A Letter of Undertaking (LUT) under GST allows eligible exporters to supply goods or services without paying IGST upfront, improving cash flow and eliminating the need to claim a tax refund later. Since exports are treated as zero-rated supplies under Section 16 of the IGST Act, 2017, filing an LUT enables eligible businesses to export without the upfront tax payment while complying with GST requirements.
What is an LUT in GST?
A Letter of Undertaking (LUT) is a statutory declaration that allows eligible exporters to supply goods or services without paying IGST upfront. It is filed in Form GST RFD-11 under Rule 96A of the CGST Rules, 2017, through which the exporter undertakes to:
- Export goods within 3 months of the invoice date
- Realise foreign exchange within one year
If either condition is not met, the exporter must pay IGST along with interest under Section 50 of the CGST Act, 2017.
Before the LUT facility was extended to all eligible exporters on 4 October 2017 (Notification 37/2017-Central Tax), most exporters had to furnish a bond backed by a bank guarantee, making exports more expensive and paperwork-intensive. That extension replaced the requirement for eligible exporters with a simpler online declaration.
Exporters who do not qualify for an LUT must continue to furnish a bond. The LUT is available only to eligible exporters and is not granted automatically.
Who can file an LUT?
Any GST-registered person making zero-rated supplies can file LUT. This includes exporters of goods, exporters of services and suppliers to Special Economic Zones (SEZs). There is no minimum turnover requirement for filing an LUT, although GST registration is mandatory under Section 24 of the CGST Act, 2017.
An exporter is not eligible to file an LUT if they have been prosecuted for tax evasion exceeding ₹2.5 crore under the CGST Act, 2017, the IGST Act, 2017, or any previous tax law.
First-time exporters can file an LUT from the start of their export activities, provided they meet the eligibility conditions.
What details are needed before filing?
Before filing Form GST RFD-11, keep the following details ready to complete the application without delays:
- GST Identification Number (GSTIN) and login credentials: Required to access the LUT section under User Services on the GST portal.
- Authorised signatory details: The name, designation and Permanent Account Number (PAN) of the person signing and submitting the form.
- Two independent witness details: The full name, address with PIN code and occupation of both witnesses. They should not be relatives or authorised signatories of the business.
- Digital Signature Certificate (DSC) or Electronic Verification Code (EVC): A DSC is mandatory for companies and Limited Liability Partnerships (LLPs). Proprietorships and partnership firms can authenticate the form using an EVC.
- Previous year's LUT copy: Optional, but it can speed up the filing process. The file must be in PDF or JPEG format and not exceed 2 MB.
How to file the LUT on the GST portal
You can file LUT online through the GST portal by completing and submitting Form GST RFD-11.
- Log in to the GST portal using your GSTIN and password. Go to Services > User Services > Furnish LUT and select the relevant financial year.
- Form GST RFD-11 opens with your basic registration details pre-filled. Enter the authorised signatory's name, the place of filing and the names, addresses and occupations of the two witnesses.
- Select the declarations confirming compliance with the export conditions and GST rules. If you do not want to submit the form immediately, you can save it and complete it later.
- Click Preview and verify that all details are correct.
- Submit the application using a DSC or an EVC, as applicable.
On successful submission, the system generates an Application Reference Number (ARN) as proof of filing. The LUT is treated as approved immediately upon submission.
Conclusion
Filing an LUT on time helps eligible exporters avoid paying Integrated Goods and Services Tax (IGST) upfront, improving cash flow and reducing the need for refund claims. Renewing it every financial year and complying with its conditions are essential to retain this benefit. TallyPrime helps businesses maintain accurate GST records, track zero-rated supplies and stay prepared for annual LUT filing. Explore TallyPrime today.
