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Who is eligible to use Letters of Undertaking (LUT) and Bonds?

• Registered taxpayers exporting goods or services can use LUTs

• Those prosecuted for tax evasion for an amount of Rs. 2.5 crores or more is not eligible to provide LUTs

• LUTs are valid for one year until the end of the financial year

• Exporters must provide new LUTs every financial year

• Failure to meet LUT conditions within the timeframe results in the removal of privileges and the requirement to post bonds

- Exports made without payment of IGST require bonds

- Bonds must be provided to all other assesses

- Those prosecuted for tax evasion of Rs. 2.5 crores or more also need to provide bonds

- Letters of undertaking can be submitted online through the GST portal

The bonds for LUT transactions need to be filled out manually and sent to the department as a hard copy. LUT/Bonds can be utilized for various transactions.

Here are three distinct scenarios where IGST payment may not be required:

• SEZ supplies can be zero-rated without the need for IGST payment.

• IGST payment is necessary only when exporting products to a country outside India.

• Services rendered to an international client are exempt from IGST payment.

Apply for/filing a LUT - when is the right time and how did it work before GST?

·         In order to export goods or services, an online submission of a letter of undertaking is required. Previously, exporters were obligated to provide a manually filled and signed RFD-11 on a Business letterhead in duplicate, with one copy being submitted to the Jurisdictional Deputy/Assistant Commissioner who has jurisdiction over their primary place of business.

·         The export documents were subsequently authenticated through the ICEGATE system. The other copy was to be submitted to the Customs clearing authority.

- The prior excise scheme resulted in exporters experiencing lost time and expenses as a result of compliance efforts.

- A new streamlined and simplified procedure has been implemented. This updated process offers transparency to all stakeholders involved in an exporter's entire export process.

- In adherence to this procedure, a bond must be presented on non-judicial stamp paper. The bond submission process must be carried out manually.

 STEPS TO COMPLETE A LUT ON THE GST PORTAL

1.      Log in to the GST Portal and go to 'SERVICES' tab

2.      Select 'User Services' and choose 'Furnish Letter of Undertaking (LUT)' option

3.      Choose the financial year for which the Letter of Undertaking is applied from the drop-down list

4.      Upload any previously submitted Letters of Undertaking using the 'Choose File' option

5.      (Only PDF and JPEG files are accepted with a upload file size limit of 2 MB) and fill in the required information on the displayed Letter of Undertaking Form/GST RFD-11

            The following guidelines must be strictly adhered to by the exporter:

- Export of goods/services must be completed within 3 months of invoice issue or within the authorized time frame.

- GST rules for exports must be diligently followed and if any failure to export will result in payment of IGST along with interest.

- It is mandatory to have two self-reliant witnesses to furnish information.

- The names, occupations, and addresses of the witnesses must be provided in red boxes and the witnesses mentioned in the Letter of Undertaking (LUT) are also enlisted in the running Bond/Bank guarantee.

6.      Select a file location and save the form and preview the form for accuracy before submitting (Note that a submitted form cannot be revised)

7.      Sign and submit the form using primary or additional authorised signatures can include the managing director, working partner, firm secretary, proprietor, or person authorised by the board of directors.

Instructions for application signing and filing with a registered Digital Signature Certificate:

- Ensure the application is signed using the Digital Signature Certificate of the authorized signatory

- Access the feature by clicking on 'SIGN AND FILE WITH DSC' and click on 'SIGN AND FILE WITH DSC'

- Upon doing so, a warning message box will appear where you should select 'PROCEED' and after completion, the system generates a Unique Application Reference Number (ARN) for the application.

Submit your document electronically with EVC (electronic verification code)

• It is a unique code used to verify the authenticity and integrity of electronic documents

·                     Go to 'SIGN AND FILE WITH EVC' so that OTP will be sent to the authorised signatory's registered mobile and email

• Enter OTP and click on 'PROCEED' thereby system will create a unique ARN for each company/LLP

• Confirmation of submission will be sent via email and SMS and download acknowledgement by clicking DOWNLOAD

• To view submitted LUTs, go to 'SERVICES' > 'User Services'> 'View my Submitted LUTs'

• Choose timeframe and view list of LUTs and click 'VIEW' to see details of a specific LUT.

Submission of Letter of Undertaking (FORM GST RFD-11)

The RFD-11 format encompasses both LUT and Bonds format. To complete the LUT application form, the following details need to be furnished:

- Registered Name

- GSTIN Number

- Address

- Date of filing

- Date, place, and signature

- Witness information (Name, address, and occupation).