In the context of international trade, a Letter of Undertaking (LUT) is a document that exporters use to declare the intent to fulfill their tax obligations. It is submitted by exporters to the Indian Goods and Services Tax (GST) authorities. By providing an LUT, exporters can supply goods or services without paying GST and claim a refund on input tax credit.
Registered taxpayers engaged in exporting goods or services from India are required to complete a Letter of Undertaking (LUT) to exempt themselves from Integrated Goods and Services Tax (IGST) payments. This undertaking, typically supplied by the owner or managerial staff of the exporting entity, signifies the exporter’s commitment to fulfilling GST requirements for their exports, in accordance with Rule 96A and CGST notification No. CGST-37/2017 dated 04.10.2017.
The LUT option enables exporters to conduct their business smoothly without the immediate need for IGST payments. All GST-registered exporters, excluding those facing charges for offenses related to exporting, can avail themselves of this service. Alternatively, exporters have the option to make initial IGST payments and subsequently claim a refund.
To be eligible for LUTs, any registered taxpayer involved in exporting is qualified, except those facing charges of tax evasion exceeding Rs. 2.5 crores. LUTs are valid for one year, expiring at the end of the financial year, and exporters must renew them annually. Failure to meet LUT conditions within a specified timeframe results in the revocation of benefits, necessitating the furnishing of bonds.
In the letter undertaking bond, we fill in our legal name and we need to select the financial year for which LUT is being filled. Enter the legal names of the two witnesses and their addresses and occupations. Along with that taxpayers also need to choose all the points of self-declarations before submitting the LUT bonds.