GST LUT Filing

GST LUT is filed to export goods and services without payment of IGST.

Meaning of Export

Export of goods can be defined as taking goods out of India to a place outside India.

Export of service is a bit more complicated. It requires fulfilment of the following conditions:-

  1. The supplier of service is located in India
  2. The recipient of service is located outside India
  3. The place of supply is outside India
  4. The supplier of service and the recipient of service are not merely establishments of same person
  5. The payment is received by the supplier in convertible foreign exchange (except where Indian currency is allowed to be received by RBI, for example: export to Bhutan)

Here it should be noted that in case of export of goods there is no requirement to receive the consideration in convertible foreign exchange. It merely requires movement of goods from India to a place outside India.

Charge of IGST and Zero-Rated Supply

Supply of goods or services, where the supplier is located in India and the place of supply is outside India shall be deemed to be inter-state supply of goods or services. Hence IGST is leviable. In order to provide relief to exporters and to promote exports, the government has notified that export of goods and services will be treated as zero-rated supplies. Therefore, no tax is payable by the exporter although Input Tax Credit (ITC) is allowable. The exporter may claim refund of ITC.

Refund of Tax

The following two options are available to the exporter: -

  1. Export the goods/ services upon payment of IGST and claim refund of the tax paid
  2. Export the goods / services under a Letter of Undertaking, without paying IGST and claim refund of the unutilized ITC.

Refund cannot be claimed if the goods exported are subjected to export duty or duty drawback is availed by the supplier.

Application for refund

The shipping bill filed by the exporter shall be deemed to be an application for refund in a case the exporter has paid the applicable IGST on such export. Such application shall be valid only if the following conditions are satisfied:-

  1. The applicant has filed GSTR-3B
  2. The person in charge of the conveyance carrying the export goods duly file export manifest

Where IGST has not been paid on export, the unutilized ITC may be claimed as refund by the exporter. This can be done by filing application for refund in form GST RFD-01.

Furnishing of Letter of Undertaking or bond

All registered persons are eligible to furnish LUT in place of a bond except those who have been prosecuted for cases involving an amount exceeding Rs. 250 lakhs.


Where the exporter avails the option to supply goods or services for export without payment of IGST, he has to furnish a bond or Letter of Undertaking (LUT) prior to export in Form GST RFD-11 to the jurisdictional commissioner. The LUT or bond binds the exporter to pay IGST along with interest, if any, within a period of: -

  1. 15 days after the expiry of 3 months from the date of issue of the invoice for export, if the goods are not exported out of India; or
  2. 15 days after the expiry of 1 year from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the RBI.

Name, Occupation and address of at least 2 witnesses have to be provided in the Form GST RFD-11. In case of a bond being furnished, a bank guarantee of at least 15% has to be provided.

Bond or LUT must be filed even if export takes place to SEZ unit.

Withholding of Refund

The claim of refund may be withheld where: -

  1. The proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962.
  2. A request has been received from the jurisdictional Commissioner of Central tax, State tax or Union Territory tax to withhold the payment of refund due to the person claiming refund.

In case of export of goods or services you have two options: -

  1. Pay tax (IGST) and claim refund on the same; or
  2. Don’t pay any tax and file letter of undertaking or bond

If you have paid IGST on export you do not have to file any application for refund. The shipping bill filed by you at the time of export shall be deemed to be an application of refund subject to the following conditions: -

  1. The person in charge of the conveyance carrying the export goods has duly filed export manifest and
  2. The applicant has filed GSTR-3B.

A refund is not eligible in the following circumstances: -

  1. Where the goods exported out of India are subjected to export duty; or
  2. Where the supplier of goods or services or both avails duty drawback.

Yes. Although exports are zero-rated supply, i.e. no tax is payable on them, the exporter can claim Input Tax Credit. Input Tax Credit will be available to the exporter subject to eligibility of such credit. Unutilized amount of ITC can be claimed as refund.

An exporter may claim refund of unutilized ITC by filing form GST RFD-01. Refund is issued only when the refundable amount exceeds Rs. 1,000.

Any registered exporter of goods or services can file Letter of Undertaking (LUT). However, any person who has been prosecuted in cases involving an amount of Rs. 2.5 crores or above is not eligible to furnish LUTs. All other assesses including those who have been prosecuted for an amount of Rs. 2.5 crores or above under the GST law should furnish bonds if the export is being made without payment of IGST.

When an exporter wants to export goods or services without payment of IGST, they may opt to file LUT/ bond in form GST RFD-11. Furnishing of bond or LUT is not required in the case of zero-rated supply of exempted or non-GST goods.

Once the LUT is filed, it shall be valid for the entire financial year. The exporter needs to file LUT in every financial year.

The LUT or bond binds the exporter to pay applicable IGST along with interest, if any, at the rate of 18% within a period of: -

  1. 15 days after the expiry of 3 months or such further period as may be allowed by the Commissioner from the date of issue of the invoice for export, if the goods are not exported out of India; or
  2. 15 days after the expiry of 1 year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the RBI.

The claim of refund may be withheld where: -

  1. A request has been received from the jurisdictional Commissioner of Central tax, State tax or Union Territory tax to withhold the payment of refund due to the person claiming refund.
  2. The proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962.

An Authorized Signatory can sign and file the verification with DSC/ EVC. Authorized signatory can be the working partner, the managing director or the proprietor or by a person duly authorized by such working partner or Board of Directors of such company or proprietor to execute the form.

Where the tax official does not process the LUT application or provide any notice for clarification within 3 working days, the application will be deemed as approved.

What’s Included

  • Filing of GST LUT (Letter of Undertaking) or bond in Form GSTR RFD-11
  • ARN Generation from GST portal
  • LUT Certificate

 

Documents Required

  • GSTIN
  • Bank Guarantee details
  • Witness details
  • Details of Export/ Export Invoices (if any)

GST LUT Filing


All registered tax payers who export the goods or services have to furnish Letter of Undertaking (LUT) in GST RFD-11. Filecrat offers an easy online process to register for GST LUT Filing from Rs.999/

₹999.00

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