GST LUT Filing — Export Without Payment of IGST
Exports and supplies to SEZ units are zero-rated under GST, which gives an exporter two routes. You can pay IGST on the export invoice and claim a refund afterwards, or you can file a Letter of Undertaking and export without paying IGST at all. The second route is what most exporters choose, because it never puts the money in the government’s hands in the first place.
The LUT is filed in Form GST RFD-11 on the GST portal under Rule 96A of the CGST Rules. It is a binding undertaking: you promise that if the goods are not exported within the prescribed period, or the payment for exported services is not received in convertible foreign exchange within the prescribed period, you will pay the IGST with interest yourself.
This guide covers who is eligible, what the LUT commits you to, the exact conditions on export timelines and remittance, the documents and witnesses required, the portal steps, validity and annual renewal, what happens when a condition is breached, and when a bond with a bank guarantee is required instead.
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What is a Letter of Undertaking under GST?
A Letter of Undertaking is a declaration filed with the GST department in Form RFD-11 by which a registered exporter undertakes to comply with the conditions of zero-rated supply without paying integrated tax. Once accepted, you raise export invoices with no IGST charged and quote the LUT reference on the invoice.
The commercial point is working capital. Under the refund route you pay IGST on every export invoice and wait for the refund to be processed — real money, parked with the government, on every shipment. Under the LUT route the cash never leaves, which for an exporter with thin margins or a long collection cycle is the difference between comfortable and constrained.
An LUT does not change your return obligations. Exports are still reported as zero-rated supplies in your GST returns, and you still claim and, where applicable, refund the input credit accumulated on your inputs.
Who is eligible to file a GST LUT?
The facility was extended to all registered persons making zero-rated supplies, with one exclusion. You are eligible unless you have been prosecuted for an offence under the CGST Act, the IGST Act, or an earlier indirect tax law where the tax evaded exceeded the prescribed amount — commonly stated as ₹2.5 crore.
- Exporters of goods to a destination outside India
- Exporters of services where the place-of-supply and remittance conditions are met
- Suppliers to a Special Economic Zone developer or SEZ unit
- Any constitution — proprietorship, partnership, LLP, company, or trust
- No minimum turnover and no minimum export history required
- Not eligible if prosecuted for evasion above the prescribed amount, in which case a bond applies
Note the words "prosecuted" and "amount of tax evaded". An ordinary demand, a disputed assessment, or a pending appeal does not by itself make you ineligible. The exclusion is narrow, which is why the LUT route is available to almost every exporter, including a first-year service exporter with no track record.
What are the conditions you undertake in an LUT?
The undertaking has teeth. Rule 96A binds you to pay the IGST together with interest if the export does not actually complete within the prescribed period, and the timelines differ for goods and services.
| Supply type | Condition to be met | Consequence of breach |
|---|---|---|
| Export of goods | Goods to leave India within three months of the export invoice date, or such further period as the Commissioner allows | IGST with interest payable within fifteen days after that period expires |
| Export of services | Payment received in convertible foreign exchange, or in rupees where the RBI permits, within one year of the invoice or the FEMA-permitted period, whichever is later | IGST with interest payable within fifteen days after that period expires |
| Supply to SEZ unit or developer | The same conditions apply with necessary modification, with endorsed documentation of receipt | IGST with interest payable on the same basis |
| Failure to pay on breach | The LUT facility is withdrawn and the amount recovered under the recovery provisions | Facility restored once the amount due is paid |
The periods above are those set in the rule, and the Commissioner has express power to allow a further period, which is used where a genuine shipping or collection delay can be evidenced. The consequence for a service exporter is worth stating plainly: an export invoice that is never collected is not just a bad debt — it converts into an IGST liability with interest.
What is the difference between exporting under LUT and paying IGST?
Both routes are legally available and both preserve zero-rating. The choice is about cash flow and administration.
| Aspect | Export under LUT | Export on payment of IGST |
|---|---|---|
| IGST on the export invoice | Not charged | Charged and paid |
| Working capital impact | None on the output side | Blocked until the refund is processed |
| Refund claim needed | Only for accumulated input credit, where applicable | Refund of the IGST paid, largely shipping-bill driven for goods |
| Annual filing | Fresh LUT each financial year | No LUT required |
| Ongoing conditions | Export and remittance timelines must be met | No comparable undertaking |
| Best suited to | Regular exporters and service exporters | Occasional exporters, or where the LUT conditions are hard to meet |
For goods exporters the IGST refund is largely automated off the shipping bill, which makes the paid route less painful than it used to be. For service exporters, where there is no shipping bill and the refund is a manual claim, the LUT route is almost always the better answer.
What documents are required to file a GST LUT?
The filing itself is light. The portal generates the undertaking from your GSTIN details, and you add the witness details and the declarations.
- Active GSTIN and portal credentials for the authorised signatory
- Name, address, and occupation of two independent and reliable witnesses
- Class 3 digital signature certificate of the authorised signatory, or Aadhaar-based EVC where permitted
- Board resolution or letter of authorisation where the signatory is not a proprietor or working partner
- Previous year’s LUT, where you are renewing and want the reference on record
- Import Export Code for goods exporters — see import export code
- An uploaded copy of the LUT on letterhead where the portal or your jurisdiction asks for it
The undertaking must be executed by a person with authority — the proprietor, a working partner, the managing director, the company secretary, or a person duly authorised by the board or the partners. A junior signatory without authorisation is a genuine defect, not a technicality.
How do you file an LUT on the GST portal?
- 1.Log in to the GST portal with the authorised signatory’s credentials
- 2.Go to Services, then User Services, then Furnish Letter of Undertaking
- 3.Select the financial year for which the LUT is being filed
- 4.Confirm the auto-filled GSTIN and legal name
- 5.Read and select each self-declaration about the export and remittance conditions
- 6.Enter the name, address, and occupation of both witnesses
- 7.Upload the LUT on letterhead where your jurisdiction expects it, within the file-size limits the portal sets
- 8.Sign and submit with DSC or EVC
- 9.Download the acknowledgement with the ARN and keep it with the accounts
- 10.Quote the LUT reference on export invoices raised during that financial year
Acceptance is normally system-generated on submission rather than requiring an officer’s approval, so the LUT is effectively available immediately. That is convenient, but it also means nobody checks your eligibility at filing — the check happens later, if at all, and the undertaking stands regardless.
How long is a GST LUT valid?
An LUT is valid for the financial year for which it is filed and lapses at the end of that year. The portal marks it expired, and a fresh LUT has to be filed for the new financial year — there is no auto-renewal and no reminder you can rely on.
File it at the start of the year, before the first export invoice. Exporting without a valid LUT on record for the period is the most common problem we see: the invoice was raised without IGST, but there was no subsisting undertaking covering it, which leaves the supply exposed to a demand for the tax with interest.
A new GSTIN needs its own LUT. If your registration changes mid-year — a new state registration, or a fresh GSTIN after a constitution change — file a fresh LUT for the remaining part of the year against the new number.
When is a bond with a bank guarantee required instead?
An exporter who is ineligible for the LUT — that is, one prosecuted for evasion above the prescribed amount — must furnish a bond instead. The bond is executed on non-judicial stamp paper of the value applicable in the state and has to be accompanied by a bank guarantee, prescribed at fifteen per cent of the bond amount in the master circular.
A bond is materially more expensive than an LUT: stamp duty, a guarantee that consumes your banking limits, and periodic renewal. It is also administered by the jurisdictional officer rather than being system-accepted. If you believe you have been pushed towards a bond incorrectly, the eligibility test is narrow and specific and is worth verifying before you comply.
What is a zero-rated supply, and when is a service an export?
Zero-rated supply under the IGST Act covers export of goods or services and supply to an SEZ developer or unit. Zero-rated is not the same as exempt: an exempt supply blocks the related input credit, whereas a zero-rated supply preserves it, which is the entire reason exporters can recover input tax.
For services, export status depends on conditions being met together: the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange or in rupees where the RBI permits, and the supplier and recipient are not merely establishments of the same person. Fail any one and the supply is domestic, taxable, and an LUT does not help.
The place-of-supply rules deserve specific attention for intermediaries, services connected with immovable property in India, and performance-based services. A business that assumes every foreign-invoiced service is an export is the classic candidate for a demand years later. If your model is even slightly unusual, get the position written down — start with an online CA consultation.
What refunds can an exporter claim under an LUT?
Exporting without paying IGST means there is no output tax to refund. What accumulates instead is input credit on your purchases — rent, software, professional fees, raw material, freight — which has no output liability to be set against.
- 1.Identify accumulated unutilised input credit attributable to zero-rated supplies
- 2.Compute the refund using the formula the rules prescribe for the relevant period
- 3.File the refund application on the portal with the prescribed statement and declarations
- 4.Attach export invoices, and shipping bills or bank realisation evidence as applicable
- 5.Track the acknowledgement and respond to any deficiency memo within its window
- 6.Follow the provisional refund route where you are eligible, and reconcile on final sanction
Refund claims are time-barred by a limitation period computed from the relevant date, which differs between goods and services. Quarterly refund hygiene is much easier than a large claim assembled at year end against a deadline.
What happens if the export or the payment does not come through?
The rule is mechanical. If goods do not leave India within the prescribed period, or service export payment is not received within the prescribed period, you must pay the IGST with interest within fifteen days of the period expiring. If you do not, the facility to export under the LUT is withdrawn immediately and the amount is recovered as arrears.
The withdrawal is not permanent. The rule provides that the facility is restored as soon as the amount due is paid, so a single failed shipment or an uncollected invoice does not end your ability to export under LUT — but it does need to be dealt with rather than ignored.
Where the delay is genuine and evidenced, the Commissioner can allow a further period. That is a written application supported by documents, made before the position hardens, not an argument raised after a notice arrives.
What is the checklist for an exporter filing an LUT?
- 1.Confirm your supplies genuinely qualify as exports or SEZ supplies under the place-of-supply rules
- 2.Confirm eligibility — no prosecution for evasion above the prescribed amount
- 3.File the LUT for the new financial year before raising the first export invoice
- 4.Record the ARN and quote the LUT on export invoices
- 5.Obtain an import export code and, for goods, set up ICEGATE registration
- 6.Track each export invoice against the three-month shipment or one-year remittance clock
- 7.Keep shipping bills, bills of lading, and foreign inward remittance evidence invoice-wise
- 8.Report zero-rated supplies correctly in every GSTR-1 and GSTR-3B
- 9.Claim accumulated input credit refunds within the limitation period
- 10.Diarise the next LUT renewal at the start of the following financial year
The remittance tracking is the part most businesses under-build. An export ledger that shows, invoice by invoice, when the money arrived is what keeps an LUT undertaking from becoming a surprise liability.
Do you still need an LUT if you supply only to SEZ units?
Yes. Supplies to an SEZ developer or unit for authorised operations are zero-rated on the same footing as exports, and the rule applies with necessary modification. To supply without charging IGST you need a valid LUT in place, plus the endorsement and documentation the SEZ rules require.
The common error here is treating an SEZ supply as automatically tax-free. It is zero-rated, not exempt, and the mechanics — LUT or IGST-and-refund — still have to be chosen and executed. A domestic tariff area supply mislabelled as an SEZ supply is a straightforward demand.
Why choose Arjun Filings for GST LUT filing?
Arjun Filings runs GST LUT filing as a checklist-first engagement: a qualified CA or CS scopes the work, tells you exactly which documents are needed, and reviews every form before it is signed and submitted. You get a named specialist, a status update at each stage, and a compliance calendar for whatever comes next.
- CA-led desk for GST LUT filing
- Checklist before portal submission
- Mismatch and notice awareness
- Clear status until certificate or ack