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LUT Registration

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  • Overview
  • Eligibility
  • Prerequisites
  • Documents
  • Process
  • Benefits
  • How Can Apka Tax Assist You
  • FAQs

What is LUT Registration?

The Letter of Undertaking or LUT in GST is a document that facilitates export transactions without the immediate payment of Integrated Goods and Services Tax (IGST). GST LUT, an abbreviation for Letter of Undertaking, holds significant importance within the context of the GST framework. LUT certificate is a useful system for exporters, allowing them to engage in the export of goods or services without the immediate need for tax payment. Any registered entity availing the option of supplying goods or services for export or to SEZs without payment of integrated tax has to furnish, prior to export/SEZs supply, a Letter of Undertaking (LUT). Examples of transactions for which an LUT certificate can be used are:

Zero rated supply to SEZ without payment of IGST.

Export of goods to a country outside India without payment of IGST.

Providing services to a client in a country outside India without payment of IGST.

Exporters can also indulge in export without filing LUT and by paying IGST. They can claim a refund later, but it is a tiresome process compared to applying for LUT form and then proceeding with export. For all registered taxpayers involved in the export of goods or services, it is mandatory to submit a Letter of Undertaking (LUT) using Form GST RFD-11 on the GST portal. This requirement is essential to enable exports without paying Integrated Goods and Services Tax (IGST).

 

What are the Eligibility for LUT Registration?

The eligibility criteria for applying for LUT for export include the following:

  • Registered Taxpayer: Any registered taxpayer engaged in exporting goods and services can apply for a LUT, provided they meet certain conditions.
  • Intent to Supply: The applicant should intend to supply goods or services within India, to foreign countries, or to Special Economic Zones (SEZs).
  • GST Registration: The entity seeking to avail the benefits of an LUT should be registered under the GST framework.
  • Tax-Free Supply: The desire to supply goods without the imposition of integrated tax is a key requirement for LUT application. Individuals facing prosecution for tax evasion exceeding Rs. 2.5 crore or more are considered ineligible.

 

What are the Prerequisites for LUT Bond in GST?

Here are some important points to remember about LUTs (Letter of Undertaking) in GST:

  • Validity: LUTs have a validity period of one year, which means a new LUT must be submitted for each subsequent financial year. Failure to meet the conditions outlined in the LUT within the specified timeframe will lead to the withdrawal of privileges associated with it, necessitating the provision of bonds.
  • Provisional Acceptance: The acceptance of a LUT comes with specific terms, and failure to meet these conditions might lead to privilege revocation, needing the provision of a bond.
  • Substitute Bond: Entities who are ineligible for LUT can still furnish a bond, which usually requires a bank guarantee to cover the anticipated tax liability based on exporter assessment.
  • Formal Letterhead: LUT submissions must be done via the registered entity's letterhead, who is planning to supply goods or services without integrated tax payment.
  • Authorized Form: An LUT must be applied through the official GST RFD-11 form and can only be submitted by authorized personnel like the MD, company secretary, or partners in a firm.
  • Limit of Bank Guarantee: The accompanying bank guarantee should not exceed 15% of the bond amount. The concerned GST Commissioner can waive this requirement of bank guarantee. 

Keeping these details in mind ensures a smooth process when dealing with LUT bonds under GST regulations.

 

What Documents are Required for LUT Registration?

To apply for an LUT under GST, you need to provide several documents, including:

  • LUT Cover Letter- a request letter signed by an authorized person.
  • Eligibility Proof
  • Copy of GST Registration
  • Copy of PAN Card of Entity
  • ID and address proof of the authorized person.
  • GST RFD 11 Form, the application form for LUT.
  • Copy of IEC Code if engaged in exports.
  • Copy of canceled cheque
  • Authorized Letter granting power to the authorized signatory.

 

What is LUT Registration Process?

You can now apply for an LUT online through the GST portal. 

It's a lot easier than before. Here's how you do it:

  • Go to the GST portal and log in.
  • Go to "Services" in the menu.
  • Choose "User Services" and then click on "Furnish LUT."
  • Select the financial year you want to file for and upload the LUT form.
  • Tick the required checkboxes and provide details of two witnesses.
  • Sign the LUT with your DSC or EVC.
  • Enter the OTP received on email and mobile.
  • Click on proceed and get your application reference number.

Just remember, once you file the LUT, it cannot be changed. Therefore it is advised to crossverify and recheck every information. After that, you can download your GST Letter of Undertaking.

 

What are the Benefits of LUT Registration?

Choosing to file LUT brings several benefits to exporters, making their export activities more efficient and financially optimized. Some of the benefits are mentioned below

  • Tax Exempt Exports: LUT enables exporters to carry out their export transactions without the burden of immediate tax payment, eliminating the need to claim refunds later.
  • Streamlined Process: The whole process to file LUT has been made online so it is quite easy for exporters to opt for LUT. Also, exporters avoid the complexities of claiming tax refunds or engaging in follow-ups with tax authorities, saving time and effort.
  • Long Validity: Once filed, the LUT remains valid for the entire financial year, reducing the burden of repetitive filings.
  • Liberated Resources: As exporters have access to both funds as well as year-long validity of LUT, this allows exporters to focus more on their core activities. By utilizing the LUT, exporters can navigate international trade more efficiently and flexibly.
  • Free Working Capital: Funds that would have been locked as tax payments remain accessible to exporters. This is highly beneficial for small and medium-sized enterprises (SMEs) that are always short of funds. 

Filing and obtaining LUT is a complex process. ApkaTax specializes in streamlining the process, allowing you to focus on expanding your export operations. Our experienced professionals understand GST regulations and can guide you through the seamless submission of the GST RFD-11 form. We offer end-to-end support, from document preparation to online submission, ensuring accuracy and compliance at every step. With Apka Tax, you can unlock the benefits of tax-free exports without the hassle of navigating complex procedures, simplifying your LUT filing for a smoother export journey. Contact us to experience a hassle-free GST LUT filing process that empowers your export ventures like never before.

 

How Can ApkaTax Assist You?

End-to-End Assistance

Expert Legal Guidance

Best in Class Client Support

We provide thorough assistance and comprehensive service for getting your LUT Registration done. 

ApkaTax offers comprehensive support for LUT GST application process, including legal assistance based on the specific priorities of our clients.

Our dedicated support team ensures that our clients stay informed about the latest guidelines and updates regarding LUT filing requirements.

 

FAQs

A Letter of Undertaking (LUT) or LUT in GST is a form used by exporters to declare their commitment to complying with GST requirements during exports without making an IGST payment.

Any registered taxpayer engaged in the export of goods or services is eligible to utilize an LUT. However, individuals who have been prosecuted for tax evasion involving amounts exceeding Rs. 2.5 Crores under the tax act cannot furnish LUTs bond.

An LUT remains valid for one year, typically until the end of the financial year.

Information required for filing LUT includes GSTIN and legal name along with the financial year for which the LUT is being filed. Also the names, addresses, and occupation details of two independent and reliable witnesses is required. The taxpayer also needs to select the self-declaration points before submitting the LUT.

All registered taxpayers engaged in zero-rated supply of goods or services must submit an LUT in Form GST RFD-11 on the GST Portal before making such supplies. Individuals need to login on the GST portal with a valid username and password, click on the 'Services' tab, then select 'User Services' under the 'Services' category, and then choose the 'Furnish Letter of Undertaking (LUT)' sub-category to file the LUT.

Furnishing an LUT allows exporters to export goods and services without making IGST payments.

The LUT application must be signed and verified with a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) by the primary authorized signatory or any other authorized signatory. The authorized signatory can be a working partner, managing director, proprietor, or a person duly authorized by the working partner or board of directors of the company or proprietor.

 

Upon successful filing of the LUT application, the system will generate an Acknowledgement Reference Number (ARN), and the taxpayer will receive notification via SMS and email. The taxpayer can also download the acknowledgement in PDF format.

If a tax official does not process the LUT application or issue a notice for clarification within three working days, the application will be considered approved by default. In such cases, the status of the LUT application will change to "Deemed Approved."

In scenario of the exporter failing to produce LUT then he has to either pay the IGST or furnish an export bond.

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