Letter of Undertaking or LUT Certificate

Till when LUT is valid?

Letter of Undertaking or LUT is valid for one Financial Year. For eg: If LUT is furnished in FY 2017-18, then the date of expiry of the LUT is 31st March 2018.

Why LUT is important?

By furnishing LUT Certificate, you can export the goods and services without paying IGST.

What is a LUT or bond under GST?

There are two ways possible to export under GST, one is export with payment of GST and second is export without payment of GST. To choose second option, you need to file the bond or LUT with the tax department stating that you shall fulfill all the export requirements.

When bond or LUT is filed under GST? what all laws govern them?

Filing of bond or LUT depends upon the total foreign receipts in the previous year. If you have received more than 1 Cr foreign exchange then you are required to file LUT instead of bond. Bond is required to be filed in following three cases:

• New Exporter or First Time Export: If you are a first-time exporter of goods or services, then also you need to file the bond because you have no exports receipts in the previous year. Hence, if you are a first-time exporter, you need to file bond with a bank guarantee.
• Foreign receipts less than 1 Crore: If you have total foreign receipts less than 1 crore, then you cannot file the LUT instead you need to file the bond with 15% bank guarantee.
• Foreign receipts less than 10%: If you have received less than 10% foreign receipts then also you need to file the bond. E.g. if you receive total FE of 2 crore and your total turnover is Rs. 50 Crore, then you shall need to file bond and not LUT.