Cancellation of LUT

[BDO India Services Private Limited]

Hi all!

One of our clients used to make exports with payment of tax after filing of LUT for F.Y. 20-21.Now the client wants to know if we can cancel our LUT and pay the taxes on it?

Can we still pay the taxes on exports even after being granted an LUT?

There is a lot of un-utilised ITC credit available.

[KASTURI SETHI]

Yes. You can pay tax despite acceptance of LUT by the department. It is your option whether to supply goods for export on payment of tax or without payment under LUT.

[KASTURI SETHI]

Relevant extract of Board's Circular No. 8/8/2017-GST, dated 4-10-2017 as amended on 15.3.18,6.4.18,1.2.19 and 18.11 19

(b) Validity of LUT : The LUT shall be valid for the whole financial year in which it is tendered. However, in case the goods are not exported within the time specified in sub-rule (1) of rule 96A of the CGST Rules and the registered person fails to pay the amount mentioned in the said sub-rule, the facility of export under LUT will be deemed to have been withdrawn. If the amount mentioned in the said sub-rule is paid subsequently, the facility of export under LUT shall be restored. As a result, exports, during the period from when the facility to export under LUT is withdrawn till the time the same is restored, shall be either on payment of the applicable integrated tax or under bond with bank guarantee.

[Shilpi Jain]

Agree. There is no requirement of getting your LUT canceled.

AI Summary

Export under LUT optional: exporter may elect to pay tax instead of using LUT; lapse requires compliance to restore. Exporters may elect to pay tax instead of exporting under an accepted LUT; acceptance of LUT does not preclude payment. The LUT is valid for the financial year tendered but will be deemed withdrawn if exports are not made within prescribed timeframes and specified amounts are unpaid; payment restores the facility. While the LUT facility is withdrawn, exports must be on payment of integrated tax or under bond with bank guarantee.