Sandipan Mitra is the CEO and co-founder of Pice. He boasts eight years of experience in the B2B and fintech sector. Sandipan's journey includes significant roles at multiple Indian Unicorns Including Product at PayU, and as founding member / VP, Product at Open Financial Technologies.
Exports with LUT improve working capital by eliminating upfront IGST.
Authorized signatories must file and verify LUT via DSC or EVC on the GST portal.
A Letter of Undertaking (LUT) is an important document that every exporter must possess before starting to export internationally. All GST-registered exporters involved in exporting goods and services or intending to begin their exporting journey must submit a letter of undertaking on the respective GST portal.
This will allow them to export products or supply them to Special Economic Zones (SEZs) without payment of IGST (Integrated Goods and Services Tax). After the online submission of LUT, exporters commit towards fulfilling their obligations under the GST laws.
Continue reading this blog to gain detailed insights about zero-rated exports, how to go for a flexible filing of an official GST RFD-11 form and more.
What Is RFD-11?
RFD-11 form is a specific type of GST refund application form furnished if any registered taxpayer with a zero-rated supply of goods and services is willing to carry out export without payment of IGST. The government has made it mandatory to fill out the Letter of Undertaking (LUT) in RFD-11 form under rule 96A of CGST Rule 2017 as notified by Notification No. 16/2017 received from GST dated 07-07-2017. Successful filing of the Letter of Undertaking is essential before the export of goods and services.
In simple language, any registered individual with the option of supplying goods and services for export operations without IGST payment for services needs to issue bonds or fill out the Letter of Undertaking in form RFD-11.
When Can We Apply for RFD-11?
The government has made it mandatory to submit the Letter of Undertaking online before involving in export transactions of goods and services. Before making the application in the respective online GST portal, exports must fill out the RFD-11 form, sign it and then submit it manually with a business letterhead.
Two copies of the form must be submitted – one to the respective Jurisdictional officer and the other one to the Assistant Commissioner. Make sure to attach the export documents with the other form to the customs clearing authority to experience a smooth process.
The process of successful filing a Letter of Undertaking is simple and convenient. To experience a hassle-free GST LUT filing process, follow the below step-by-step procedure:
1. Visit the official GST portal and log into the account using valid credentials
2. Go to the 'Services' menu. Under it, you will find User Services > Furnish Letter of Undertaking (LUT)
3. Enter correct details such as legal name, GSTIN and address. Provide also the export activities and declare compliance as applicable under Rule 96A
4. For your form authentication, use either the Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC)
5. Keep all supporting documents ready and attach their scanned copies. These documents include export agreements and identity proofs.
6. Once you complete submitting the application form, make sure to download the Acknowledgment slip by clicking on the 'Download' button. Further, you can also find the furnished Letter of Undertaking on the respective GST portal.
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What Are the Details to be Filled in LUT?
Filling up with details on the Letter of Undertaking (LUT) under GST is essential. Here are the details you need to fill in the Letter of Undertaking (LUT):
Exporter’s Information: This includes the name of exporter, GSTIN and address
Validity Period: A LUT remains valid typically for a specific duration of a financial year
Witness Details: It consists of details of independent witnesses, including their names, addresses and signatures to the undertaking.
Specifications of Export Transactions: This includes the export invoice date and number, the destination country and a detailed overview of goods and services to export such as their quantity, values, units, etc.
Declaration: Provide a declaration for adhering to all GST regulations.
All these details provided must be accurate as LUT after filing allows the taxpayer to carry out a smoother export journey without payment of Integrated GST (IGST), streamlining the financial operations and preventing repetitive filings.
Who Has to Sign the Letter of Undertaking Application?
It is mandatory to sign the Letter of Undertaking (LUT) and get it verified using a Digital Signature Certification (DSC) or Electronic Verification Code (EVC). The person to sign must be an authorized person. This person should be a working individual, managing director or the proprietor of the business.
Alongside this, a person being authorized by the Board of Directors is also eligible to sign the form. It is the duty of an authorized signatory to ensure the information provided is completely up-to-date and legally binding, enabling businesses to carry out exports without making payment of IGST.
Submission of Form
The application form can be submitted either through Digital Signature Certification (DSC) or Electronic Verification Code (EVC). Here is a detailed overview of the process to follow for submitting through these different modes.
With DSC
Put a signature on the online application form using the registered Digital Signature Certificate of the chosen authorized person. To avail this option, click on 'Sign and file with DSC'. After this, a warning message box for submission appears. Further, click on 'Proceed' and the system then generates a unique Application reference number.
With EVC
To avail this option, click on the option ‘Sign and file with EVC’. Once done, the system generates an OTP to your registered mobile number and the respective e-mail address of the authorized signatory.
Provide that OTP in the popup window that appears for signing the application. After this, a warning message box appears inquiring whether you submit the application form. Click on ‘Proceed’. Once done, the system provides a unique Application reference number which every company and LLPs need for filing using DSC.
After receiving the confirmation message, the GST portal sends this ARN to your registered email address and mobile phone number.
Benefits of Filing LUT for Exporters
Filing LUT using the GST RFD-11 form provides a host of benefits to exporters, including the following:
Tax-Free Exports: With a LUT certificate, you can conduct export transactions without the need for immediate tax payment. This eliminates the hassle of paying taxes upfront and later claiming refunds for zero-rated exports.
Optimised Resources: Regular exporters benefit significantly from the LUT certificate, as it remains valid for the entire financial year. This reduces repetitive filings, which allows them to concentrate on their core business operations.
Minimised Working Capital Issues: Exporters retain access to funds that would otherwise be tied up in tax payments. This is particularly crucial for SMEs so that they can face working capital challenges more effectively.
Saved Time and Resources: With the LUT certificate, exporters can avoid the hassle of tax refund claims and follow-ups with tax authorities. This will save a lot of time and resources of exporters, leading to operational ease.
By now, you must have understood the importance of filing the GST RFD-11 form. Through submission of a valid Letter of Undertaking (LUT), businesses ensure compliance while avoiding unnecessary delays in refunding taxes.
Make sure to follow the necessary format and meet the eligibility criteria. Keeping yourself informed about GST rules and on-time submission of RFD-11 ensures managing export ventures without paying IGST.
FAQs
What is a Letter of Undertaking (LUT) under GST?
A Letter of Undertaking (LUT) is a document that enables GST-registered exporters to export goods or services without paying Integrated GST (IGST). It must be submitted online via the GST portal before starting any export transactions. The LUT is valid for one financial year and simplifies the process of zero-rated exports.
Who needs to file Form RFD-11?
Any GST-registered individual or business intending to export goods or services without IGST payment must file Form RFD-11. It is mandatory under Rule 96A of the CGST Rules, 2017. Filing the form signifies the exporter’s commitment to follow all GST rules and complete export obligations in a timely manner.
What documents are required while filing LUT online?
Key documents include the export agreement or purchase order, identity proof of the authorized signatory, and details of previous LUTs if applicable. Exporters should also provide witness details and declarations as per GST rules. Scanned copies of all supporting documents must be uploaded during submission.
How can an LUT be verified on the GST portal?
The LUT can be verified using either a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC). DSC is typically used by companies and LLPs, while EVC can be used by proprietors or individuals. Once verified and submitted, an Application Reference Number (ARN) is generated for tracking.
What are the benefits of filing an LUT for exporters?
Filing an LUT allows exporters to supply goods and services without IGST payment, improving cash flow and working capital. It eliminates the need to claim refunds later, saving time and administrative effort. For frequent exporters, this also reduces repetitive tax-related processes and paperwork.
Sandipan Mitra is the CEO and co-founder of Pice. He boasts eight years of experience in the B2B and fintech sector. Sandipan's journey includes significant roles at multiple Indian Unicorns Including Product at PayU, and as founding member / VP, Product at Open Financial Technologies.
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