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LETTER OF UNDERTAKING UNDER GST
LETTER OF UNDERTAKING:
Any registered person who intends to supply goods /services to outside India without payment of integrated tax (IGST) is required to furnish Letter of Undertaking (LUT) in FORM GST RFD-11.Export without the payment of tax can be made only after filing a bond or Letter of Undertaking(LUT) as applicable to exporter.
The government of India has released few notifications regarding the filing of bond and LUT in the case of certain specified people. Exporters can make the payment of IGST at the time of export and then claim the refund later.
ELIGIBILTY FOR EXPORT UNDER LETTER OF UNDERTAKING:
Registered person(exporter) under GST who are engaged in export activity are eligible to submit LUT except the exporters who have been prosecuted for any offence and the amount of tax evasion exceeds Rs.250 lakhs under the CGST Act or the Integrated Goods and Services Tax Act,2017 or any of the existing laws.
In such cases , where the exporter is not eligible for LUT is required to furnish export Bond.
WHAT IS EXPORT BOND?
Entities who are not eligible to submit Letter of Undertaking (LUT) is required to furnish an export bond along with bank guarantee. The bond should cover the tax liability on estimated basis as assessed by 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.
Also, exporters can furnish a running bond, so that export bond need not be executed for each and every export transaction. 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.
Export bonds and letter of undertaking can be submitted to the jurisdictional Deputy Commissioner or Assistant Commissioner of the concerned jurisdiction.
PROCEDURE FOR FILING LETTER OF UNDERTAKING UNDER GST:
Filing of LUT has been made online through the GST Portal. You can follow the steps below to file LUT online:
- Login to the GST Portal.
- Go to menu bar and select ‘Service’ option. Under ‘Service’ option go to ‘User Service’ option’ and select the Tab “Furnishing Letter of Undertaking”.
- Form GST RFD-11 will display.
- Select the Financial Year for which period you want to furnish the LUT.
- You can also upload LUT that belong to an earlier period by clicking on the choose file option and uploading the LUT file.
- If you have already furnished LUT Offline, for previous period, then attach the same here and continue to file your application.
- If you are filing LUT, select all the three check boxes for accepting the conditions as prescribed.
- In name, address and occupation of the independent witnesses section, enter name and address of two witness.
- In the Place field, enter the place where the form is filed.
- Select the name of Primary Authorized signatory who will sign the Application form.
- With the PREVIEW button we can preview the form.
- Then save the form and retrieve later.
- Click the SIGN AND FILE WITH DSC or SIGN AND FILE WITH EVC button.
- Once the Form is signed and filed, it cannot be edited.
REFUND UNDER GST
Exporter has benefit of paying IGST and then claiming refund on the same under GST laws. This deal is made easy enough for the exporters to promote the export and boost them to increase their services. Also, there is no need for filing refund application (GST RFD-01) instead, shipping bill filed with customs by the exporter for refund claiming if:
- The person carrying export properties (goods) has filed an export patent or export general manifest.
- The person should have filed the returns GSTR-3B.
After filing the details in table 6A in Form GSTR-1, refund process is initiated. Refunds can also be claimed by exporters.
If the exporter fails to export goods or services or fail to receive payment for exports within the stipulated period prescribed by the government, and does not pay the IGST within 15 days from such prescribed period, the facility of export without payment of IGST will be withdrawn till the time the tax paid.
Hope this article will be useful for you.