The full form of LUT is Letter of Undertaking. Letter of Undertaking or LUT is an undertaking filed by an exporter of goods or service which permits him to export goods or services without payment of tax. Under the new GST regime, all exports are subject to IGST, which can later be reclaimed via a refund against the tax paid. If the exporter fails to provide the LUT, then he has to pay IGST or provide an export bond. Following can apply for LUT if they:

•       Intend to supply goods or services to India or overseas or to SEZs.

•       Wish to supply goods without the payment of an integrated tax (IGST).

•       Is also registered under goods and services tax.

All goods and service exporters are eligible to submit LUT except the exporters who have been prosecuted and the amount of tax evaded exceeds Rs. 2.5 Lakhs under the – CGST Act; or SGST Act; or Any of the existing laws. The exporters who are not eligible to submit LUT can make the payment of IGST at the time of export and then claim the refund later but it will block their working capital. The LUT shall be accepted by the Assistant or Deputy Commissioner having Jurisdiction over the place where the exporter does his business. As per Circular No. 4/4/2017 – GST dated July 7th, 2017, the LUT furnished for exports under GST would remain valid for a period of 12 months.

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