What is the Full form of LUT in GST?
The LUT Full Form in GST is Letter of Undertaking. The Goods and Services Tax (GST) regime in India aims to simplify indirect taxation. For exporters, a crucial aspect of GST compliance is the Letter of Undertaking (LUT). This document plays a vital role in facilitating exports by allowing them to ship goods or services without immediate Integrated Goods and Services Tax (IGST) payment. Let’s delve deeper into understanding LUT under GST and the key information associated with it.
Relevance of Letter of Undertaking in GST?
A Letter of Undertaking, commonly referred to as LUT is a legal document that a registered taxpayer needs to submit to the GST Department. It is a formal undertaking that the exporter will meet all their IGST liabilities incurred from zero-rated supplies for export or supplies to Special Economic Zones.
Benefits of Filing LUT
For exporters, filing LUT has various benefits. LUT is an easy way for exporters to avoid the need for paying upfront IGST. They can also utilize their working capital for other business needs. Because of the absence of immediate IGST payment, LUT helps in speeding up the customs clearance process at ports.
Conclusion
Letter of Undertaking is a very useful tool for exporters under GST. Simple procedure of export and working capital reduction make LUT easier to operate exports. However, the criteria of the facility and information to be provided, and the provisions for filing it properly, must be known and followed closely. LUT can be a big boon to exporters who qualify and comply with the undertaking.