Comprehensive Guide to Letter of Undertaking (LUT) Services under GST
1. Introduction: Understanding the LUT Mechanism
In the landscape of Indian indirect taxation, the Letter of Undertaking (LUT) is a critical instrument for any business involved in the export of goods or services. Under the GST regime, specifically under Rule 96A, an exporter can export goods or services without the prior payment of Integrated GST (IGST).
Traditionally, exporters had two paths:
- Export with Payment of IGST: Pay the tax upfront and claim a refund later. This often leads to “blocked capital” and liquidity crunches.
- Export under LUT: File a declaration promising to fulfill export obligations, thereby avoiding the outflow of cash for taxes entirely.
At GST Suvidha Center (Branch WB 093), managed by Purna Chandra Achary, our mission is to simplify this complex legal requirement, ensuring that your working capital stays in your business, not in a government refund queue.
2. Why LUT is Essential for Your Business Growth
The primary advantage of filing an LUT through Pcachary.in is the preservation of Liquidity. For a small trader or a service provider (like an IT consultant or a freelancer), paying 18% IGST on a large invoice and waiting months for a refund can be catastrophic for cash flow.
Key Benefits:
- Zero Cash Outflow: You do not need to pay tax at the time of export.
- Reduced Compliance Cost: Avoid the hassle of filing monthly refund applications for IGST paid on exports.
- Competitive Edge: By reducing the “tax-waiting” cost, you can price your products more competitively in the international market.
- Annual Validity: An LUT is valid for a whole financial year. You only need to file it once every April.
3. Eligibility Criteria: Who Can Apply?
Not every business qualifies for an LUT, though the government has significantly relaxed the rules to promote the “Make in India” initiative.
Who is eligible?
- Any registered GST taxpayer intending to export goods or services.
- The taxpayer must not have been prosecuted for any offense under the CGST Act or the Integrated Goods and Services Tax Act, 2017, where the amount of tax evaded exceeds Rs. 250 Lakhs.
- Exporters who have failed to complete the export of goods or services within the prescribed time limit (and haven’t paid the tax) may be barred from using the LUT facility until the tax is cleared.
As your GST Jan Suvidha Kendra, we perform a prior “Eligibility Health Check” to ensure your GST profile is clean before filing the Form GST RFD-11.
4. The Step-by-Step Filing Process at GST Suvidha Center
Filing an LUT is an online process, but it requires precision. Errors in the form can lead to the rejection of the undertaking, resulting in mandatory tax payments.
Step 1: Documentation
We require basic details including:
- GSTIN of the exporter.
- Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
- Witness details (Names and addresses of two witnesses).
Step 2: Filing Form GST RFD-11
Our backend team of 170+ knowledgeable members accesses the GST portal and navigates to Services > User Services > Furnish Letter of Undertaking.
Step 3: Validation and Submission
The LUT must be signed by the primary authorized signatory (Proprietor, Managing Director, or Partner). Once submitted, a Transaction Reference Number (ARN) is generated.
Step 4: Record Keeping
We provide our clients with the downloaded LUT certificate, which must be mentioned in every Export Invoice and Shipping Bill to notify Customs that the shipment is tax-exempt under an active LUT.
5. Critical Deadlines and Timeframes
The timing of an LUT filing is paramount.
- The “April Rule”: An LUT is valid for one financial year (e.g., April 1, 2025, to March 31, 2026). To ensure uninterrupted exports, the filing for the upcoming year should ideally be done in March.
- Retroactive Filing: An LUT cannot generally be filed retroactively for exports already made. If you exported yesterday without an LUT, you are legally bound to pay IGST.
Pcachary.in provides a proactive “Renewal Alert” service for all our franchise clients so that no deadline is ever missed.
6. Common Pitfalls and Legal Consequences
While the LUT is a “facilitation” measure, the government treats it as a legal bond. If a business fails to export the goods within 3 months of the invoice date (or 1 year for services), the exporter is liable to pay the IGST along with 18% interest.
How We Help You Avoid Risks:
- Bookkeeping Integration: Our GST Suvidha Center provides bookkeeping services that track your “Export Realization.”
- Tracking Inward Remittance: We ensure that for service exports, the Foreign Inward Remittance Certificate (FIRC) is matched against the LUT-based invoices.
- Audit Support: If the GST department initiates an audit, our experts at the Delhi Head Office and Kolkata Branch provide the necessary representation.
7. Beyond GST: A Holistic Financial Ecosystem
At Pcachary.in, we believe that a business needs more than just a tax filing. Our 450+ services are designed to support every stage of your business journey.
- Loan Services: If your export business needs expansion, we facilitate Mudra Loans and Business Loans through our authorized lender network.
- Banking & PAN: From getting a Business PAN to setting up domestic money transfers for your staff, we handle the friction.
- Insurance: Protect your export shipments with our specialized Marine and Vehicle insurance sectors.
- G2C (Government to Customer): Services like Jeevan Pramaan and Digital Life Certificates ensure that even the personal administrative needs of the business owner are met in one destination.
8. Why Choose Purna Chandra Achary (GSC WB093)?
Our USP lies in the marriage of Technology and Personal Touch.
- The Progress Chart: As mentioned in our mission, we maintain a transparent progress chart for every client. You are never in the dark about your application status.
- Experienced Backend: While you interact with your Relationship Manager, a team of CA-assisted professionals handles the technical filing in the backend.
- Affordability: We cater specifically to the “small shopkeeper” and “seasonal businessman.” Our rates are “nominal,” ensuring that professional tax consultancy isn’t a luxury reserved only for large corporations.
9. Conclusion: Partnering for a “Viksit Bharat”
The Indian government’s push to remove the “overburden” from business shoulders is a goal we share. By utilizing the Letter of Undertaking (LUT), you are not just saving tax; you are optimizing your business’s DNA for the global market.
Together, we can make awesome memories by turning your local business into an international success story. Whether you are a 12th-pass entrepreneur looking to start a franchise or an established trader needing GST relief, GST Suvidha Center (WB 093) is your gateway.
Contact Information:
- Center Head: Purna Chandra Achary
- Website: pcachary.in
- WhatsApp: +91 9836812177
- Email: connect@pcachary.in
- Address: Budge Budge, Kolkata, West Bengal – 700137
