LUT obtained after export of zero rated service
9 months ago
I am software consultant providing service to UK based company. I make zero rated supply of service each month. In FY23, I made zero rated supply of service from Apr onwards and realized in the month of July that I didn't apply for LUT. I have applied for LUT now. I have few questions related to this.
1. Do I need to pay tax along with interest and then claim for refund later? I came to know that interest is not refundable.
2. Is it possible to skip paying tax as its ongoing monthly routine. I had LUT for previous year so I didn't have to pay tax?
Tax and Interest Payment: If you are making zero-rated supplies of services, you are generally not required to pay Goods and Services Tax (GST) on those supplies. However, if you did not have an active Letter of Undertaking (LUT) during the period when you made the zero-rated supplies, you might have inadvertently treated the supplies as taxable supplies and not claimed any input tax credit. In such a case, you may need to consult a tax advisor to rectify the situation and understand the appropriate course of action.
Regarding interest, if you have not paid the tax on zero-rated supplies on time, you may be liable to pay interest as per the applicable tax laws. Interest on delayed tax payment is usually non-refundable.
Compliance with Tax Laws: It is essential to comply with the tax laws and regulations in your country. If you are required to obtain an LUT or follow specific procedures to make zero-rated supplies, it is crucial to adhere to those requirements to avoid any potential issues or penalties.
As tax laws and regulations can be complex and may vary depending on your country, it is essential to seek professional advice to ensure you are correctly following the tax rules related to your business activities. A tax advisor can help you assess your specific situation, handle any necessary adjustments or filings, and guide you through the proper compliance process.
Abidali Sayed
Replied 9 months ago
Thank you for your response.
I am from India providing service to UK based company. I raise invoice on monthly basis in dollars and I get inward remittance in dollars.
I had LUT for FY22.
In FY23, I filed GSTR1 on quarterly basis in the month of July for Apr/May/June. While filing, I have selected without payment of tax in 6A.
After that I applied for LUT on 19th July and am planning to file GST3B in same month. I should be getting LUT in couple of days.
As I understand, it was a procedural lag. In my case, export of service is not taxable. Can I refer LUT for past months of same FY (just 3 months).
Do you still think, earlier 3 months income was taxable even though I had selected "Without Payment Of Tax" while filing GSTR1.
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