What is Letter of Undertaking (LUT) in GST?

Letter of undertaking or LUT is a guarantee that a taxpayer registered under Goods and Services Tax regime in India provides to government claiming that he will be exporting his services or/and goods and will be receiving payment in foreign exchange. Once this Letter of undertaking is furnished, the taxpayer can file his GST returns without payment of tax.

One of the key condition for Letter of undertaking is that the exporter of goods and/or services must receive his payment in foreign currency. Also the exporter must collect Foreign Inward Remittance Certificate (FIRC) from their bank. These FIRCs are considered as proof against your export claims.

The purpose of introducing Letter of Undertaking in GST is to promote export among the exporter of services/goods. Once the taxpayers receive LUT, they are eligible to file their monthly GSTR-3B without payment of tax. Also they are eligible to claim refund on input tax credit which they have paid on various services and goods consumed for completing the export.

Every exporter of service must ensure to apply for LUT right after the GST registration to avoid the hassle of claiming refunds on GST paid on your export invoice.

We do provide application of Letter of Undertaking for freelancers working on platforms such as Freelancer and Upwork.

If you need any assistance in understanding more about LUT, FIRC or refund of GST on export of services, you can write to us at [email protected].