Validity of LUT (Letter of Undertaking)
The LUT submitted is valid for the whole financial year in which it is submitted. You need to submit a new LUT for each financial year. If the goods for export are not exported within three months of Date of Invoice issue, then the Exporter is liable to pay GST along with 18% interest within 15 days according to Section 50 (1). Also in case of payment for services are not received within one year for which the LUT has been submitted, the exporter is liable to pay GST @ 18% within 15 days. Failing to do so will lead to withdrawal of LUT facility and on subsequent payments, it can again be restored.
For more information on this visit https://www.taxaj.com/
Frequently Asked Questions
1. What is Letter of Undertaking (LUT) and Bonds ?
It is a type of bank guarantee, under which a bank allows its customer to raise money from another Indian bank’s foreign branch as a short-term credit. Letter of Undertaking is commonly known as LUT. The Letter of Undertaking (LUT) is prescribed to be furnished in form GST RFD 11 under rule 96A, whereby the exporter declares that he/she would fulfil all the requirements prescribed under GST while exporting without making IGST payment.
2. Who can use Letter of Undertaking (LUT) ?
Any registered taxpayer exporting goods or services can make use of LUTs. However, any person who has been prosecuted for tax evasion for an amount of Rs. 2.5 Crores or above under the act is not eligible to furnish LUTs.
3. What is the validity of LUT ?
The validity of such LUT’s is for a period of one year (till the end of financial year). An exporter furnishing LUT’s are required to furnish fresh LUT for each financial year. If the conditions mentioned in LUT are not satisfied within the time-limit, the privileges are revoked and the exporter will have to furnish bonds.
4. What is to be filled in LUT ?
Once a taxpayer gets logged in to the GST Portal, his GSTIN and Name (Legal Name) would get auto-populated. Then, the taxpayer needs to select the financial year for which LUT is being filed, enter the name, address and occupation details of two independent and reliable witnesses. Taxpayer also needs to select all the points of self-declaration before filing the LUT.
5. How can I file LUT ?
All registered taxpayers making zero-rated supply of goods or services have to furnish LUT in Form GST RFD-11 on the GST Portal before making such a supply. They need to access the GST portal and login using valid username and password.
Then, they need to click the ‘Services’ Tab on the homepage. Under ‘Services’ category, they need to select ‘User Services’ and then ‘Furnish Letter of Undertaking (LUT)’ sub-category to file LUT.
6. Is it mandatory to record the manually approved LUT in online records ?
It is not mandatory to record the manually approved LUT in online records. But if a taxpayer wants to record the manually approved LUT to be available in online records, then he can furnish it with online application.
7. What is the benefit of LUT ?
If you furnish LUT, then you can export goods and services without payment of IGST.
8. Is there any limitation regarding the upload of previous LUT ?
Yes! Only one previous LUT document not exceeding 2 MB in size can be uploaded in one application. In case the taxpayer wants to upload another LUT, he needs to file a new application.
9. Who has to sign the LUT application ?
The Primary authorized signatory or any other Authorized Signatory needs to sign and file the verification with DSC/EVC. The Authorized signatory can be the working partner, the managing director or the proprietor or by a person duly authorized by such working partner or Board of Directors of such company or proprietor to execute the form.
10. How would I know that the process of furnishing LUT has been completed ?
The system will generate ARN and acknowledgement after successful filing of the LUT application by the taxpayer. The taxpayer will be informed about successful filing via SMS and Email. So, the taxpayer can also download the acknowledgement as PDF.
11. What will happen if a Tax Official doesn’t process the LUT application ?
In case the tax official does not process the LUT application or does not issue any notice for clarification within 3 working days, then the application shall be deemed approved. Furthermore, the status of LUT application will change to “Deemed Approved”.
Thus, when the application is deemed approved, then an order copy will be generated through the GST Portal. This order will be available to the taxpayer in the downloadable form under Dashboard > Services > User Services > View Additional Notices/Orders option.
Ramesh Kumar Gupta (Team TAXAJ)