Letter of Undertaking

Do you need a Letter of Undertaking? Our dedicated team of GST experts will file your GST LUT form or export bond form!

Contact us to know more about how we can help you with Letter of Undertaking (LUT)

An Overview

To promote the export of goods or services, the government has provided various reliefs and benefits under GST. Exports help to create employment, achieve a favorable balance of payment situation and boost the economic growth of the country. GST law provides 2 options to exporters:- 1) Export without payment of Taxes by applying for LUT or Export Bond. 2) Export with payment of Taxes and claim a refund later.

Export without payment of Tax by applying for LUT or Export Bond
Generally, when an entity exports goods or services, they are required to pay taxes on such exports. However, the GST law allows taxpayers to claim a refund of these taxes paid. The GST method also offers attractive alternative options, wherein the taxpayer can apply for Letter of Undertaking (LUT) or Export bonds with the GST department and if the application is accepted by the department then the taxpayer is not required to pay any taxes on export thereby sparing the efforts for claiming a refund and also avoid blocking of funds by way of payment of taxes.

What is Letter of Undertaking (LUT)?

The Letter of Undertaking (LUT) is a prescribed document to be furnished in Form GST RFD 11 under rule 96A, whereby the exporter declares that he/she would fulfil all the requirements prescribed under GST while exporting without making IGST payment. Any person registered under GST can submit a LUT only if they have not been prosecuted for tax evasion exceeding Rs. 2.5 Crore, or for any other offence under the CGST Act, the IGST Act 2017, or any other existing law. If the exporter does not meet the LUT requirements, his privileges can be revoked and he must leave a deposit. Please note that this Letter of Undertaking (LUT) is to be filed online before exporting any goods/services.

How to Apply for LUT?

What is an Export Bond?

Exporters who are ineligible to apply for LUT, including exporters who have been prosecuted for tax evasion, will have to furnish an export bond along with a bank guarantee if the export is being made without payment of IGST. This bond should cover the estimated amount of tax liability on the exports as assessed by the exporter itself. If the exporter is involved in the export of goods or services on a regular basis, he can opt for a running export bond which will give him the benefit of not furnishing a new export bond for every new transaction. A bank guarantee may or may not be mandated with the bond depending on the track record of the exporter. Normally, the GST commissioner demands a bank guarantee not exceeding 15% of the bond value.

Benefits of LUT and Bond
Export of good or services without having to pay taxes
Avoid the trouble of claiming a refund if tax is paid on exports
Frees up working capital
LUT once filed remains valid for a period of 12 months from the date of submission.
The entire process of filing of LUT and its acceptance by the department can be done online. In case of Bond, it is to be furnished manually by submitting the hardcopy of the same to the department.

Documents Required

In case of Bond
GST Form RFD – 11 on the letterhead of the entity
Bond on stamp paper
Guarantee from Bank
Details of witnesses (Name, Occupation and Address)
Authority letter (In case of company – Board Resolution)
Other supporting documents
Copy of IEC code
Cancelled Cheque
Pan card
Export Invoice
The department issues a signed letter accepting the export without payment of taxes, within 2 to 3 days of filing the documents.

How will ICI help you in obtaining LUT or Export bond?

We have a well versed team of GST experts who can advise you on GST on Exports and also file your GST LUT form or export bond form.

Submit a request by clicking here.
Our Compliance Manager will contact you to obtain your documents along with a simple checklist.
Our team of GST experts will verify your documents and proceed with the preparation of the LUT form or Export bond, as required. All throughout the process, your dedicated Compliance Manager will keep you updated on the progress of the form.
Before filing, we will get the form reviewed from you. Once your approval is received by our team, we will file the form. Upon successful filing, an email containing the acknowledgment receipt will be mailed to your registered email ID.

FAQs

a. Who should file LUT or bond under GST?

All exporters of goods and services who do not want to pay tax upfront should apply for LUT or Bond.

b. Who will sign the LUT application?

A person who has been recognized as an authorised signatory on the GST portal can sign the LUT application.

c. What if you don’t file LUT?

If you don’t file LUT, then tax shall be imposed on all your exports. However, you can apply for a refund of such taxes paid.

d. What if I have already furnished any LUT manually?

For a LUT that has been manually provided and approved by the tax officer for the current fiscal year, the taxpayer can upload that LUT and submit an online application that provides the LUT to request online approval of the previous LUT. However, it is not mandatory to record the manual LUT online.

e. How would you know that the process of furnishing LUT has been completed?

If the transmission is successful, the system generates an ARN and a confirmation, which would be informed to you via SMS and email. You can also download the confirmation as PDF.

f. How long is the validity of LUT ?

LUT will be valid for the entire financial year i.e. a LUT which is furnished in FY 2019-20 will expire on 31st March 2020.

g. What happens if the Tax Official doesn’t process the LUT application?

In case the tax office does not process the LUT application or does not issue any notice for clarification within 3 working days, then the application shall be deemed to be approved.

h. Still Confused?

Speak to our experts who shall solve all your doubts.
Call us at +91 7738 066 334 or Mail us at info@indiacompanyincorporation.com

What Our Clients Say About Us!

Startups aren’t easy. Definitely not during times of Corona. India Company Incorporation was able to guide us with an immense amount of clarity. The team is experienced, always available and the work was handled with the utmost professionalism.

I'm thoroughly impressed with India Company Incorporation services. They really made my work easier. The team provided excellent support and I highly recommend this company.

It was the best decision to choose India Company Incorporation for my company incorporation. Forming a company was such a seamless process. The team was really supportive, patient and available 24x7. I would definitely recommend this company.

It was a pleasure working with India Company Incorporation and their well-trained executives. They answered our queries while guiding us through the entire process at a really reasonable cost. We were happy to have a hassle-free experience.

India Company Incorporation team has given excellent service to our company. They solve all our doubts and suggest appropriate solutions in the best possible way. Thank you so much for your support. All the best for future endeavors.

We were looking for a low-cost service provider, and India Company Incorporation exceeded our expectations. They took care of our registration and took the time to get to know who we are as a firm. We are quite pleased with the service and would enthusiastically recommend India Company Incorporation to anyone.

I am extremely delighted with the experience and would suggest India Company Incorporation to everybody. They took care of my registration procedure and spent time getting to know my business helping us in every regard. I look forward to working with India Company Incorporation again.