For exporters, paying IGST in advance can temporarily lock up funds until the corresponding refund is received. An LUT offers eligible businesses an alternative route for making zero-rated supplies without paying IGST upfront, subject to the prescribed GST conditions. But who can use this facility? How do you file an LUT, and when does it need to be renewed?
What is the LUT Full Form in GST?
Under GST, LUT refers to a Letter of Undertaking. It is a declaration that allows eligible registered taxpayers to export goods or services or make zero-rated supplies without paying Integrated GST (IGST) upfront, subject to the prescribed conditions.
In practical terms, this can help exporters avoid tying up funds in IGST while waiting for a refund, making it easier to manage working capital during regular export transactions.
What is LUT in GST, and Why is it Used?
If you are wondering what is LUT in GST, it is a facility that allows eligible exporters to make zero-rated supplies without paying IGST upfront, subject to the prescribed conditions.
Under GST, exporters generally have two options:
- Pay the applicable IGST at the time of export and claim a refund later.
- Export under a bond or LUT in GST without paying IGST upfront and claim a refund of eligible unutilised input tax credit.
Businesses that wish to avoid blocking funds in IGST during the export process may find the second option useful. Because it enables them to maintain more working capital for regular business expenses, this can be particularly beneficial for exporters who handle a lot of foreign orders.
Who Can File an LUT in GST?
LUT can generally be furnished by a registered person who intends to export goods or services or make eligible supplies to an SEZ without paying IGST upfront, subject to the prescribed conditions.
However, certain restrictions apply. For example, the LUT facility is generally not available to a person who has been prosecuted for specified tax evasion offences involving an amount exceeding ₹250 lakh.
Eligible zero-rated supplies may include:
- Export of goods
- Export of services
- Supplies made to an SEZ developer
- Supplies made to an SEZ unit
What are the Benefits of Filing LUT in GST?
For eligible exporters, filing an LUT can simplify the way zero-rated supplies are handled and make cash-flow planning more predictable. The key benefits include:
1. No Upfront Payment of IGST
The biggest advantage of filing an LUT is that eligible exporters can make zero-rated supplies without paying IGST at the time of export. This can prevent funds from being tied up in tax payments.
2. Easier Working Capital Management
Since the business does not have to arrange funds for IGST on eligible exports, more working capital can remain available for inventory, supplier payments and other day-to-day business expenses.
3. Refund of Eligible Input Tax Credit
Eligible exporters who make zero-rated supplies under an LUT may claim a refund of unutilised input tax credit, subject to the applicable GST provisions and refund requirements.
*Note: An LUT must be furnished before making the relevant zero-rated supplies without payment of IGST.*
How Can You File LUT Online On The GST Portal?
You can furnish an LUT online through the GST portal without submitting a physical form. Follow these steps to complete the process:
- Log in to the GST portal using your registered GST credentials.
- Open the LUT filing option under the relevant User Services section.
- Choose the relevant financial year for which you are submitting the LUT.
- Fill in the necessary information in Form GST RFD-11 and carefully check the details before proceeding.
- Add the required declarations and witness details, wherever applicable.
- Complete the verification process and submit the LUT using the available authorised method.
- Download or save the acknowledgement and reference details for your records.
*Tip: Keep your GST registration details and other required information ready before starting the filing process. Since the GST portal may update its menu or interface, check the latest options displayed on the portal while submitting your LUT.*
What Details are Required for LUT Filing?
The LUT is filed online, so you generally do not need to upload a separate set of physical documents. However, you should keep the required business and verification details ready before starting the filing process.
Keep the following details and verification requirements ready:
- GSTIN and GST portal login credentials
- The financial year for which you are submitting the LUT
- Exporter or business details
- Details of the authorised signatory, where applicable
- Witness information and the declarations required in the application
- Digital Signature Certificate (DSC) or Electronic Verification Code (EVC), depending on the applicable filing requirements
Before submitting the LUT, check all the details carefully and ensure that the authorised person completes the required verification.
What is the Validity of LUT in GST?
An LUT in GST typically remains valid throughout the financial year in which it is submitted. If an eligible exporter wants to continue making supplies without payment of IGST in the following financial year, a fresh LUT must be furnished.
An LUT furnished for FY 2026-2027, for instance, usually applies to that fiscal year and does not automatically extend into FY 2027-2028. Therefore, if exporters plan to continue using the facility, they should provide a new LUT at the beginning of each fiscal year.
The LUT is subject to the conditions prescribed under GST. If these conditions are not fulfilled, the exporter may have to pay the applicable tax and interest as per the relevant provisions.
When Should You File or Renew an LUT?
It is advisable to furnish the Letter of Undertaking in GST at the beginning of the financial year, especially if your business expects to make regular zero-rated supplies. This ensures that the LUT is in place before you start making eligible exports without payment of IGST.
Since an LUT is generally valid for the relevant financial year, exporters should furnish a fresh LUT at the beginning of each new financial year if they plan to continue making eligible zero-rated supplies without paying IGST upfront.
Filing the LUT early can also help businesses avoid last-minute compliance issues when an export order is ready to be processed.
What Happens if You Export Without a Valid LUT?
If you make eligible zero-rated supplies without a valid Letter of Undertaking in GST, the consequences can depend on how the transaction was handled and the applicable GST provisions.
Key points to keep in mind are:
- LUT route may not apply: You generally need a valid LUT to make eligible zero-rated supplies without payment of IGST under this route.
- IGST may need to be paid: Depending on the circumstances, you may have to pay IGST and follow the applicable refund process.
- Rule 96A conditions apply: Exports made without payment of IGST are subject to the conditions and timelines prescribed under Rule 96A of the CGST Rules.
What is the Difference Between LUT and Bond in GST?
Both an LUT and a bond in GST can be used by eligible taxpayers to make zero-rated supplies without paying IGST upfront. However, the option available to a taxpayer depends on their eligibility under the applicable GST provisions.
| Basis | LUT (Letter of Undertaking) | Bond |
| Purpose | Used for eligible zero-rated supplies without payment of IGST | Used for zero-rated supplies without payment of IGST where the LUT route is not available |
| Eligibility | Available to eligible registered persons meeting the prescribed conditions | Generally applicable to persons who cannot furnish an LUT |
| Financial security | Generally does not require a bank guarantee | A bank guarantee may be required, depending on the applicable requirements |
What are Some Common Mistakes to Avoid While Filing an LUT?
A few small errors while furnishing an LUT in GST can lead to unnecessary compliance issues. Keep these points in mind:
- Selecting the wrong financial year or relying on an LUT from a previous year
- Entering incorrect authorised signatory or business details
- Leaving required declarations incomplete
- Not saving the LUT acknowledgement or reference number
- Making exports without confirming that the LUT has been properly furnished
- Overlooking the conditions and timelines applicable under Rule 96A
- Failing to include the required endorsement on export invoices, wherever applicable
Review the LUT details and supporting declarations carefully before submitting the form to minimise compliance errors.
Read More: E-Way Bill in GST
Wrapping Up
For eligible exporters, an LUT provides a practical way to make zero-rated supplies without paying IGST upfront. Knowing the eligibility requirements, filing process, and validity can help businesses plan their export transactions and manage working capital more efficiently.
At Lendingkart, we understand that exporters and other MSMEs often have to balance GST obligations with supplier payments, operating costs and working-capital needs. When an eligible business faces a short-term cash-flow gap, we offer business financing options designed to support genuine working-capital requirements. This can help businesses keep routine expenses and export-related commitments on track without making the financing discussion feel separate from their day-to-day needs.
Frequently Asked Questions (FAQs)
What is the LUT full form in GST?
The full form of LUT in GST is Letter of Undertaking. It allows eligible registered persons to make zero-rated supplies without paying IGST upfront, subject to applicable conditions.
Who can file a Letter of Undertaking in GST?
Eligible registered persons intending to make zero-rated supplies without payment of IGST can generally furnish LUT, subject to the conditions prescribed under GST law.
Is LUT mandatory for exporters?
An exporter may choose between the applicable GST routes for zero-rated supplies, including exporting under an LUT without payment of IGST or exporting on payment of IGST and claiming a refund, subject to applicable provisions.
Can I file LUT online?
Yes. Eligible taxpayers can furnish a Letter of Undertaking online through the GST portal in Form GST RFD-11.
Is there any fee for filing an LUT?
The official GST portal provides LUT furnishing as an online taxpayer service. Check the latest portal instructions and applicable notifications for any current procedural requirements.
Can I claim an ITC refund after filing an LUT?
Eligible exporters making zero-rated supplies under an LUT may claim a refund of unutilised Input Tax Credit (ITC), subject to the applicable GST refund provisions and conditions.
What happens if my LUT expires?
If your LUT is no longer valid, furnish a fresh LUT before continuing eligible zero-rated supplies without paying IGST upfront.
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