A Letter of Undertaking (LUT) is a document used in the Indian Goods and Services Tax (GST) regime to allow an exporter of goods or services to export without paying the GST on their supply. The LUT acts as a declaration by the exporter to the government that they will fulfill their tax obligations and will not claim any input tax credit (ITC) on the GST paid on inputs and input services used in their export supplies.

Process of Filing Lut Applicaiton

An exporter who wishes to avail the benefit of the LUT scheme must have a valid GST registration and submit a LUT in the prescribed format to the jurisdictional tax authority. The LUT must be supported by a bank guarantee or a bond, depending on the value of the export supplies, to ensure that the exporter will fulfill their tax obligations.

Once the LUT is approved, the exporter can make their export supplies without paying the GST, and the buyers of the export supplies are also exempt from paying the GST. The exporter can claim a refund of the GST paid on inputs and input services used in their export supplies by filing a refund application with the relevant authorities.

It is important for exporters to understand the terms and conditions of the LUT scheme and to comply with all the applicable GST laws and regulations. Any violation of the LUT terms and conditions can result in penal action, including the revocation of the LUT and the forfeiture of the bank guarantee or bond.