LUT stands for Letter of Undertaking. It is a facility under GST that allows eligible taxpayers to make qualifying exports or other zero-rated supplies without paying IGST upfront, subject to applicable GST rules.
In simple terms, LUT can help eligible exporters avoid paying IGST upfront and then claiming a refund, which can help improve cash flow.
Key Points
- LUT means Letter of Undertaking.
- It is mainly relevant to zero-rated supplies.
- Eligible exporters can generally supply without payment of IGST by furnishing an LUT.
- LUT is furnished electronically through the GST portal.
- It is generally valid for the financial year.
- The taxpayer must satisfy the applicable conditions to use the LUT facility.
💡 One-Line Takeaway
LUT can make GST compliance easier for eligible exporters by allowing qualifying zero-rated supplies without upfront IGST payment.
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