LUT Under GST: How Exporters Can Supply Without Paying IGST
For exporters, cash flow is everything — and paying IGST on every export only to claim it back later locks up working capital. The Letter of Undertaking (LUT) solves this by letting you export without paying IGST at all. This guide explains the LUT under GST, who can file it, how, and its validity.
What Is a LUT Under GST?
A Letter of Undertaking (LUT) is a declaration an exporter files with the GST department, undertaking to fulfil the conditions of zero-rated supply. Once accepted, it allows the exporter to supply goods or services for export (and to SEZs) without paying IGST. Without a LUT, the exporter would have to pay IGST and claim a refund — see GST refund on exports.
Why File a LUT?
- Protects working capital — no IGST outflow on exports.
- Avoids the refund cycle for the IGST that would otherwise be paid.
- Simplifies compliance for regular exporters.
This is why most regular exporters of goods and services file a LUT as a matter of course.
Who Can File a LUT?
Any registered person who intends to make zero-rated supplies (exports or supplies to SEZ) can file a LUT, provided they have not been prosecuted for tax evasion of a specified amount under GST or earlier laws. Exporters who do not qualify for a LUT must furnish a bond with a bank guarantee instead.
How to File a LUT
1. Log in to the GST Portal
Go to “Services > User Services > Furnish Letter of Undertaking (RFD-11)”.
2. Select the Financial Year
Choose the financial year for which the LUT is being filed.
3. Fill the Undertaking and Witness Details
Accept the self-declarations and provide details of two independent witnesses.
4. Sign and Submit
Submit using DSC or EVC. An acknowledgement with an ARN is generated — no physical submission is needed.
Validity of a LUT
A LUT is valid for one financial year. A fresh LUT must be filed at the start of each financial year. If the conditions of the LUT are not met (for example, foreign exchange is not realised in time), the benefit may be withdrawn and IGST with interest could become payable.
LUT vs Bond
| Aspect | LUT | Bond |
|---|---|---|
| Who | Eligible exporters | Those not eligible for LUT |
| Bank guarantee | Not required | Usually required |
| Validity | One financial year | As specified |
| Format | RFD-11 online | Bond with guarantee |
Frequently Asked Questions
Is a LUT mandatory for exporters?
Not mandatory — but without it, you must pay IGST and claim a refund. The LUT route is more cash-flow friendly.
How long is a LUT valid?
For one financial year; a fresh LUT is filed each year.
Who cannot file a LUT?
Those prosecuted for tax evasion of a specified amount — they must furnish a bond with a bank guarantee.
Can a LUT be used for SEZ supplies?
Yes — supplies to SEZ units and developers are zero-rated and covered by the LUT.
File Your LUT and Export Smarter
S. Choudhary & Co. files LUTs and manages end-to-end export GST compliance. Explore our GST services or call +91 90248 28295 · sushil@sushilchoudhary.com.
