Letter of Undertaking (LUT) For Export of Goods
Simplify your annual Letter of Undertaking (LUT) filing for GST-free exports. Our expert service ensures compliance and timely submission, freeing you to focus on expanding your export business.
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Drafting of the letter of undertaking (LUT)
Submission of appropriate forms with the department
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Under the Goods and Services Tax (GST) regime, registered exporters can avail themselves of certain benefits when exporting goods. One such benefit is the option to furnish a Letter of Undertaking (LUT) instead of paying the Integrated Goods and Services Tax (IGST) on exports. In this guide, we will provide you with a comprehensive understanding of the LUT for the export of goods, including its purpose, eligibility criteria, application process, and important considerations.
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Purpose of LUT for Export of Goods:
The Letter of Undertaking (LUT) is a document that allows registered exporters to export goods without payment of IGST. It serves as a declaration by the exporter to fulfill their obligations under the GST law. The LUT replaces the requirement of furnishing a bond and helps facilitate smooth export transactions by eliminating the need for upfront payment of taxes.
Eligibility for Cancellation of GST Registration:
To be eligible for availing the benefits of LUT for the export of goods, certain conditions must be met:
- Registered Exporter: The exporter must be a registered entity under the GST law and possess a valid Goods and Services Tax Identification Number (GSTIN).
- Export of Goods: The LUT facility is applicable only for the export of goods and not for the export of services. Exporters of services are required to pay IGST or claim a refund.
- No Pending Proceedings: The exporter should not have any pending proceedings, such as prosecution, under the GST law or any other law.
- No Defaults: The exporter should not have any arrears in tax payments, interest, penalties, or any other dues under the GST law.
Application Process for LUT:
- Log in to the GST portal (www.gst.gov.in) using your credentials.
- Go to the Services tab and select the “User Services” option.
- Click on the “Furnish Letter of Undertaking (LUT)” link.
- Fill in the required details in the LUT form, such as the financial year, bond details, and export details.
- Upload the supporting documents, such as bank details, export invoices, and any other specified documents.
- Review the entered information and documents.
- Sign the declaration by using the Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
- Submit the LUT application.
- After successful submission, an acknowledgement reference number (ARN) will be generated.
- The GST authorities will verify the application and supporting documents.
- Once verified, the LUT will be deemed accepted, and you will receive an approval confirmation.
- Maintain a copy of the approved LUT for your records and future reference.
Important Points to Note:
The exporter must ensure compliance with all the conditions mentioned in the LUT throughout the validity period. Any non-compliance may result in the withdrawal of LUT benefits and the requirement to furnish a bond and pay IGST.
The exporter must maintain proper records and documentation to substantiate the exports made under the LUT. These records may be subject to verification by the GST authorities.
The Letter of Undertaking (LUT) for the export of goods is a valuable facility that allows registered exporters to export goods without payment of IGST, simplifying the export process and providing a competitive edge. By understanding the purpose, eligibility criteria, and application process of the LUT, exporters can avail themselves of this benefit and ensure compliance with the GST law. It is advisable to consult a tax professional or refer to the official GST guidelines for specific guidance related to your circumstances. Properly adhering to the conditions mentioned in the LUT and maintaining accurate records will help facilitate seamless export transactions under the GST regime.
The Letter of Undertaking (LUT) is a document that allows registered exporters to export goods without payment of Integrated Goods and Services Tax (IGST). It serves as a declaration by the exporter to fulfil their obligations under the GST law and replaces the requirement of furnishing a bond.
Any registered individual who chooses to supply goods or services for export/SEZs without payment of integrated tax must submit a Letter of Undertaking (LUT) before the export/SEZs supply. However, this requirement applies only if the person has not been prosecuted for tax evasion of Rs 2.5 Crore or more under the CGST Act/IGST Act/Existing law. Examples of transactions that may utilize LUT include:
- Zero-rated supply to SEZ without payment of IGST.
- Export of goods to a country outside India without payment of IGST.
- Provision of services to a client in a country outside India without payment of IGST.
All registered taxpayers engaging in zero-rated supply of goods or services must submit the LUT in Form GST RFD-11 on the GST Portal before making such supplies. Follow these steps to file the LUT:
Access the GST portal and log in using your valid credentials.
Navigate to Services > User Services > Furnish Letter of Undertaking (LUT) command to file the LUT.
The GSTIN and Legal Name of the taxpayer will be pre-filled based on your login. The taxpayer needs to select the relevant financial year for which the LUT is being filed and enter the name, address, and occupation details of two independent and reliable witnesses. The taxpayer also needs to select all the points of self-declaration before filing the LUT.
If you have a manually furnished LUT that has been approved by the Tax Authority for the current financial year, you can upload that LUT and file an online application to seek online approval for the previous LUT.
Recording manually approved LUTs in online records is not mandatory. However, if you want to have the manually approved LUT available in your online records, you can furnish it with the online application.
In one application, you can upload only one previous LUT document that does not exceed 2 MB in size. If you need to upload another LUT, you will have to file a new application.
Yes, as a taxpayer, you can save the application at any stage for up to 15 days. You can retrieve the saved application from Dashboard > Services > User Services > My Saved Applications.
Before signing and filing the application, you will have the option to preview the application and save it in PDF format.
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, managing director, proprietor, or a person duly authorized by such working partner or Board of Directors of the company or proprietor to execute the form.
After successful filing, the system will generate an ARN (Application Reference Number) and acknowledgement. You will receive an SMS and email notification confirming the successful filing, and you can also download the acknowledgement as a PDF.
Yes, as a taxpayer, you can view your ARN under Services > User Services > View My Submitted LUTs.
The processing of LUT is available online for Model 2 States. For Model 1 States, the Tax Official may process the LUT manually or online, depending on the facility available at the backend of Model 1 States to process the LUT.
To reply to a notice issued by the Tax Official, navigate to Dashboard > Services > User Services > View Additional Notices/Orders.
To view the order issued by the Tax Official, navigate to Dashboard > Services > User Services > View Additional Notices/Orders.
If the LUT application is not processed by the Tax Official, or if no notice for clarification is issued within 3 working days, the application will be deemed approved, and the status of the LUT application will change to “Deemed Approved.” When the application is deemed approved, an order copy will be generated through the GST Portal, and the order will be available for download under Dashboard > Services > User Services > View Additional Notices/Orders.
A Tax Official who is the LUT Processing Officer has the authority to disable the LUT filing functionality for a taxpayer on the GST Portal. In such cases, the taxpayer will be notified via SMS and email.
If the LUT Processing Officer has disabled the filing of LUT for a taxpayer, the taxpayer must manually communicate the request to enable the filing of LUT to the LUT Processing Officer. It is not possible for the taxpayer to raise the request to enable the filing of LUT through the GST Portal.
Registered entities who engage in the export of goods and possess a valid Goods and Services Tax Identification Number (GSTIN) are eligible to avail the benefit of LUT. The exporter should not have any pending proceedings or defaults under the GST law.
Yes, LUT is applicable for the export of services as well.
The list below provides the list of statuses of the LUT application in Form GST RFD-11 ARN, filed by the taxpayer:
- Submitted: Status of LUT application after Taxpayer submits the application successfully
- Pending for Clarification: Status of LUT application after LUT Processing officer issues notice for seeking clarification
- Pending for Order: Status of LUT application after Taxpayer submits the reply for notice within 15 working days Or Taxpayer does not submit the reply for notice after completion of 15 working days and then GST Portal changes the status from pending for clarification to pending for order
- Approved: Status of LUT application after Tax Official accepts the undertaking furnished by Taxpayer
- Rejected: Status of LUT application after Tax Official rejects the undertaking furnished by Taxpayer
- Deemed Approved: Status of LUT application in case Tax Official doesn’t take any action within 3 working days
- Expired:The status of the LUT application will get changed to Expired at the end of the respective FY.
It is generally pre-filled on the portal, only DSC of the Authorised Signatory needs to be attached.
The validity of the LUT is typically for a specific financial year. However, the specific validity period may be subject to the guidelines issued by the GST authorities.
Yes, the LUT can be used for multiple export transactions during its validity period, as long as all the conditions mentioned in the LUT are complied with. The exporter must maintain accurate records and documentation to substantiate the exports made under the LUT.
Non-compliance with the conditions mentioned in the LUT may result in the withdrawal of LUT benefits. In such cases, the exporter may be required to furnish a bond and pay Integrated Goods and Services Tax (IGST) for export transactions.
Changes or corrections to the LUT are generally not allowed once it is approved. It is advisable to review the LUT carefully before submission to avoid any inaccuracies. However, in case of genuine errors or changes, you may consult with the GST officer for guidance.
Yes, an exporter can switch from the bond facility to LUT or vice versa. However, the specific procedures and requirements may vary, and it is advisable to consult with the jurisdictional GST officer for guidance on the process.