If you are an exporter in India, then you would have heard of the Letter of Undertaking LUT Filing as part of the Goods and Services Tax (GST). LUT isn’t just a technical tax phrase; it actually provides an exporter with an opportunity to export their products/services without having to pay upfront Integrated Goods and Services Tax (IGST).
To put it very simply, LUT allows the exporters to save on cash flow, avoid long timelines for claiming refunds & improve their cash flow.
This article will help you understand all aspects of the GST LUT Filing. We will explain in a simple and easy-to-understand manner the following 4 items:
What is a GST LUT?
A GST LUT is a commitment that you make to the GST Department when you file and apply for one. In a GST LUT, you are agreeing that you will comply with all of the regulations under the Export Rules and pay the applicable taxes when necessary.
In exchange for this commitment, the Government authorises you to export products/services without paying the IGST at the time of your exportation.
Without a GST LUT, you have to pay the IGST in advance and then apply for a refund of the IGST paid. Refund processes can take months, and your money could be in a “frozen” state until the refunds are processed. The completion of an export transaction can occur in a matter of days or weeks as opposed to the months that it may take to receive your refund if you didn’t have an LUT available.
Why LUT Filing is Beneficial?
When an exporter files an LUT, it is a good business decision for the exporter. Reasons for filing an LUT include:
- No advance IGST payment, therefore, the money stays with the exporter;
- Improved cash flow can be used for business growth.
- Faster export process since there is no need to wait for refunds; and
- It makes it easier for your business to comply with GST, as it provides evidence that you are operating in accordance with the law.
For smaller exporters and medium-sized exporters, LUTs offer many advantages.
Who Can File an LUT?
Not every business is eligible to file an LUT. To qualify to file an LUT, businesses must meet the following qualifications:
- Export goods or services from India;
- Supply goods or services to SEZ Units/Developers ( deemed exports);
- Have not been indicted for tax evasion in an amount greater than Rs 2.5 crore.
What Documents Do I Need to File An LUT?
Here are some of the key documents and information to have on hand:
- GST Registration Certificate
- Import Export Code (IEC)
- PAN card for the business
- Aadhaar Card for the authorized representative
- Cancelled Check or Bank Account Information
- LUT from previous year (for renewal only)
An authorisation letter (signed by the person who will be submitting the LUT) if someone else is submitting it on behalf of the business.
How To File A GST LUT Online Step By Step
Follow these step-by-step instructions to successfully file a GST LUT online.
Step 1- To log into the GST Portal, visit www.gst.gov.in.
User name and password must be used to access your account.
Step 2 – Access the LUT application
Click on Services, User Services, then “Furnish Letter of Undertaking (“LUT”). Select the Financial Year in which to apply for your LUT.
Step 3 – Complete Application Form
Check your data for the GSTIN, Trade Name, and Business Name entered.
Enter the name and address of the witness.
Step 4 – Upload Documents
You will need to upload any supporting document(s) required, such as your Authorisation Letter or previous LUT submission.
Step 5 – Submit Application Form
Tick the declaration check box and then submit the application using your Digital Signature Certificate (“DSC”) or Electronic Verification Code (“EVC”).
Step 6 – Acknowledgment Number
The ARN Number generated after submission is unique to your application and should be saved for future reference.
Tips to Avoid Mistakes when applying for LUT
- Filing after the deadline and/or paying IGST on exported goods
- Incorrectly entered GSTIN/address
- Failure to renew the LUT yearly
- Not saving the acknowledgment of submission
LUT Online Filing Advantages
Easier/Quicker – No need to visit a GST Office
Usually approved within 24 hours
Easily saved as electronic files
Renewed every Year with Very Little Effort
Conclusion:
LUT Filing is more than a Requirement; it’s a great opportunity for exporting companies to reduce costs, increase sales growth, and avoid delays in receiving Refunds.
The complete online process is Fast, Easy, and cost-free for all exporters, whether new or experienced. Be sure to apply the LUT and annual renewal on time each year.
