Letter Of Undertaking
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Every trader wants to enlarge their business by extending the trades. Read about “Letter Of Undertaking,” big relief for exporters in Texas.

Introduction

Every trader wants to enlarge their business by extending the trades, not just countrywide but also globally. Indeed, to help these traders grow their exports and amplify their business’s functionality, the government has made multiple provisions.

One of the major ones is the GST, i.e., a united tax across the country. Adding to this, an arrangement of Letters of Undertaking has also been made to permit the exporters to export goods without paying IGST (Integrated Goods and Services Tax). 

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What is LUT?

LUT means Letter of Undertaking. Under GST, every exporter is provided with two choices to supply their goods and choose the exemption format from taxes. These include:

  • Reimburse the Integrated Goods and Services Tax (IGST) and then claim for the refund amount.
  • Filling the Letter of Undertaking or bonds, and being exempted from paying taxes for exports.

LUT is fit out under the Form GST RFD 11, rule 96A of GST. Under this rule, the exporter makes the declaration of providing the exports without paying the IGST and eventually fulfilling all the requirements under GST rules and guidelines. 

Eligibility for submitting LUT

All the people who have enrolled themselves under the GST act can submit the Letter Of Undertaking. The only exception stands for those who have been summoned for tax eluding. Under this, the money exceeds Rs. 2.50 lacs under GST or IGST rules, 2017. 

In case the person is not allowed to submit the LUT, they can offer the export bonds for exporting the goods. 

Format of the Letter of Undertaking (LUT)

Under the LUT, the following particulars have to be filled:

  • GSTIN 
  • Name enrolled under GST
  • Type of document (Bond/LUT)
  • Address
  • Furnishing date
  • Signature and position
  • Witness particular
  • Bank guarantee

The Letter Of Undertaking is valid for one year from the time it is furnished. Once the validity date expires, the form needs to be given again by the person. It can be done right away online at the GST portal.

Documents Required for LUT

The file of the documents to be submitted along with the LUT includes the following:

  • Acceptance cover letter of Undertaking.
  • A photocopy of the GST certificate of registration.
  • Form GST RFD 11: Two sets of the original form.
  • They have notarized the original Annexure of Letter Of Undertaking (two sets). Along with these, two witnesses have to be available.
  • Get the confirmation of the digital signatures done from the Bank Manager.
  • The eyewitnesses have to provide their IDs and PAN cards. All the details provided in the Letters Of Undertaking have to be similar to the ID.
  • The PAN card of the individual has to be submitted.
  • Proof for the firm’s incorporation has to be provided, i.e., the Bond Incorporation certificate. In case of a partnership, the Partnership Deed must be provided.
  • Self-proclamation of eligibility on a letterhead.
  • A synopsis of all the invoices for export sales. These invoices have to be confirmed and certified by the Chartered Accountant.
  • Copy of IEC code. 

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Furnishing the LUT

Earlier, all the operations of LUT were done offline. But, now, the LUT can be provided online comfortably with some easy steps. The steps to do so are as mentioned below:

  • Initially, log in on www.gst.gov.in using the provided user id and password.
  • Under the ‘services’ tab, select the ‘user services’ label. 
  • From the drop-down menu, select the ‘Furnish Letter of Undertaking’ option.
  • A new page opens up, where all the information, including the registered name, trade name, GSTIN, etc., are mentioned. On the same page, select the financial year. 
  • In case the LUT has been furnished manually, you can attach the document. 
  • Next, fill in all the information regarding the LUT on the form that emerges on the screen. 
  • At last, the place of filing has to be noted along with the designation/signature. (Note: As of now, the signature, once submitted, cannot be changed.)
  • There are two methods of finally submitting the form. One is with Electronic Verification Code and the other with Digital Signature Certificate. Both require the Application Reference Number ARN. 
  • Finally, once all the formalities are done, you can download the Letter of Undertaking acknowledgment.

Apart from the Letter Of Undertaking, the other way for the exporters is submitting the bonds, which also needs similar methods and means to be followed, the new thing being the bank guarantee, in which the bond has to be attached along with a 15% bank guarantee of the total amount. 

Conclusion

As such, all the exporters and traders can function their business without worrying about paying taxes on their exports just by submitting the Letter Of Undertaking. This helps not only the traders but also the government. 

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