Letter of Undertaking is commonly known as LUT. The Letter of Undertaking (LUT) is prescribed format, whereby the exporter declares that he/she would fulfil all the requirements prescribed under GST while exporting without making IGST payment.
Filing Letter of Undertaking is mandatory to export goods or service or both without payment of Integrated Taxes (IGST). If LUT has not been furnished, the export can only be made through payment of IGST or by furnishing an export bond.
Letter of Undertaking or LUT is a form that you file with GST department promising(a) to export the goods or services supplied without payment of integrated tax within time specified in sub-rule (1) of rule 96A;
(b) to observe all the provisions of the Goods and Services Tax Act and rules made there under, in respect of export of goods and services;
(c) pay the integrated tax, thereon in the event of failure to export the goods or services, along with an amount equal to eighteen percent interest per annum on the amount of tax not paid, from the date of invoice till the date of payment.
Initially, only the options of export bond was allowed. However, to improve ease of doing business, the Government introduced LUT. LUT was to be filed offline at the concerned GST office. Now, the Government has made the process of filing GST LUT online. Now, exporters can file LUT online through their respective GST Portal account easily.