Letter of Undertaking (LUT) is a an undertaking which is required to be submitted by all registered taxpayers who export the goods or services in the form GST RFD 11 under Rule 96A, wherein the exporter declares that he or she will fulfill all the requirement that is prescribed under GST while exporting without making IGST payment.
According to Notification No. 37/2017 – Central Tax, it is mandatory to file LUT for exporting goods or services or both without paying IGST.
As per section 16 of the IGST Act, 2017, exports of goods and services i.e. zero-rated supply, does not come under the Good and Service Tax. Accordingly, in such case, the exporters can claim refund.
A few examples of transactions for which LUT can be used are:
- Zero rated supply to SEZ without payment of IGST
- Export of good to a country outside India without payment of IGST
- Providing services to a client in a country outside India without payment of IGST
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