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GST LUT (Letter of Undertaking) Certificate

  • SureTax Fincare simplifies the process of Registration, Compliance & Management of your business, by making it more convenient than ever.
  • Completely online, Quick & Hassle free process – Our Services can be availed from any Location in India or Abroad.
  • Our team of CA-accredited professionals provide expert guidance throughout every stage of the process

Talk to an expert for Free: 70661 55000

GST LUT (Letter of Undertaking) Certificate

  • SureTax Fincare simplifies the process of Registration, Compliance & Management of your business, by making it more convenient than ever.
  • Completely online, Quick & Hassle free process – Our Services can be availed from any Location in India or Abroad.
  • Our team of CA-accredited professionals provide expert guidance throughout every stage of the process

Talk to an expert for Free: 70661 55000

Overview

LUT stands for Letter of Undertaking, which is a document that is submitted by an exporter under the Goods and Services Tax (GST) regime in India. The LUT is a declaration by the exporter that they will fulfill their export obligations under the GST laws and that they will not claim Input Tax Credit (ITC) on the taxes paid on inputs and input services used in the export of goods or services.

The LUT is submitted to the jurisdictional tax authority in a prescribed format and once it is approved, the exporter can make exports without paying GST. The LUT remains valid until it is cancelled or until the exporter fails to fulfill their export obligations.

It is important to note that the LUT is only available to exporters who are registered under GST and who have a good track record of compliance. Exporters must also ensure that all export invoices are issued in accordance with the GST laws and that the proper export procedures are followed.

Documents Requirements

Required in Soft Copy Only

Documents of Applicant

  • PAN of the Applicant and/or Authorized Signatory
  • GST Registration Certificate
  • IEC (Import Export Code) Certificate (if available)
  • Name, Address and Occupation of 2 Indipendent Witness
  • Previous LUT Certificate (if any)
  • Other Supporting Documents (if Required)

Advantages

Easy compliance

Filling a GST LUT is a simple and convenient way to comply with the GST regulations for exports, compared to the traditional bond or security deposit method.

No GST on Exports

Exporters who furnish a LUT are not required to pay GST on the exports made, thereby reducing the cost of exports and making exports more competitive in the international market.

No ITC Restriction

Exporters are not restricted from claiming Input Tax Credit (ITC) on the taxes paid on inputs and input services used in the export of goods or services.

No Advance Tax Payment

With a LUT, businesses do not need to make advance tax payments, reducing the
financial burden on them.

Improved Cash Flow

By avoiding the payment of IGST, the taxpayer can improve their cash flow, which can be invested in other business activities.

Exemption from Security Deposit

Filing a GST LUT allows the taxpayer to claim exemption from the payment of integrated tax (IGST) on exports without having to furnish a bond or security deposit.

Reduced Documentation

Filing a GST LUT requires fewer documents compared to the bond or security deposit method, making the process of compliance easier and quicker.

Faster Exports

The reduction in the cost of exports and the ease of compliance can lead to an increase in exports, thereby boosting the overall economy.

Improved Credibility

The LUT acts as a guarantee from the government and helps increase the credibility of the business in the eyes of their customers, suppliers and other stakeholders.

Frequently Asked Question

LUT stands for Letter of Undertaking, which is a document that is submitted by an exporter under the Goods and Services Tax (GST) regime in India.The LUT is a declaration by the exporter that they will fulfill their export obligations under the GST laws. Under the LUT system, a taxpayer is not required to pay tax at the time of supply and is allowed to claim a refund of the input tax credit (ITC) instead.
An exporter who is registered under GST and has a good compliance record is eligible to furnish a LUT.
The validity of a Letter of Undertaking (LUT) depends on the rules and regulations set by the government. It is usually valid for a financial year or for a specified period of time, which is determined by the government. It is important for businesses to regularly check and renew their LUT to ensure it remains valid and to avoid any penalties or legal consequences for non-compliance.
The purpose of a Letter of Undertaking is to simplify the compliance process for businesses engaged in export activities and to provide a guarantee from the government for the payment of taxes and fulfillment of export obligations.
Yes, a Letter of Undertaking can be revoked or cancelled by the government if the exporter fails to fulfill their obligations or if they provide false information in their application.
No, furnishing a LUT is optional and exporters can choose to pay GST on exports instead of furnishing a LUT.
Some of the benefits of a Letter of Undertaking include reduced time and cost, easy compliance, no advance tax payment, increased credibility, streamlined process, flexibility, and improved business relationships.
In case of failure to fulfill export obligations, the tax authorities may cancel the LUT and demand payment of the GST that was not paid at the time of export.
Yes, an exporter can claim Input Tax Credit (ITC) on both input goods and services, as well as capital goods, if they furnish a Letter of Undertaking (LUT) under the Goods and Services Tax (GST) in India.
LUT: A LUT is a legal document submitted by a taxpayer to the Indian government in which they undertake to fulfill their GST obligation and pay all taxes due on their supplies of goods or services. The LUT serves as a commitment by the taxpayer to the government that they will fulfill their GST obligations, and that they will pay all taxes due on their supplies of goods or services. Bond: On the other hand, a bond is a financial guarantee provided by a third-party (such as a bank or a financial institution) to secure the payment of taxes. A bond is required by the government when a taxpayer has been granted provisional registration or has been granted a certain waiver or relief from tax liability. The bond serves as a guarantee that the taxpayer will pay the taxes due in case they fail to fulfill their GST obligations.
In case of a taxpayer who has submitted a LUT, they are not required to pay tax at the time of supply and are allowed to claim a refund of the input tax credit (ITC) instead. In the event that a taxpayer needs to claim a refund of ITC, they may do so by filing a GST refund application with the government. The process of claiming a refund may vary depending on the specific circumstances and the reasons for the refund. In some cases, the taxpayer may be required to provide additional documentation or information to support their claim. It is important for taxpayers to ensure that they have fulfilled all the necessary requirements and conditions for claiming a refund under the LUT system, in order to avoid any potential penalties or legal consequences. Our Expert team of professionals at SureTax Fincare will provide the necessary assistance and guidance for claiming refunds.

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