GST LUT FILING

The Goods and Services Tax (GST) is a type of tax in India that has replaced several other types of indirect taxes. It was implemented on July 1, 2017 and has had a significant impact on the country’s economy. GST is a tax that is applied at the place where a product or service is consumed, and the resulting revenue is distributed among different states based on their respective levels of consumption.

In accordance with the GST system, all taxpayers are required by the government to submit their tax returns electronically using a shared portal. Adhering to GST regulations mandates the submission of a GST return, which outlines a taxpayer’s income, sales, purchases, and taxes paid. To file a GST return, an individual must possess a GSTIN (Goods and Services Tax Identification Number), which is a unique 15-digit identification code assigned to each taxpayer under GST regulations.

One important aspect of complying with GST regulations is to submit a Letter of Undertaking (LUT). This document releases exporters from having to pay the integrated tax (IGST) on their exported goods. It is essentially a statement that an exporter sends to the government, acknowledging that they will meet their export responsibilities and not request a refund for the IGST paid.

In order to fill out a LUT under the GST system, the exporter must adhere to a strict set of instructions. This can be a complex process, which is why we will be covering the different elements involved in LUT filling in this article.

 

WHO CAN FILE A LUT?

In the GST system, those who are registered and export goods or services can submit a LUT, provided they meet specific requirements. These conditions must be met for an exporter to be eligible to submit a LUT.

1. It is necessary for the exporter to possess a permanent account number for income tax.
2. The exporter should have a GSTIN.
3. The person who sold goods to another country should not face charges for breaking any laws, such as the GST Act or any other regulation.
4. It was unfair to charge the exporter according to the Customs Act of 1962.
5. The exporter must have a positive history of following the regulations set forth in the GST Act.
6. The individual or organization exporting goods should not owe any outstanding taxes or payments according to the regulations outlined in the GST Act.
7. The individual or company who is exporting goods should not have any outstanding requests for reimbursement under the GST regulations.
8. In the previous fiscal year, the exporter was required to have exported goods or services worth a minimum of Rs. 1 crore.

HOW TO FILE A LUT?

Registering for LUT filing is an easy process that can be completed using the GST portal. To do so, exporters are required to possess a valid GSTIN and a PAN card. The following are the steps that one must go through in order to complete the registration process:

• Access the GST portal by using your login information.
• To access the User Services, you must first click on the “Services” tab.
• Choose the option “Provide a Letter of Undertaking (LUT)” from the “Registration” section.
• Provide the necessary information, which includes the exporter’s name, address, and authorized representative’s signature.
• Add the required files that prove your financial status, like a statement from your bank, an order for export, and a certification for registration in the GST.
• Present the application and anticipate sanction from the GST department.

After the approval of the LUT application by the GST department, the exporter is permitted to export goods or services without any payment of IGST. It is crucial to keep in mind that the LUT remains valid for a financial year and requires renewal annually.

 

DOCUMENTS REQUIRED:

In order to submit a Letter of Undertaking (LUT) under the Goods and Services Tax (GST) system, the exporter is required to provide the following paperwork:

• A certificate that proves registration for the Goods and Services Tax.
• A copy of the PAN card.
• A copy of the export order.
• A document showing transaction history for the past six months from the bank.
• A statement that confirms the exporter has not faced any legal action or charges related to the GST Act or other laws.

 

COST AND TIME INVOLVED:

The expenses related to submitting a LUT are very low. The government does not demand any payment for this process. Nevertheless, there could be a small charge imposed by the professional helping in the LUT submission.

The duration of the LUT filing procedure differs based on the thoroughness of the papers provided and how fast the GST department responds. Generally, it takes around 5-7 business days for the LUT application to be dealt with after it has been submitted.

 

 

ADVANTAGES AND DISADVANTAGES:

LUT filing provides a major benefit for exporters as it enables them to avoid paying IGST on exports, resulting in lower export costs and increased competitiveness in the global market. Furthermore, this process eliminates the requirement for exporters to request refunds of any IGST fees they may have paid previously, which can be a challenging task.

One downside of utilizing LUT filing is the exporter must uphold a positive history of following the GST Act, as any breach could lead to the termination of the LUT. In such a scenario, the exporter would have to pay IGST on their exports. Furthermore, the exporter must update the LUT each fiscal year.

 

CONSEQUENCES OF NON-FILING OF GST LUT:

Exporters who want to exempt themselves from paying IGST on their exports must file a Letter of Undertaking (LUT), which is compulsory. The LUT is a lawful paper that commands the exporter to comply with specific rules, including those outlined in the GST Act. Not filing the LUT can result in serious repercussions for the exporter, which will be covered in the following section.

1. If an exporter fails to submit the letter of undertaking (LUT), they will have to pay the Integrated Goods and Services Tax (IGST) on their exports. As a result, the cost of exports will escalate, making them less competitive in the global market. The exporter will then have to apply for a refund of the IGST paid, which can be a challenging and protracted procedure.
2. If an exporter does not file an LUT, they could be required to pay a penalty. The penalty could amount to as much as 10% of the tax involved, with a minimum penalty of Rs. 10,000. Further to this, interest will be added to the tax amount at a rate of 18% per annum, starting from the due date of payment until the actual payment date.
3. If an exporter fails to file a Letter of Undertaking (LUT), their GST registration could be cancelled by the GST department if they are found to be not following the GST Act. This could have serious repercussions for the exporter, as they would not be able to receive input tax credit or conduct any taxable transactions.
4. The GST department may put the exporter on a blacklist if they do not file the LUT, which could harm their reputation and cause them to miss out on potential business opportunities.
5. Legal Action: Failing to submit an LUT breaks the rules of the GST Act and may lead to legal action being taken against the exporter. The exporter could be charged with a crime and be required to pay a penalty or be put in jail.

To sum up, not submitting the LUT can lead to serious ramifications for those who export goods. It is crucial to adhere to the regulations outlined by the GST Act and submit the LUT promptly to avoid facing any fines, fees, or legal actions. Exporters must ensure they possess all the mandatory documentation and follow all the legal protocols and guidelines when filing the LUT.