FILING OF GST LETTER OF UNDERTAKING (LUT)

The motive of any developing economy’s government is to expand its export base. The rationale for the same is to maintain the balance of payments, create job opportunities and boost economic growth.

By providing certain benefits and reliefs on exports, the government promotes the trade. The exporters can avail these benefits and reliefs and thus undertake a free-flowing and beneficial trade. On the same note, the government provides certain benefits under the GST regime to exporters.

Under the GST regime, the exporter has either of the two options:

1. Export under bond without payment of tax
2. Export along with tax payment and claim refund later

The Letter of Undertaking is prescribed to be furnished in form GST RFD-11 under rule 96A. Here, the exporter declares that they would fulfill all the requirements prescribed under GST while exporting without making IGST payment.

Letter of Undertaking for Exports:

According to the Central Goods and Services Tax Rules, 2017 any registered person exporting goods without payment of integrated tax (IGST) is required to furnish a bond or a Letter of Undertaking in Form GST RFD-11.

All GST registered goods and services exporters are eligible to submit Letter of Undertaking except the exporters who have been prosecuted for any offence and the amount of tax evasion exceeds INR 2.50 Cr under the CGST Act or the Integrated Goods and Services Tax Act, 2017 or any of the existing laws.

Letter of Undertaking will be valid for a period of twelve months from the date of submission. If the exporter fails to comply with the conditions of the Letter of Undertaking, privileges could be revoked and the exporter would be required to furnish a bond.

Export Bond for GST:

Entities that are not eligible to submit a Letter of Undertaking would have to furnish an export bond along with bank guarantee. The bond should cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. Export bond should be furnished on non-judicial stamp paper of the value as applicable in the State in which the bond is being furnished.

Exporters can also furnish a running bond to avoid executing for each and every export transaction. However, if the outstanding tax liability on exports exceeds the bond amount at any time, then the exporter must furnish a fresh bond to cover the additional liability.

A bank guarantee can be mandated along with export bond. The value of bank guarantee should normally not exceed 15% of the bond amount. However, based on the track record of the exporter, the bank guarantee, which is required to be submitted with export bond, can be waived off by the jurisdictional GST Commissioner.

MYDBIZ is the market leader in GST LUT Filing services in India. Before we get started with the engagement, all the required information and documents are collected. An engagement manager would be assigned who will be the point of contact till the engagement is completed. The average time required to complete a GST LUT Filing is 4-6 working days depending on the government processing time and client document submission.

For more information, feel free to contact us at info@mydbiz.com or call us at +91 9632 993 993.