LUT - Letter of Undertaking Registration

To promote the export of goods or services, the government has provided various reliefs and benefits under GST. Exports help to create employment, achieve a favourable balance of payment situation and boost the economic growth of the country. GST law provides 2 options to exporters:-
1) Export without payment of Taxes by applying for LUT or Export Bond.
2) Export with payment of Taxes and claim refund later.

Export Without Charging GST Using LUT – Letter of Undertaking

Generally, when an entity exports goods or services, they are required to pay taxes on such exports. However, the GST law allows taxpayers to claim a refund of these taxes paid. The GST method also offers attractive alternative options, wherein the taxpayer can apply for Letter of Undertaking (LUT) or Export bonds with the GST department and if the application is accepted by the department then the taxpayer is not required to pay any taxes on export thereby sparing the efforts for claiming a refund and also avoid blocking of funds by way of payment of taxes.

What is LUT – Letter of Undertaking

The Letter of Undertaking (LUT) is a prescribed document 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. Any person registered under GST can submit a LUT only if they have not been prosecuted for tax evasion exceeding Rs. 2.5 Crore, or for any other offence under the CGST Act, the IGST Act 2017, or any other existing law. If the exporter does not meet the LUT requirements, his privileges can be revoked and he must leave a deposit. Please note that this Letter of Undertaking (LUT) is to be filed online before exporting any goods/services.