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Letter of Undertaking under GST
File the Letter of Undertaking and export without paying tax first. It is valid for one financial year, and it has to be filed again before the next one begins.
- The undertaking drafted and executed on stamped paper
- Filed online in form GST RFD-11 using your GST credentials
- The ARN acknowledgement, which is the acceptance, shared with you
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- We tell you when the next year’s LUT falls due
- A dedicated relationship manager from start to finish
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What a Letter of Undertaking is
What the undertaking says, what it saves you, and the deadline that decides whether it saves you anything at all.
A Letter of Undertaking, or LUT, is filed by an exporter so that goods or services can go out without paying tax on them. Exports are zero-rated either way; the LUT is about which of the two routes to zero-rating you take.
Without one, you export on payment of IGST and then claim the tax back as a refund. That works, but the money is out of the business for as long as the refund takes, and the refund process is a good deal more involved than the undertaking is. By filing the LUT you undertake instead to meet the conditions the route requires, and pay nothing up front.
It is filed online in form GST RFD-11 and it is valid for the financial year in which it is filed. To keep exporting tax-free into the next year, the LUT has to be filed again before that year starts. The eligibility rules are also far more relaxed than they used to be: the old turnover and inward-receipts conditions are gone, and any exporter willing to export without paying tax can file one.
- Filed in
- Form GST RFD-11
- Online, on the GST portal
- Valid for
- One financial year
- The year in which it is filed
- Filed again
- Before each new year
- To keep exporting without paying tax
- Who can file
- Any exporter
- No turnover condition any more
- Bond required
- No
- The bond requirement was removed
- Acceptance
- The ARN
- The acknowledgement is deemed acceptance
- Turnaround
- 3 to 5 working days
- Subject to government processing
Why exporters choose LegalWiz.in
- An expert team of qualified CA, CS and lawyers
- A dedicated relationship manager with on-call support
- The undertaking drafted, stamped and filed for you
- The entire process handled online
- Quick turnaround and economical pricing
- Thousands of happy customers across every state in India
What the service covers
The undertaking is a legal document executed on stamped paper, not a form. It is drafted and executed before anything is submitted.
- Consultancy on whether the LUT route is the right one for your exports
- Collection and review of the documents against the checklist
- Preparation and drafting of the Letter of Undertaking
- Execution of the undertaking on duly stamped paper
- Online submission in form GST RFD-11 using your GST credentials
- The acknowledgement bearing the ARN, shared with you
The LUT covers only the financial year in which it is filed. Filing for the next year has to be done before that year begins, or exports made in the meantime carry IGST which then has to be claimed back as a refund.
LUT or refund
With an LUT
The goods or services go out with no tax paid. Nothing leaves the business and nothing has to be reclaimed.
Without one
IGST is paid on the export first and then claimed back. The tax is out of the business until the refund is processed.
Which costs more
The refund route ties up working capital on every consignment and adds a claim to make each time. For a regular exporter the difference compounds.
Neither is a choice about tax
Exports are zero-rated on both routes. The only thing that differs is whether the money leaves the business in between.
What filing the LUT does for you
Export without paying tax first
With the undertaking on file, goods and services go out with no tax paid on them. Without it, the tax is paid on export and then reclaimed to get to the same zero-rated position.
Working capital stays in the business
The refund route blocks a real amount of capital for as long as the claim takes to process. With the LUT that money is available for the business instead, and the cost of exporting comes down with it.
One filing covers the whole year
Once filed, the undertaking runs for the rest of that financial year. There is nothing to repeat per consignment, unlike the refund route where every export carries its own procedure.
Filed and accepted entirely online
Both the filing and the acceptance have been online since 2018. Nobody visits an officer, and the ARN on the acknowledgement is itself the acceptance.
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Documents required to file an LUT
Six items. The witnesses are the one people are usually not expecting, so it is worth arranging them early.
PAN of the entity
A copy of the PAN card of the exporting entity.
KYC of the authorised signatory
A copy of the PAN and Aadhaar of the partners or directors.
Witnesses
The details of at least two witnesses, with their address proof and PAN.
GST registration
The GST registration certificate of the exporter.
IEC certificate
The Importer Exporter Code certificate.
Cancelled cheque
A copy of a cancelled cheque of the exporter’s current account.
File the LUT in three easy steps
Step 01
Answer a few quick questions
- Spend less than 5 minutes on a simple set of questions
- Share the basic details and documents against the checklist
- Pay through a secure payment gateway
Step 02
Our experts take over
- You are assigned a dedicated relationship manager
- The Letter of Undertaking is prepared and executed
- It is filed online in form GST RFD-11
Step 03
The undertaking is on file
- The whole process takes 3 to 5 working days
- The acknowledgement bearing the ARN is shared with you
Subject to government processing time.
How long the filing takes
Three to five working days, most of which is drafting and execution.
Days 1 to 2
2 of 5 working days
- Discussion and collection of the basic information
- Collection of the required documents, including the witness details
Days 3 to 4
2 of 5 working days
- Preparation and drafting of the Letter of Undertaking
- Execution on duly stamped paper
- Online submission of the LUT
Day 5
1 of 5 working days
- The acknowledgement bearing the ARN is shared with you
Subject to government processing time.
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How can goods or services be exported from India?
On either of two routes. Exports can be made on payment of the applicable GST, with the tax then refunded subject to the conditions of export, or without payment of tax at all.
The second route is the one the Letter of Undertaking opens.
When does the LUT have to be filed?
A first LUT can be filed at any point before you export without tax.
To carry the arrangement into the next financial year it has to be filed before that year begins. This is the deadline people miss, and missing it means exports in the meantime go out with IGST paid.
Who is eligible to file one?
Any exporter willing to export without paying tax.
The turnover and inward-receipts conditions that used to apply have been removed, so the eligibility is far wider than it was when the route was introduced.
Does a bond have to be filed as well?
No. The requirement to furnish a bond has been removed. For exports without payment of tax the online Letter of Undertaking is what is filed.
How is the LUT filed?
Online, on the GST Network portal, using your GST credentials. It has been filed this way since the 2018-19 financial year.
The undertaking itself is executed on duly stamped paper and then submitted through the portal.
What is the validity of an LUT?
The whole of the financial year in which it is filed.
It can lapse earlier: where the conditions attaching to the exports are not met, the LUT is deemed withdrawn until they are.
Does anything have to be submitted physically?
No. The ARN generated on the acknowledgement is itself deemed to be acceptance of the LUT, so there is no physical submission and no visit to an officer.
Does the LUT have to be filed again each year?
Yes. It is valid only for the financial year in which it is filed, so it is applied for at the start of every financial year.
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