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GST LUT (Letter of undertaking)

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GST LUT Filing - Mother Tax

    The Letter of Undertaking (LUT) is a crucial document for exporters. It allows them to supply goods or services without paying integrated tax (IGST). By submitting Form GST RFD 11, exporters declare their commitment to fulfill all the requirements imposed by the government under the GST Act. The LUT serves as a guarantee that exporters will follow the rules related to exporting goods or services.

    GST LUT (Letter of Undertaking)

    A Complete Guide for Exporters

    In the world of international trade, exporters face many challenges, including complying with government regulations and ensuring smooth transactions. One important document that exporters must know about is the Letter of Undertaking (LUT). In this guide, we will explain what LUT is, its applicability period, conditions to fulfill, and the absence of a turnover criterion.

    LUT Applicability Period

    Knowing the Timeline

    Exporters should be aware of the applicability period of LUT. It is valid for one financial year, starting from the month of application. For example, if an exporter applies for LUT in August 2022, it will be valid until March 2023. Exporters must accurately select the financial year for which they want to file the LUT.

    Fulfilling Conditions

    Requirements for Exporters

    To benefit from the LUT, exporters must meet specific conditions:

    • Exporting Within TimeframeExporters must ensure that the supplied goods or services are exported within the specified time mentioned in sub-rule (1) of rule 96A. It is essential to adhere to this timeframe for compliance.
    • Following GST Act and RulesExporters must comply with all the provisions of the GST Act and the corresponding rules. This ensures smooth and legal export operations.
    • Paying Integrated TaxIf the goods or services are not exported, exporters must pay the integrated tax along with 18 percent interest per annum on the unpaid tax from the invoice date until the payment date.

    LUT and Turnover Criterion

    Exemption Explanation

    One significant advantage of LUT is the absence of a turnover criterion for its filing. The government has extended this facility to all taxpayers, except those involved in tax evasion of 2.5 crores or more. This exemption allows genuine exporters to benefit from LUT without any threshold restrictions.