Listen to this informative audio to know what is a Letter of Undertaking (LUT) under Goods and Services Tax (GST) and how you can apply for it. In addition, you will find the detailed eligibility criteria to apply for LUT.

If the exporter fails to provide the LUT, then he has to pay IGST or provide an export bond. Earlier LUT could only be filed offline at the concerned GST office. But to further ease the process the Government has made the LUT application & filing online.

What is LUT under GST?

A LUT is a guarantee that a bank provides to its customer (exporter in this case). Through LUT, the bank allows the exporter to raise short-term credit from a foreign branch of any other Indian bank. In case the exporter fails to pay the credit, the bank undertakes to pay on its customer’s behalf.

As per the IGST Act 2017, the export of goods and services (zero-rated supply) does not fall under the GST Act. The LUT furnished for exports under GST is valid for one year. This means, for every financial year, LUT has to be filed by eligible exporters.

What is GST?

Goods and Services Tax (GST) is an indirect tax (or consumption tax) used to supply goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step in the production process but is meant to be refunded to all parties in the various stages of production other than the final consumer. As a destination-based tax, it is collected from consumers and not point of origin like previous taxes.

Contact FinacBooks to get connected to a vast network of Chartered Accountants who can make you understand and help with all GST related matters.

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