To export goods from India without paying IGST, exporters must submit a letter of undertaking on the GST portal. This reference is provided for exporters. All registered sellers must file a letter of the project via the GST system.
What exactly is a GST letter of undertaking?
An exporter needs a letter of undertaking, which functions as a guarantee granted by the bank of the importer to the bank of the exporter, to be able to export without paying IGST. It displays cross-border transactions carried out by banks in various nations. According to the Central Goods and Services Act of 2017, exporters must file LUTs to export goods. They can then request a GST refund as a result of this. It is effective for the specific fiscal year from when they are filed. Consequently, in contrast to the reimbursement process, an exporter is optional to adhere to the formalities for each export consignment made. According to the GST regulation, companies that export goods must have a letter of undertaking. Businesses that export products or services without paying Integrated Products and Service Tax (IGST) are required by the Central Goods and Service Act of 2017 to include this document with the GST RFD-11 Form. Documents needed to file a letter of undertaking (LUT) under GST have the exporter’s PAN card, an IEC certificate, a GST registration certificate, two witnesses with identification that includes their address and PAN, a cancelled check from their current account, and an Aadhaar card.
What does a letter of undertaking serve?
Exporters must submit a letter of undertaking to export goods free of the Integrated Goods and Services Tax (IGST). All exports are subject to IGST under GST, which can then be recovered as a refund against the tax paid. However, an exporter can avoid paying taxes; thus, there is no need to file returns.
A list of the paperwork needed
This can be submitted by any individual who is registered for GST. The documentation needed is listed below:
- A plea for acceptance in a cover letter (An authorized individual, such as the managing director, a working partner, or the business owner, must sign it)
- Copy of the authorized person’s or signatory’s GST registration PAN card and KYC
- IEC code (Importer-Exporter Code) copy
- Returned cheque
How to submit a letter of undertaking in detail?
- Sign in to the GST website. Click the Services tab in step two. Select “users services,” then “furnish a letter of undertaking.”
- From the drop-down list titled “LUT Applied for Financial Year,” choose the fiscal year for which the letter of undertaking is necessary.
- Complete the form’s essential fields.
- Verify the preview and that all the details are correctly filled in.
- Following this, you must sign and submit the form. You can sign the application using the authorized signatory’s registered digital signature certificate. You can also sign and file documents using EVC (you will get OTPs to the registered email address and mobile number).
- Complete the form and submit it. An acknowledgment will appear on the screen. For reference in the future, you can download it.
Depending on your product type, the target country or market, and other export paperwork and certificates that may be needed, it is crucial to check for them once you have gotten the document. After that, by utilizing e-commerce, you can export products anywhere in the world without having to set up a local business overseas. The application status will be updated to “deemed approved” if the application is not processed or if the tax office does not send any clarification notices within 3 working days.
An exporter can export goods or services without paying taxes by choosing this document. If the exporter does not select this option, they will be required to pay taxes on their exports to be eligible for a refund on the zero-rated exports eventually.
Tax exemption: GST zero-rated deliveries are available to exporters of goods and services to businesses with offices in Special Economic Zones (SEZs). It implies that you are exempt from paying taxes.
Working capital reduction: You can reduce your working capital requirements by submitting this document and deferring payment of the IGST. This is considerably preferable to obtaining your tax refund later and going through a lengthy process.
Pertinent for a year: Applying each time you export or import something is unnecessary. This is good for a single fiscal year.
From India, how do you export?
Selling globally has become straightforward and easy because of e-commerce exports. From the comfort of your home in India, you may sell your Indian goods in 18 foreign markets, including Amazon USA, the UK, the UAE, Australia, Singapore, and more. Amazon helps you at every stage of your export journey, from reaching millions of customers and product listings through international shipping and payments.
As an exporter or importer, using a letter of undertaking is an easy and effective way to reduce your GST liability. Applying for this document will go more smoothly if you are prepared with the documentation listed.