India has transformed its indirect tax system because of Goods and Services Tax. Whereas, in the practical field, most goods and services have turned out to be taxable under GST, some provisions have been envisaged, with the idea of decongesting export facilitation in the Act. It falls in the umbrella term of a Letter of Undertaking and is known to be one essential document of proof that might help a serious exporter sell his goods or his service in another state, without raising any immediate demand to the treasury of some other place for paying for the IGST.
Through this elaborate guide, StartupFlora unfolds the LUT GST filing process with benefits, criteria of eligibility and the procedure that one must undertake:.
Understand Letter of Undertaking (LUT) in GST?
It is a legal document presented with GST authorities by a registered taxpayer declaring their intent of exporting their goods or services with no amount of IGST. Thus, in that case, through this process of LUT GST filing, they undertake to comply with all other export obligations provided for under GST law. Hence, as they avail the benefits available under this new GST regime so tailor-made for exports, so also they are entitled to claim the abovementioned exemption.
Why is LUT Filing Important?
Here are some benefits the exporter gets when filing their LUT:
Cash flow Improvement:
There is no need for IGST to be paid in advance, and thus working capital will be available for other business requirements.
Reduced Compliance:
The export procedure will be made easy as the hassles of having to pay and then claim back IGST are removed.
Export clearance:
GST LUT Filling will help to obtain hassle-free and fast export clearances, thus lesser delays and efficiency.
Improvement of Competitiveness:
To avoid the pre-payment of tax, exporters can quote competitive prices as compared to others in the world.
Who can File LUT?
A registered taxpayer who wishes to export goods or services can file LUT GST. However, there are a few conditions that have to be satisfied:
The exporter should be registered under GST.
The exporter shall not have been prosecuted for any offence under The Central Excise Act, Customs Act or GST Act where the amount of tax evasion exceeds ₹250 lakh.
The exporter shall not have been convicted of any offense under the said acts for which imprisonment for more than two years has been prescribed.
Process to File LUT on the GST Portal
LUT filing can be done completely through the internet. Therefore, this is both hassle free and very efficient too. Follow the steps below.
Visit GST Portal: log into your online GST portal with login id and password.
Click on Form GST RFD-11: There, from the 'Services' tab you click 'Refunds, then select 'Furnishing of Letter of Undertaking'.
Form GST RFD-11: Form needs to be filled appropriately, properly so that in your form you mention correctly all your GSTIN information, your name but also your financial year while filing LUT
Attach Supporting documents: Sometimes attaching supporting documents can be done such as attaching a copy of your IEC number.
Submit the LUT: Verify the details and submit the form online.
Verification and Acceptance: GST authorities will validate the details. Upon approval, your LUT is applicable for the entire fiscal year.
Important Points to Consider
Validity:
An LUT GST is generally valid for one fiscal year. You need to file a new LUT for every fiscal year.
Bond Requirement
If you are not eligible under LUT, then sometimes you may be asked to furnish a bond too.
Amendments:
Any amendment in the information given along with the LUT may be filed online as well.
StartupFlora: Your Partner in GST Compliance
GST is quite robust. Dealing with the complexity of this tax will not prove to be a simple matter for small businesses and emergent ones. For such small and emergent businesses, StartupFlora gives directions and skills to support compliance. What we do:
GST Registration and Filing:
We will help you with GST Registration, return filing, and all other compliance requirements for your business under GST.
LUT Filing Assistance:
Our experts would help you in the LUT GST filing process so as to achieve the accuracy and timely submission of the same.
Advisory Services:
Advisory on every aspect of GST with an outline of available benefits under GST, along with exports-specific provisions.
GST should not be a barrier between you and your export prospects. You can reach us at StartupFlora and help you make it possible to avail all the benefits of LUT filing today itself.
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