Letter of Undertaking (LUT) is an essential compliance requirement for exporters under the Goods and Services Tax (GST) regime in India. It allows exporters to supply goods or services without the payment of Integrated GST (IGST), thus easing cash flow constraints. This guide provides a step-by-step overview of GST LUT filing, its eligibility, conditions, and the process involved.
Under GST, exports are classified as “zero-rated supplies,” meaning that the exporter can:
• Option 1: Pay IGST on exports and later claim a refund.
• Option 2: Export goods or services without payment of IGST by furnishing a Letter of Undertaking (LUT).
• Option 3: Export goods or services without payment of IGST by furnishing Bond.
Choosing the second option helps businesses avoid upfront IGST payments, improving cash flow and simplifying the refund process.
| Feature / Criteria | GST LUT Filing | GST Bond Filing | Export without LUT/Bond |
|---|---|---|---|
| Meaning | Filing a Letter of Undertaking (LUT) for exporting goods/services without paying IGST. | Filing a Bond with bank guarantee for exporting goods/services without IGST payment. | Exporting with IGST payment and then claiming refund later. |
| Applicable For | Exporters of goods or services without payment of IGST. | Exporters not eligible for LUT or whose LUT is rejected. | Exporters who don't file LUT/Bond. |
| Requirement | Submit LUT Form GST RFD-11 online on GST portal annually. | Submit a Bond with security (bank guarantee) to GST Officer. | IGST is paid first, then refund is claimed later. |
| Cost Involved | Usually NIL (only professional charges if outsourced). | Bank guarantee cost + administrative hassle. | Cash blockage until refund is received. |
| Documents Needed | PAN, GSTIN, export invoices, previous year's export proof (optional). | Bank guarantee, Bond, export documents. | IGST payment proof, export invoices. |
| Time Taken | Few hours to 1 day (online approval). | Few days (due to physical verification, officer approval). | Refund may take 2–3 months. |
| Validity | Valid for the entire Financial Year (FY). | Valid as per bond terms or until new bond filed. | Refund timelines apply. |
| Risk/Downside | Minimal if terms of LUT are followed. | High — cash blockage, higher compliance cost. | Cash flow issues, refund delays. |
Exporters should prefer filing a GST LUT to avoid IGST payment and cash blockage. Filing a Bond or exporting with IGST payment should only be considered if LUT is not available.
The following taxpayers are eligible to furnish LUT:
• All registered exporters supplying goods or services overseas or to Special Economic Zones (SEZ) without payment of IGST.
• Exporters who have not been prosecuted under GST law where the tax evaded exceeds INR 250 Lakhs.
If a taxpayer does not meet these criteria, they must furnish an export bond along with a bank guarantee instead of LUT.
• The LUT is valid for one financial year, expiring on March 31st of every year.
• Exporters must renew LUT at the beginning of each financial year by filing Form GST RFD-11.
• Failure to renew LUT may result in the requirement to pay IGST on exports until the new LUT is submitted.
Exporters can file LUT online on the GST Portal by following these steps:
Login to GST Portal: Visit www.gst.gov.in and log in with your credentials.
Navigate to LUT Form: Click on Services > User Services > Furnish Letter of Undertaking (LUT).
Select Financial Year: Choose the financial year for which the LUT is being applied.
Upload Required Documents: Provide details such as:
a. Exporter’s GSTIN
b. Details of authorized signatory
c. Signature and verification by the exporter
e. Declaration & Submission: Accept the declaration terms and submit the LUT form using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
f. Acknowledgment & Approval: Upon successful submission, an acknowledgment receipt is generated. The GST officer reviews the application, and upon approval, the LUT is deemed accepted.
• GST Registration Certificate
• Import Export Code (IEC)
• PAN Card of the entity
• Authorized signatory details
• Previous year LUT (if applicable)
• Self-declaration stating compliance with LUT conditions
If an exporter violates the conditions of LUT, the GST authorities can:
• Revoke the LUT and mandate the exporter to furnish a bond with bank guarantee.
• Demand the payment of IGST on exports.
• Initiate penal actions in case of fraudulent claims.
Input Tax Credit (ITC) on Exports: Exporters supplying goods/services under LUT can claim a refund of unutilized ITC.
Refund Application: The exporter must file Form GST RFD-01 to claim ITC refunds on inputs used for exports.
Supporting Documents for Refund:
o Export invoices
o Shipping bill or airway bill
o Bank realization certificate (BRC)
If a business has multiple GST registrations in different states, LUT must be filed for each GST registration separately.
• Supplies made to SEZs qualify as “zero-rated” and can be made without IGST payment under LUT.
• The process remains the same as regular exports.
With evolving tax laws, exporters should stay updated and ensure compliance. Proper LUT filing and adherence to GST guidelines help businesses streamline operations and maintain tax efficiency. If you need professional assistance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091 expert services can ensure smooth and accurate filing.
