The GST LUT, explained: exporting without locking up your cash in IGST
Exports are zero-rated under GST, but there are two ways to get there — pay the tax and claim it back, or file a Letter of Undertaking and never pay it at all. For most exporters the LUT is the sensible route. Here is what it is, who files it, and why it needs renewing every year.
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Zero-rated exports, without the cash squeeze
Under GST, exports and supplies to SEZ units are zero-rated — meaning no GST should ultimately stick to them. But there are two mechanisms to achieve that, and they feel very different to your bank balance. You can either pay IGST on the export and then claim it back as a refund, or you can file a Letter of Undertaking (LUT) and supply without paying IGST at all.
The LUT — filed online in form GST RFD-11 — is the working-capital-friendly choice: it keeps the tax out of the transaction entirely rather than tying up funds until a refund is processed. This page explains who can file one, how it compares to the refund route, and why it needs renewing every financial year. For the done-for-you version, see our GST LUT filing service, and confirm the current process on gst.gov.in.
Who needs an LUT
An LUT is relevant to anyone making zero-rated supplies who would rather not pay IGST upfront:
- Exporters of goods shipping outside India.
- Exporters of services — for instance, IT, consulting or freelance services billed to overseas clients.
- Suppliers to SEZ units or developers, whose supplies are zero-rated in the same way.
One exclusion to note
Any registered taxpayer can file an LUT except those who have been prosecuted for tax evasion above the prescribed threshold — they must furnish a bond with a bank guarantee instead. For the vast majority of clean exporters, the LUT route is open.
If you are a service exporter still working out whether you even need to register, start with do I need GST registration? — export of services interacts with the threshold rules in its own way.
LUT versus paying IGST and claiming a refund
| LUT route | Pay-and-refund route | |
|---|---|---|
| IGST on export | Not paid | Paid, then refunded |
| Working capital | Not blocked | Blocked until refund processed |
| Paperwork | File LUT once a year | File a refund claim per cycle |
| Best for | Regular exporters and SEZ suppliers | Where an LUT is unavailable or not filed |
The trade-off is straightforward. The LUT keeps money in your business and reduces per-shipment paperwork to a single annual filing. The pay-and-refund route is a fallback where an LUT is not available — for example the excluded category above — or simply was not filed in time. For a regular exporter, letting the LUT lapse and falling back to refunds is an avoidable drain on cash.
One year at a time — so renewal matters
An LUT is valid for one financial year. It does not roll over automatically; you file a fresh one each year. The timing to remember:
- File the new LUT before 31 March so exports from 1 April are covered without a gap.
- The portal usually enables next year's LUT filing in advance, so you can file early.
- New exporters can file at any time during the year when they start.
A lapsed LUT means falling back to pay-and-refund
If your LUT expires and you export before filing the new one, those exports may not be covered for supply without payment of tax — pushing you into paying IGST and claiming it back. Diarise the renewal, or let us track it for you, so the coverage never breaks on 1 April.
The obligations you undertake
An LUT is exactly what its name says — an undertaking. In exchange for supplying without paying IGST, you commit to conditions. Broadly:
- Goods: complete the export within the prescribed period from the invoice date.
- Services: receive the payment for exported services within the prescribed time, in convertible foreign exchange where required.
If these conditions are not met, you may have to pay the IGST along with interest — the relief the LUT gave you is undone. The timelines are specific, so confirm them on the portal for your type of supply. This is not a reason to avoid an LUT; it is a reason to keep your export documentation and receipts in order, which most exporters do anyway.
What we do with your LUT
A small filing that is easy to forget — until it costs you
The LUT itself is not complicated to file, and we will not pretend it is a heroic task. Where clients actually get caught is the yearly renewal and the alignment between the LUT and their export invoicing — a lapsed LUT quietly forces the pay-and-refund route and blocks cash. We are facilitators: we prepare and file the RFD-11, track the renewal window, and check that your invoicing lines up so nothing is left uncovered.
We will also be honest about the excluded category — if a prosecution history means you must furnish a bond instead of an LUT, we will tell you rather than file something that will not stand.
Send us your GSTIN and a note on what you export and to whom. We will file the LUT and set a reminder for next year's renewal, with a fixed quote before any work begins.
The bottom line
If you have read this far, you know more than most agents will ever tell you. The next step is simple: send us your case on WhatsApp, get the exact fee and timeline in writing, and decide with full information. That quote costs nothing.
LUT questions, answered
What is an LUT in GST?
Who needs to file an LUT?
What is the alternative to an LUT?
How long is an LUT valid?
When should I renew my LUT?
What happens if I export without a valid LUT?
Does an LUT cover supplies to SEZ units?
What obligations come with an LUT?
Can you file my LUT for me?
Exporting this year? Get your LUT in place
Tell us what you export and to whom, and we will file your LUT in RFD-11, check it covers your invoicing, and set a reminder for next year's renewal so your zero-rated supplies never fall back to the refund route. Fixed quote before we begin.