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A Letter of Undertaking (LUT) is a declaration submitted by GST-registered exporters in India, allowing them to export goods or services without payment of Integrated GST (IGST). By furnishing an LUT, the exporter commits to fulfilling all export obligations in compliance with GST laws and agrees not to claim a refund of Input Tax Credit (ITC) on the taxes paid for inputs and input services used in the exports.
The LUT must be filed in the prescribed format and submitted to the jurisdictional GST officer through the GST portal. Once approved, it enables the exporter to carry out exports without paying IGST, making the process more cash-flow efficient.
The LUT remains valid for the 1 financial year unless revoked or if the exporter fails to meet the conditions outlined.
It is essential that all export invoices are issued in accordance with GST regulations and proper export procedures are strictly followed to retain the benefits under the LUT.
Filing a GST LUT is a hassle-free and efficient alternative to the traditional bond or security deposit method, making it easier for exporters to comply with GST regulations.
Exporters with an approved LUT can export goods or services without paying IGST, reducing export costs and enhancing competitiveness in global markets.
Exporters can continue to claim Input Tax Credit (ITC) on taxes paid for inputs and input services used in exports, ensuring tax efficiency and compliance.
A LUT eliminates the need for advance tax payments on exports, easing the financial strain on businesses and freeing up working capital.
LUT filing exempts exporters from furnishing bonds or security deposits, simplifying the procedural requirements under GST.
The LUT process requires minimal documentation compared to the bond option, making it quicker and more convenient.
Lower compliance costs and streamlined procedures enable faster export clearances, supporting timely international trade operations.
An approved LUT reflects regulatory compliance and builds trust among customers, suppliers, and stakeholders, strengthening the exporter’s business reputation.
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