit a LUT instead of providing an export bond, provided that you have not been charged with tax evasion exceeding Rs 250 lakhs or any other felony. The LUT must be submitted in the form of GST RFD 11, confirming that you will comply with all GST requirements while exporting without paying IGST.
To furnish an LUT, an authorised individual must submit a cover letter requesting acceptance, accompanied by a copy of the entity’s PAN card for GST registration, and KYC for the signer. The Letter of Undertaking is valid for one year and must be renewed each fiscal year. Conditions outlined in the LUT must be met within the specified timeframe; otherwise, the exporter will be required to post bonds.
The LUT can be applied in various situations, such as zero-rated supplies without IGST payments to Special Economic Zones (SEZs), exporting goods to a non-Indian nation or providing services to a client in a non-Indian nation without paying IGST. Before the GST regime, exporters had to manually submit the filled and signed RFD-11 to the jurisdictional Deputy or Assistant Commissioner. This process has been streamlined and simplified for exporters, allowing them to efficiently comply with the GST regulations without losing considerable time and expense.
In summary, filing a LUT is crucial for GST-registered exporters who aim to export goods without paying IGST, and it must be submitted following the prescribed procedure on the GST portal.
10. Significance of LUT in promoting exports in India
The Letter of Undertaking (LUT) has emerged as a game-changer for exporters under the Goods and Services Tax (GST) system in India. With LUT, exporters can export goods or services from India without paying taxes, avoiding the inefficient refund process. This has led to significant savings for exporters and a boost in exports. As per the GST regulations, exporters have the option to either export under a bond or LUT. While the bond requires exporters to pay taxes upfront and claim a refund later, LUT allows them to export goods without paying taxes, making it a more convenient option.
Furthermore, LUT is valid for the entire fiscal year, meaning that it saves exporters from going through procedural requirements for each export consignment. As one commentator notes, “The Letter of Undertaking had a huge impact on businesses as it saved them from the cash being blocked in refunds. It helped the industry keep the working capital intact and hence led to more businesses.”
The LUT has thus played a significant role in promoting exports in India. For businesses with a high export turnover, LUT can help save a considerable amount of time and money. One commentator notes that “Processing LUTs have been a boon for regular exporters as they don’t have to go through the refund process, and their funds are free to be utilized.” Additionally, LUT has made the process of exporting more convenient for exporters, resulting in a free-flowing and advantageous trade. Overall, LUT has become a crucial tool in the hands of exporters to grow their business and contribute to India’s economic growth.
11. Documents required for GST LUT Filing
1. GST registration certificate (If the applicant is a registered dealer)
2. Letter of Undertaking in Annexure IV in duplicate
3. Copy of PAN card
4. Copy of the passport
5. Copy of the GST Returns filed for the previous financial year, if applicable.
The above-mentioned documents are mandatory for filing the GST LUT. Additionally, the Applicant has to ensure that all the documents are submitted correctly and accurately to avoid any inconvenience.
12. Frequently Asked Questions about GST LUT Filing
1. What is the purpose of GST LUT filing?
GST LUT filing is required by exporters to claim their GST refund without payment of IGST. This helps them carry out their business smoothly with the minimum financial burden.
2. Who is eligible to file for GST LUT?
Only registered GST taxpayers who are exporting goods and services out of India without payment of IGST are eligible for LUT filing.
3. What is the penalty for non-filing of GST LUT?
If the GST LUT is not filed, the applicant has to pay the applicable IGST along with the interest which can range from 18% to 24% per annum.
4. Is LUT one-time or periodic?
The LUT is valid for one financial year, and the exporter needs to reapply for a new LUT every year before the expiry of the existing LUT.
5. Can a GST-registered dealer file for LUT even if he/she hasn’t exported any goods or services yet?
Yes, GST-registered dealers can file for LUT even if they have not exported any goods or services yet. However, the LUT can only be availed if the exported goods/services are without payment of IGST.
6. Can LUT be filed electronically?
Yes, LUT can be filed electronically on the GST portal.
7. What is the validity of the GST LUT?
The validity of LUT is one financial year. The export without payment of IGST can be done during the validity period of the LUT. It’s mandatory to apply for a new LUT every financial year.
8. Is it mandatory to file for LUT every year?
Yes, LUT filing is mandatory every financial year, and exporters need to renew their LUT before the expiry of the existing LUT to avoid any inconvenience.
9. What is the difference between LUT and Bond?
A Letter of Undertaking (LUT) is usually for small scale exports, and a bond is for larger exports. Bonds require a bank guarantee, whereas an LUT does not require any bank guarantee.
10. Can the LUT be withdrawn once filed?
Yes, the LUT can be withdrawn by the exporter if they want to pay IGST instead of exporting goods and services without paying IGST. It can be withdrawn by filing an application on the GST portal.