Why is exporting LUT needed?

Benefits of filing LUT – for Exporters The LUT ensures that exporters don’t have to go to the trouble of claiming a refund or following up with the IT department. Much time can be saved by avoiding the refund route. Till the refund is received, any amount paid as the tax will remain blocked.

Is LUT mandatory for export of goods?

An exporter furnishing LUT’s is required to furnish fresh LUT for each financial year. If the conditions mentioned in LUT are not satisfied within the time-limit, the privileges are revoked and the exporter will have to furnish bonds.

What is the benefit of Lut?

By filing LUT under GST, an exporter can export goods or services without paying the taxes. If LUT is not filed, the exporter must first pay the required tax while making exports and then claim a refund to avail benefit of zero-rated exports.

What is Lut bond?

The LUT Bond is an acronym for the Letter of Undertaking which is a document filed by an exporter to get relief from payment of IGST on exports. Whereas, an exporter furnishing LUT’s are required to furnish fresh LUT for each financial year.

Can export be done without Lut?

Exports without LUT: Export of goods or services can be made without payment of integrated tax under the provisions of rule 96A of the Central Goods and Services Tax Rules, 2017 (the CGST Rules).

What is the use of LUT in GST?

LUTs / Bonds can be used for: Zero-rated supply to SEZ without payment of IGST. Export of goods to a country outside India without the payment of IGST. It is providing services to a client in a country outside India without paying IGST.

How do I use LUT certificate in GST portal?

Steps to furnish LUT on the GST portal

1. Step 1: Login to GST Portal.
2. Step 2: Go to ‘SERVICES’ Tab > ‘User Services’ > Select ‘Furnish Letter of Undertaking(LUT)’
3. Step 3: Select the financial year for which Letter of Undertaking is applied for from the ‘LUT Applied for Financial Year’ drop-down list.

How do you treat export sales in GST?

The export of goods or services is considered as a zero-rated supply. GST will not be levied on export of any kind of goods or services. A duty drawback was provided under the previous laws for the tax paid on inputs for the export of exempted goods. Claiming the duty drawback was a cumbersome process.

What is the validity of Lut for exports under GST?

As per Circular No. 4/4/2017 – GST dated July 7th, 2017, the LUT furnished for exports under GST would remain valid for a period of 12 months. Furthermore, if the registered person choosing to file LUT for exports fails to comply with the conditions of furnishing LUT, he would be asked to file a Bond in place of LUT.

What is the time limit for export of goods under GST?

Export of goods will be done within three months from the date of issue of export invoice or this time may be extended if allowed by the Commissioner. The exporter needs to abide by GST law in respect of exports. To pay Integrated tax along with Interest if failed to export.

Why do some exporters choose to export under Lut instead of bonds?

If the bond provided is supported by a bank guarantee, the working capital is blocked due to the bank asking the exporter for a money deposit against the guarantee. Given this, any exporter would choose the option to export under LUT, instead of a bond.

Who can apply for LUT under GST RFD 11?

Under CGST Rules, 2017, any registered person can furnish a bond or LUT in form GST RFD 11 and export goods without the payment of integrated tax. They can apply for LUT if they: