What is a Letter of Undertaking Under Gst?
Exports without the payment of tax can be made only after filing a bond or letter of undertaking (LUT) as applicable to the exporter. There was a lot of ambiguity regarding the exports which are to be made without the payment of IGST. The government of India has released few notifications regarding the filing of bond and LUT in the case of certain specified people. Exporters can make the payment of IGST at the time of export and then claim the refund later but it will block their working capital.
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Eligibility to provide LUT
- A person who has received foreign inward remittances equal to minimum of 10% of the export turnover, which should not be less than INR 10 million, in the preceding financial year.
Validity of LUT
- The LUT would be valid for 12 months.