Complete Guide to Letter of Undertaking (LUT) Under GST: Everything Exporters Need to Know
For any growing business stepping into the global arena, international trade opens up monumental avenues for scaling revenue. However, navigating cross-border taxation can quickly become a labyrinth of red tape. If you are an Indian exporter shipping goods or services outside the country, managing your cash flow efficiently is the difference between thriving and merely surviving.
This is where the Letter of Undertaking (LUT) under GST comes into play as your most valuable financial shield. By filing an LUT, exporters can bypass the cumbersome process of paying Integrated Goods and Services Tax (IGST) upfront during exports and subsequently chasing refunds.
At CleverCoins, we turn the complexity of tax codes into a strategic advantage for your bottom line. In this comprehensive guide, we unpack everything you need to know about LUT under GST, its legal backing, eligibility, step-by-step filing procedures, and compliance best practices.
What is a Letter of Undertaking (LUT) Under GST?
Under the Goods and Services Tax (GST) regime in India, any export of goods or services is legally classified as a “zero-rated supply.” This means the supplies themselves are not taxed, ensuring that Indian products and services remain competitive in global markets.
Normally, when you supply goods or services, GST is applicable. To export without paying this tax upfront, exporters have two primary pathways:
Export under Bond/LUT: Export goods or services without paying IGST by furnishing a Letter of Undertaking.
Export on Payment of IGST: Pay the applicable IGST at the time of export and subsequently claim a cash refund from the government portal.
A Letter of Undertaking (LUT) is a formal legal document prescribed under Rule 96A of the CGST Rules, 2017. By submitting an LUT on the official GST portal, a registered taxpayer formally undertakes that they will fulfill all export obligations specified under the GST law within designated timelines—eliminating the need to block working capital through tax payouts.
Why is Filing an LUT Crucial for Exporters?
Working capital is the lifeblood of any business, particularly for startups and scaling enterprises breaking into international markets. Here is why securing an LUT under GST is vital:
Preservation of Working Capital: When you pay IGST upfront on exports, your capital remains locked with the government until the refund is processed—a timeline that can occasionally experience administrative delays. An LUT lets you keep that cash liquid for day-to-day operations.
Zero Operational Friction: Filing an LUT completely bypasses the tedious, document-heavy IGST refund claim cycle (such as Form RFD-01 processing).
Enhanced Global Competitiveness: By avoiding immediate tax burdens, your pricing structure remains lean, allowing you to offer competitive rates to international clients.
Who is Eligible to File an LUT Under GST?
Historically, under earlier indirect tax frameworks, facility schemes had stringent track-record prerequisites. Under the current GST regulations, eligibility has been democratized significantly to encourage ease of doing business.
General Eligibility Rule
Any registered taxpayer who is registered under GST and intends to export goods or services out of India is eligible to file an LUT.
The Major Exception: Criminal Prosecution
The only major disqualifier under Rule 96A is compliance history regarding tax evasion. If a registered taxpayer has been prosecuted under the CGST Act, the SGST Act, or any existing laws for an amount exceeding ₹2.5 Crores, they lose the privilege of filing an LUT. In such penal scenarios, the exporter is legally mandated to export goods and services only by executing a physical bond backed by a bank guarantee.
Validity Period of an LUT
An important regulatory update introduced via Notification No. 37/2017-Central Tax states that an LUT is valid for the entire financial year in which it is submitted.
Example: If you file your LUT for the financial year 2026–27 on April 5, 2026, it remains active and legally binding until March 31, 2027.
Renewal Mandate: You must file a fresh LUT for every new financial year before making any exports in that subsequent year. Failing to renew your LUT before executing exports can leave your shipments exposed to mandatory IGST payments or compliance penalties.
Documents and Prerequisites Required for LUT Filing
Before logging into the GST portal to file your Form GST RFD-11, ensure you have the following prerequisites ready:
Active GST Registration: Your primary GSTIN must be fully active and compliant.
Authorized Signatory Details: Details and valid credentials (DSC or EVC) of the designated Managing Director, Partner, Company Secretary, or an authorized proprietor.
Two Independent Witnesses: According to standard legal formatting of an LUT, names, occupations, and addresses of two independent witnesses are required within the physical/digital declaration draft.
Digital Signature Certificate (DSC) or Electronic Verification Code (EVC): Mandatory for authenticating the submission on the portal. Companies and LLPs must use a Class 3 Digital Signature Certificate.
Step-by-Step Guide: How to File LUT (Form GST RFD-11) on the GST Portal
Filing your Letter of Undertaking is an online, paperless process completed directly through the official GST common portal. Follow this step-by-step framework:
Step 1: Log Into the GST Portal
Navigate to the official GST portal (
www.gst.gov.in).Enter your valid credentials (Username and Password).
Step 2: Navigate to the User Services Menu
Once on your dashboard, locate the top navigation bar.
Click on Services > User Services > Furnish Letter of Undertaking (LUT).
Step 3: Select the Financial Year
From the drop-down menu labeled “Financial Year for which LUT is being filed”, choose the target financial year (e.g., 2026-27).
Note: If you have previously submitted an LUT for an older financial year, the portal will allow you to reference or review past filings.
Step 4: Upload the LUT Document & Fill Declarations
Download the standard template provided by the portal if required, or prepare your document based on the statutory text.
Check the mandatory declaration boxes confirming that:
Exports will be made within statutory time limits (3 months from the date of export for goods, or within the realization period permitted by RBI for services).
You have not been prosecuted for tax evasion exceeding ₹2.5 crores.
Fill in the names, addresses, and witness details as prompted.
Step 5: Add Authorized Signatory and Sign
Select the primary Authorized Signatory from the dropdown list.
Click either “File with DSC” (Digital Signature Certificate) or “File with EVC” (OTP sent to the registered mobile/email of the primary authorized person).
Step 6: Save the Reference Number (ARN)
Upon successful authentication, an Acknowledgment Reference Number (ARN) is generated instantly.
A confirmation message and copy of the filed LUT are sent to your registered email and mobile number. You can also download the filed application anytime from your user history tab under “My Applications”.
Statutory Time Limits for Exports Under LUT
Filing an LUT is not a blanket exemption from accountability; it binds the exporter to strict statutory realization timelines. If you fail to meet these timelines, the tax exemption becomes void, and you will be liable to pay the pending IGST along with heavy applicable interest.
For Export of Goods: Goods must be physically exported out of India within three months from the date of issuing the invoice, or within such extended period as the Commissioner may allow.
For Export of Services: Payment for exported services must be received in convertible foreign exchange (or in Indian rupees wherever permitted by the RBI) within the timeframe specified by the Reserve Bank of India (RBI)—typically within nine months from the phase of service provision, unless extended.
Common Mistakes to Avoid While Filing LUT
Even minor oversights during the filing process can lead to administrative delays, customs holds at ports, or compliance notices. Avoid these common pitfalls:
Missing the Renewal Window: Waiting until an export consignment reaches customs before realizing your LUT expired on March 31st. Always renew your LUT during the last week of March every year.
Incorrect Authorized Signatory Mapping: Submitting an application signed by an individual whose designation or authorization hasn’t been duly updated on the GST portal.
Incorrect Jurisdiction Details: Ensure that your state code and divisional parameters match your core GST registration profile.
How CleverCoins Can Streamline Your Tax & Export Compliance
While filing an LUT on the portal appears straightforward, managing comprehensive indirect tax compliance, tracking zero-rated refunds, handling annual reconciliations, and safeguarding your enterprise against dynamic tax policy changes require deep analytical expertise.
At CleverCoins, we go beyond standard form-filling. Founded with a clear vision to demystify complex tax laws, our seasoned panel of consultants works proactively with businesses across India to safeguard earnings, optimize tax frameworks, and secure high-value government export schemes.
Stop reacting to regulatory hurdles—partner with CleverCoins and turn compliance into your competitive edge. Contact our experts today to secure your tax structure.
Frequently Asked Questions (FAQs)
1. Is it mandatory to file a physical copy of the LUT to the jurisdictional officer?
No. Under current GST provisions, the LUT is entirely electronic. You do not need to submit physical copies to your jurisdictional GST officer unless specifically summoned under an inquiry.
2. Can an LUT be revoked by the department?
Yes. If an exporter fails to export goods or services within the mandated timelines or fails to pay due taxes upon failure of export, the jurisdictional officer has the authority to revoke the LUT facility.
3. Can I file an LUT if I have existing pending litigation?
If your pending litigation involves a criminal prosecution verdict where the tax evasion amount crosses the ₹2.5 Crore threshold, you cannot file an LUT. For regular civil assessments or routine show-cause notices, filing is generally permitted, though professional advisory consultation is recommended.
