CA.Sangam Aggarwal
Quick Summary
Introduction Under GST, Export of goods or services is considered as zero rated supply which means no GST will be levied on any kind of goods or services. Now the question arises if there is no output tax liability for exporter then how the exporter will adjust his input i.e. unutilized balance o
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FAQ :
A Letter of Undertaking (LUT) is a document that allows taxpayers to export goods or services without paying IGST at the time of export. It serves as a written promise to the government to comply with all GST regulations and fulfil tax liabilities.
To be eligible for an LUT, an exporter must possess a valid Importer-Exporter Code (IEC) and have a clean track record of GST compliance.
The main benefits of using an LUT include tax-free exports, improved cash flow as IGST is not paid upfront, a simple and online application process, a competitive advantage in the international market, and validity for the entire financial year.
Once filed, an LUT is valid for the entire financial year. There is no need to file a separate LUT for each transaction.
The LUT application must be completed before 31st March of the starting financial year or before the supply for Exports and SEZ. For example, for FY 2024-25, it needs to be filed before 31st March 2024.
If an exporter fails to file an LUT, they will have to pay IGST on their exports and may face difficulties in claiming a refund.
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