What is LUT and Why is it Used?
When to Apply/File an LUT
Scenario Before GST
Steps to Furnish LUT on GST Portal
FAQs on Furnishing LUT
A Letter of Undertaking (LUT) allows exporters to make exports without paying Integrated Goods and Services Tax (IGST).
Definition and Purpose
LUT is a document that exporters file to avoid IGST payment on exports.
Applicable to all registered taxpayers exporting goods/services.
Used for exports to countries outside India and SEZs.
Filed in Form GST RFD-11 on the GST portal.
Eligibility for LUT
Not every exporter can file an LUT; certain conditions apply.
Must be a registered taxpayer under GST.
No prosecution for tax evasion exceeding ₹2.5 crore.
Intends to export goods/services without IGST payment.
Benefits of Filing LUT
Filing an LUT provides several advantages for exporters.
Avoids blockage of working capital.
Simplifies compliance by reducing paperwork.
Facilitates seamless export operations.
Validity of LUT
An LUT is valid for a specific period.
Valid for one financial year.
Must be renewed annually before the start of the new FY.
Deadline for FY 2025-26 is 31st March 2025.
Timely filing of LUT is crucial for exporters to avoid IGST on exports.
Application Timeline
Understanding when to apply for LUT is essential.
File before the start of the financial year.
Deadline for FY 2025-26 is 31st March 2025.
GST portal opens for LUT filing well in advance.
Consequences of Late Filing
Delays in filing can lead to complications.
May result in IGST payment on exports.
Potential cash flow issues due to blocked funds.
Possible penalties for non-compliance.
Renewal Process
Renewing an LUT is straightforward but must be timely.
Submit a new LUT each financial year.
Use Form GST RFD-11 for renewal.
Ensure all previous compliance is in order.
Worked Example
Example of tax savings by filing LUT.
Exporter with ₹10 lakh export turnover.
Avoids 18% IGST, saving ₹1.8 lakh.
Improves cash flow and reduces compliance burden.
The process of exporting goods and services has evolved significantly since the introduction of GST.
Manual Submission
Prior to GST, LUT submission was manual.
Required physical submission of RFD-11.
Involved jurisdictional officer verification.
Time-consuming and prone to delays.
Use of Bonds
Bonds were an alternative to LUTs.
Required on non-judicial stamp paper.
Involved higher compliance costs.
Less preferred due to complexity.
Impact on Exporters
The old system had several drawbacks.
Increased operational costs.
Delays in export processing.
Lack of transparency in procedures.
Transition to GST
GST simplified the export process.
Online submission of LUT via GST portal.
Reduced paperwork and processing time.
Greater transparency and efficiency.
Furnishing an LUT on the GST portal is a streamlined process.
Login and Navigation
Access the GST portal to begin the process.
Login with your GST credentials.
Navigate to 'Services' > 'User Services'.
Select 'Furnish Letter of Undertaking (LUT)'.
Filling the Form
Complete the necessary details in Form GST RFD-11.
Select the financial year (e.g., 2025-26).
Upload previous LUT if applicable (PDF/JPEG, max 2 MB).
Fill in self-declaration and witness details.
Submission and Verification
Final steps to complete the LUT submission.
Enter the place of filing and save the form.
Preview the form to ensure accuracy.
Submit the form for processing.
Post-Submission Steps
What to do after submitting the LUT.
Receive acknowledgment on the portal.
Keep a copy of the submitted LUT for records.
Monitor the status of LUT approval online.
What is the deadline to file LUT for FY 2025-26?
The deadline to file LUT for FY 2025-26 is 31st March 2025. Filing before this date ensures you can export without IGST payment from the start of the financial year.
Can I export without filing an LUT?
No, without filing an LUT, you will need to pay IGST on exports, which can be claimed as a refund later. Filing an LUT avoids this upfront tax payment.
What happens if I fail to export within the LUT validity period?
If you fail to export within the stipulated period, you must pay IGST along with interest at 18% per annum from the date of the invoice until the date of payment.
Is there a fee for filing LUT on the GST portal?
No, there is no fee for filing an LUT on the GST portal. The process is free of charge, but ensure all compliance requirements are met.
Can I revise a submitted LUT?
Currently, the GST portal does not allow revision of a submitted LUT. Ensure all details are correct before submission to avoid issues.
What documents are needed to file an LUT?
You need your GST registration details, previous LUT (if applicable), and details of two independent witnesses to file an LUT.
How long does it take to process an LUT?
Once submitted, the processing time for an LUT can vary, but you should receive an acknowledgment on the GST portal shortly after submission.
Can an LUT be filed for multiple financial years at once?
No, an LUT must be filed separately for each financial year. Ensure you file a new LUT before the start of each year to continue exporting without IGST.
What is the penalty for not filing an LUT?
Failure to file an LUT results in the requirement to pay IGST on exports, which can impact cash flow and incur additional compliance costs.
Are there any exemptions to filing an LUT?
Exporters with a history of tax evasion or non-compliance may not be eligible to file an LUT and may need to furnish a bond instead.