Are you an exporter, want GST exemption, then you should read this article to know about Letter of undertaking (LUT), after reading this article you can easily apply for LUT and get GST exemption on export supply.
What is LUT under GST?
LUT is a letter of undertaking given by exporters to government for export of goods and service without paying GST.
Under LUT, an exporter declares he will export the goods/services without payment of IGST within time specified in rule 96A.
He further declares that he will abide by all GST Law and pay IGST, if he fails to export goods/services.
LUT form is filed and obtained online, renewed every year.
Who can apply for LUT?
All exports registered under GST are eligible to apply for LUT under GST.
A person is not eligible to apply LUT if he has evaded tax more than Rs.250 lacs.
How to apply for LUT?
Applying LUT online is very easy process. Below are the steps to file LUT Online.
Steps to Submit of Letter of Undertaking
Step 1: Login to the GST website (www.gst.gov.in) with your user ID and password
Step 2: Click on Services tab on top menu bar, then click on User Services and Furnish Letter of Undertaking (LUT)
Step 3: Choose the financial year for which you want to apply LUT
Step 4: if for last year you have received LUT offline, then you must attach such LUT here.
Step 5: Fill the necessary information in the form and accept the declaration by ticking the three check boxes.
Step 6: Two witness details are required, fill it.
Step 7: Attach digital signature of the authorized signatory and file it.
As per circular No. 8/8/2017, the LUT application must be accepted within three working days of its receipts otherwise it deems to be accepted.
What is the Validity of LUT?
LUT once obtained will remain valid for one financial year till 31st March.
Every year it should be renewed before the beginning of new financial year i.e 1st April.
The goods/services must be exported and payment must be received within the time limit mentioned in rule 96A(1) CGST , otherwise GST need to be paid on such goods/services.
Goods must be Exported
Within 15 days from expiry of 3 months from the date of issue of invoice.
Payment must be received
Within 15 days from the expiry of 1 year from the date of issue of invoice.
Invoice format under LUT
As per rule 46 CGST export invoice should mention “SUPPLY MEANT FOR EXPORT UNDER LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTERATED TAX.”
You can also mention the LUT No. in the invoice. If LUT no. is under process, then you can mention the reference application number.
Apart from the content of regular tax invoice, name of country of destination should also be mentioned
Delay in Processing LUT application
Once you apply LUT, it must be processed within 3 day on top priority, otherwise it deems to be approved.
Due to Covid-19, the time limit to file LUT for FY 20-21, has been extended to 30th June 20 vide notification no. 35/2020 CGST. Till that time exporter can continue to make supply without payment of IGST.
Notifications relating to LUT under GST
Conditions for furnishing LUT
LUT to all exports amending previous notifications
Detailed procedure for filing of LUT
Extend Due date of compliances