Export essentials
Posted on May 30, 2025
Exporting goods? Then you've probably felt the sting of 18% IGST. That upfront payment hurts, especially when you're waiting months for refunds. It's your money stuck in a loop, slowing down business.
But here's the good news: You don't have to pay that IGST in the first place.
Enter the GST Letter of Undertaking (LUT). It's your legal way out. No more blocking your cash. No more refund stress.
In this guide, let us walk you through what the LUT is, how to apply for it, and how it saves you time and money.
Let's make exports smoother and a little less frustrating.
What's a GST Letter of Undertaking (LUT)?
An LUT, or Letter of Undertaking, is a formal promise you make to the GST authorities as an exporter. It means you agree to follow certain rules set by the GST department.
Normally, when you export goods or services, you must first pay Integrated GST (IGST). Later, you can apply to get that tax refunded. But this refund process can be slow and tricky.
That’s where the LUT helps. When you submit an LUT, you don’t have to pay IGST upfront on your exports. This skips the refund hassle, saves you time, and keeps your money free for your business.
In short, a LUT makes exporting smoother and easier by avoiding upfront tax payments.
LUT vs. Bond – What’s the Difference?
Both LUTs and bonds help you export without paying IGST. But they’re not the same, and knowing which one fits you makes all the difference.
Here’s a quick side-by-side:
Aspect | Header 2 | Header 3 |
|---|---|---|
Filing cost | Free-no extra charges | Not free- needs a bank guarantee |
Eligibility | Open to all registered exporters | Mostly for high-risk exporters |
Usage | Great for regular and bulk exporters | Better for rare or one-time export |
So, if you export often and want zero hassle, LUT is your go-to. If you’re flagged as high-risk or exporting just once, a bond might be required.
Who Can File an LUT? Eligibility Criteria
Not everyone can skip IGST with an LUT—but most exporters can. Here's how to know if you're eligible.
1. You must be GST-registered
That’s non-negotiable. If you’re not registered under GST, you can’t file an LUT.
2. You’re supplying to international markets or SEZs
Planning to export goods or services? Or maybe supply to a Special Economic Zone (SEZ)? Then you’re in the right zone—LUT applies to all those zero-rated supplies.
3. You intend to export tax-free
By applying for an LUT, you’re telling the government, “I’ll export without paying IGST upfront.” That’s the whole point.
4. You haven’t been caught for major tax evasion
If you’ve been prosecuted for tax evasion of ₹2.5 crores or more, you're not eligible for an LUT. You’ll have to go the bond route instead.
What happens if you don’t follow the rules?
If you mess up—like missing deadlines or conditions—the benefits of LUT are gone. You’ll then need to furnish a bond instead. That means bank guarantees and paperwork. You can submit your LUT through the GST portal. Quick and digital.
How Long Does Your LUT Last? Validity & Renewal?
Once you file your LUT, it’s good for one full financial year. That means—from the day it’s accepted until March 31st. After that, you’ll need to submit a fresh one for the new year. It’s not automatic.
But here’s the catch—you’ve got deadlines to stick to.
Miss the timelines? Here's what happens:
For goods: You must export them within 3 months of the invoice date. If you don’t, GST at 18% comes in. And you’ve got 15 days to pay it.
For services: You must receive the payment within 1 year. Miss that? Same deal—GST at 18% within 15 days.
This rule comes straight from Section 50(1) of the GST Act. It’s there to keep things fair and above board.
What if you miss?
Your LUT privileges get suspended. That means the next export needs a bond instead. Good news though—once you pay the tax dues, the LUT facility can be restored.
If needed, you can grab FORM GST RFD-11 from www.cbec.gov.in (if it’s still listed). After filling it out, submit it to your jurisdictional Deputy or Assistant Commissioner.
But honestly, filing LUTs is mostly online now—faster, easier, and less paperwork.
Checklist – Documents You’ll Need
Don’t worry—it’s not a mountain of paperwork. But yes, a few key documents are non-negotiable. Let’s go through them one by one.
1. LUT Cover Letter
This is your formal request to accept the LUT. It must be signed by your authorized representative—no signature, no submission.
2. GST Registration Certificate
This proves you’re a registered GST taxpayer. It’s essential to establish your eligibility.
3. PAN Card
The business entity’s PAN is a must. It links your application to your tax records.
4. KYC of Authorised Signatory
Submit valid ID and address proof of the person signing the LUT. This ensures transparency.
5. Form GST RFD-11
This is the actual LUT form. Without this, your application won’t move forward.
6. IEC Code Copy
Got an Import Export Code (IEC)? You’ll need to attach it. This confirms you're allowed to export.
7. Cancelled Cheque
It’s just to verify your bank account details—simple but necessary.
8. Authorisation Letter
This gives legal power to the person filing and following up on the LUT process on your behalf.
Keep all your docs handy and neat. It’ll make the submission smooth and avoid back-and-forth.
Step-by-Step: Filing Your LUT Online
Filing anything on the GST portal feels like a chore. But filing your Letter of Undertaking (LUT) doesn’t have to be confusing. If you want to export goods or services without paying IGST upfront (yep, that painful 18%), this is the way out.
Here’s how to do it step by step. No jargon. No stress.
Step 1: Log in First
Go to gst.gov.in. Use your login ID and password. You’ve done this before, so nothing new here.
Step 2: Head to the Right Spot
Once you're in, click on this trail:
Services → User Services → Furnish Letter of Undertaking (LUT)
Click that. You’ll see the LUT form pop up.
Step 3: Choose Your Financial Year
Pick the financial year you want to file the LUT for. One LUT lasts the whole year, but you’ve got to renew it every year.
Step 4: Upload Any Previous LUT (If You Have One)
If you’ve filed it before, just upload the old one here. No need to dig around; just keep it handy.
Step 5: Agree to the Conditions
You'll see three checkboxes. Tick them all. These are standard rules—basically, you promise to export without messing around.
Step 6: Add Two Witnesses
Type in the names and addresses of two people who can vouch for your business. You’re not getting married—it’s just a formality.
Step 7: Mention the Place
Write the place from where you’re applying. Usually, it’s your office location.
Step 8: Pick the Authorised Signatory
This is the person who will sign the form. Could be you, your CA, or someone officially allowed to handle your filings.
Step 9: Preview the Form
Double-check everything. This is your chance to fix typos or missing info.
Step 10: Save or Submit
Want to finish later? Click SAVE.
Ready to go? Click SIGN AND FILE.
You’ll get two options:
Sign with DSC (Digital Signature Certificate)
Sign with EVC (you’ll get an OTP on your registered number)
Use whatever’s easier.
Once it’s filed, you’ll see a confirmation message. Save it or you can print it. Now, go ahead and export without worrying about upfront GST.
Top Benefits of Using an LUT
Here are the benefits of using an LUT:
Exporters using an LUT can export goods and services without paying tax upfront, which improves cash flow and profitability.
Filing an LUT saves time by avoiding the lengthy tax refund process and follow-ups with tax authorities.
Funds that would otherwise be blocked in tax payments stay available for your business operations, helping especially small and medium businesses.
Once filed, an LUT is valid for the entire financial year, reducing the need for frequent filings and easing administrative work.
The online process for filing and approval is simple and makes compliance easier.
With an LUT, exporters can focus more on their business instead of dealing with complicated tax refund procedures.
Avoiding upfront tax payments strengthens financial stability and helps prevent cash flow problems.
Using an LUT keeps you compliant with tax laws, lowering the risk of penalties or legal issues.
Minimal supporting documents are needed, which reduces paperwork and makes the process hassle-free.
By freeing up working capital, exporters can reinvest in growth and expansion without waiting for tax refunds.
Common Pitfalls & How to Dodge Them
Late Filing Penalties: Make sure you file your LUT on time. Missing the deadline can lead to fines and interest charges.
Wrong Financial Year: Always select the correct financial year when filing. Filing for the wrong year can cause delays and rejection.
Mismatched GSTIN: Check that your GSTIN matches across all documents. Any mismatch will create problems during processing.
Bond Confusion: If you’re eligible for an LUT, don’t accidentally file a bond. Bonds require bank guarantees and extra paperwork.
Annual Renewal: You must renew your LUT every financial year to keep it valid. Don’t skip this step or you’ll lose the benefits.
Deadline Reminder: For FY 2025-26, file your LUT by March 31, 2025, or before your first export or SEZ supply—whichever comes first.
File Format and Size: Only upload PDF or JPEG files, and keep them under 2 MB to avoid upload errors.
Witness Information: Provide accurate details of two independent witnesses as required in the form. Incomplete or wrong info can cause rejection.
Include ARN on Invoices: Always mention the LUT ARN number on your export and SEZ invoices. This validates your IGST exemption.
Maintain Documentation: Keep copies of your submitted forms and acknowledgments safe. You’ll need them for audits or future references.
How Does Infinity Streamline Your LUT & Export Compliance?
Dealing with LUT filings and export compliance can be a headache. That’s where Infinity comes in. It simplifies the entire process by auto-generating your LUT filings, so you don’t have to fill out forms manually.
Infinity also offers ready-to-use invoice templates, making sure your export documents are always accurate and compliant. Plus, it integrates e-FIRC management, so you can track foreign inward remittances without extra effort.
Another handy feature is purpose-code tagging, which automatically assigns the right export purpose codes to your transactions. This cuts down errors and speeds up approvals.
With Infinity handling these tasks, you save time and avoid common mistakes. You can focus more on growing your export business and less on paperwork.
Conclusion & Next Steps
Filing an LUT isn’t just paperwork—it’s a smart move that frees up your cash flow and smooths your export journey. Don’t wait until the last minute. Get your LUT filed for this financial year and enjoy hassle-free, zero-rated exports.
Use tools like Infinity to automate filings, invoice prep, and compliance tracking. This way, you’ll stay compliant without the usual stress.
Start now, avoid penalties, and keep your export business running smoothly.
FAQs
Can I file one LUT for both goods and services exports?
Yes, a single LUT covers both goods and services exports for the entire financial year.
What happens if I export without an LUT?
You must pay IGST upfront and then apply for a refund, which delays your cash flow and involves extra paperwork.
How soon after filing does my LUT become active?
The LUT is generally active immediately upon successful filing and acceptance on the GST portal.
Is a bond ever preferable to an LUT?
Bonds are usually for exporters not eligible for LUT or those flagged as higher risk by tax authorities. For most regular exporters, LUT is simpler and cost-free.
How do I renew my LUT for the next financial year?
You need to file a fresh LUT for each financial year before starting exports in that year. Renewal is done online via the GST portal.
