An exporter who does not want to pay IGST on every export invoice and then wait for a refund has to file a Letter of Undertaking, or LUT, in Form GST RFD-11 on the GST portal. A GST LUT for export is filed online, is accepted within three working days (or treated as accepted if the officer does nothing), and covers one financial year. File it before the first export invoice of each year. Once it is in place, export goods or services can be invoiced without tax, and the input tax credit that piles up can be claimed back as a refund.
The LUT is a promise, though, and it has teeth. If goods are not shipped within three months, or payment for services does not arrive within the permitted time, you owe the IGST with interest, and the LUT facility is withdrawn until you pay. The rules sit in Rule 96A of the CGST Rules and the conditions in CBIC Circular No. 8/8/2017-GST dated 4 October 2017.
What an LUT changes compared with exporting on payment of IGST
Exports and supplies to SEZ units or developers for authorised operations are "zero-rated" under section 16 of the IGST Act. Zero-rated means no tax is finally borne on the supply, while the exporter keeps the right to input tax credit. Since 1 October 2023, section 16(3) gives the main route: supply under a bond or LUT without paying IGST, then claim a refund of unutilised input tax credit.
Exporting on payment of IGST and claiming that tax back is now available only to classes the government notifies under section 16(4). Notification No. 05/2023-Integrated Tax, which amended Notification No. 01/2023-Integrated Tax from 1 October 2023, opens that route to all goods and services except the goods listed in its table (pan masala and specified tobacco products are among them). Exporters of those listed goods have no choice: they must use an LUT or bond. Section 16(5), added by the Finance (No. 2) Act, 2024, adds that goods subject to export duty get no refund of either kind.
| Point of comparison | Export under LUT | Export on payment of IGST |
|---|---|---|
| Tax on the export invoice | Nil; invoice carries the LUT endorsement | IGST charged and paid through GSTR-3B |
| Cash or credit blocked | None at invoicing; credit accumulates | IGST paid, often from the credit ledger, until refunded |
| Refund claimed | Unutilised ITC under Rule 89(4) | The IGST paid on the export |
| Who can use it | Any registered exporter not prosecuted for evasion above ₹250 lakh | Notified classes only; listed goods excluded |
| Risk if export or payment fails | Tax plus interest under Rule 96A; LUT withdrawn till paid | Refund repayable with interest |
For a services exporter with few domestic sales, the LUT is almost always the better route. Nothing is paid upfront, and the only refund to chase is the credit on inputs and input services.
Who can furnish an LUT and who has to give a bond
Para 2(a) of Circular 8/2017 makes the LUT available to every registered person exporting without payment of IGST. The one exception is a person who has been prosecuted under the CGST Act, the IGST Act or the earlier indirect tax laws for tax evasion exceeding ₹250 lakh. That person must furnish a bond instead, backed by a bank guarantee of 15% of the bond amount (para 2(f)), and the bond must cover the estimated IGST on the exports it is meant to secure.
The officer accepts the LUT on a self-declaration that these conditions are met; a declaration of no prosecution is enough unless there is specific information to the contrary (para 2(d)). The LUT is executed by the working partner, managing director, company secretary, proprietor, or a person authorised by them or by the board. The same LUT covers supplies to SEZ units and developers without payment of IGST, because Rule 96A(6) applies the rule to those supplies as well.
Check that your service is really an export before relying on the LUT
An LUT only works if the supply is an export in law. For services, section 2(6) of the IGST Act, reproduced in Circular No. 161/17/2021-GST, needs all five conditions together:
- the supplier is located in India;
- the recipient is located outside India;
- the place of supply is outside India;
- payment is received in convertible foreign exchange (or in Indian rupees where RBI permits, the wording Rule 96A now uses);
- supplier and recipient are not just establishments of the same distinct person under Explanation 1 to section 8.
The third condition trips up most people. Services such as those performed on goods physically available in India, or services tied to immovable property in India, can have an Indian place of supply even when the client sits abroad. The place of supply rules under section 13 of the IGST Act decide this case by case. The fifth condition is narrower than it looks. Circular 161/2021 clarifies that an Indian company and its foreign holding or group company are separate persons, so a subsidiary billing its overseas parent can still export. A branch in India billing its own head office abroad cannot.
Services to Nepal and Bhutan count as exports only when paid for in convertible foreign exchange. Goods to those countries and supplies to SEZs may be accepted under LUT with rupee payment if RBI rules are followed (Circular 8/2017, para 2(k)).
Filing Form RFD-11 on the GST portal
The steps below follow the GST portal user manual for furnishing an LUT.
- Log in and go to Services > User Services > Furnish Letter of Undertaking (LUT). GSTIN and legal name are filled in from your login.
- Select the financial year for which the LUT is being furnished.
- Optionally upload one earlier LUT document (up to 2 MB) if you had a manually filed LUT approved for the current year and want it on record online.
- Enter the name, address and occupation of two independent witnesses.
- Tick all the self-declaration boxes. These carry the undertakings in Rule 96A: export within the time allowed, pay tax with interest if you fail, and comply with the GST law.
- Preview, then sign with DSC or EVC by the primary or another authorised signatory. An application can be saved and finished within 15 days.
- Download the acknowledgement once the ARN is generated, and keep it with the export file. Status is visible under View My Submitted LUTs.
The status then moves through Submitted, possibly Pending for Clarification (the officer has issued a notice; you have 15 working days to reply), and then Approved, Rejected or Deemed Approved. Deemed approval follows when the officer takes no action within three working days, which matches para 2(e) of Circular 8/2017. At the end of the financial year the status changes to Expired, and a fresh LUT is needed.
Exported before filing the LUT, or forgot to renew it?
This happens most often in April, when the old LUT has expired and the first invoices of the year go out before anyone files the new one. Circular No. 37/11/2018-GST dated 15 March 2018 (para 4.1) says the substantive benefit of zero-rating should not be denied where exports have actually been made. The delay in furnishing the LUT may then be condoned and the facility allowed ex post facto, on the facts of each case.
Condonation is the officer's call, not an automatic right, so file the new LUT the day you notice the gap and keep the export evidence ready. The cleaner habit is to file for the coming year in the last week of March or on 1 April.
A taxpayer who received a new GSTIN mid-year must file a fresh LUT for that GSTIN for the rest of the year. If an officer disables LUT filing for your GSTIN, you get an SMS and email, and re-enabling has to be taken up with the LUT processing officer directly.
Invoicing and returns for supplies under LUT
The export invoice must carry the endorsement prescribed in the proviso to Rule 46 of the CGST Rules: "SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX". In place of the usual recipient details, it shows the recipient's name and address, the delivery address and the country of destination.
Export details reported in Table 6A of GSTR-1 (as amended through GSTR-1A, if used) are passed electronically to the Customs system under Rule 96A(2), and Customs confirms the export back to the portal. A mismatch between GSTR-1 and the shipping bill is what holds up most goods refunds, so reconcile the two before filing. The way GSTR-1 data then shows in GSTR-3B is covered in the note on GSTR-1 vs GSTR-3B data flow.
The two clocks that turn an LUT export into a tax demand
Rule 96A(1) sets the outer dates by which the promise must be kept:
- Goods: if the goods are not exported, tax with interest is payable within fifteen days after three months from the export invoice date, or any longer period the Commissioner allows.
- Services: if payment is not received in convertible foreign exchange (or rupees where permitted), tax with interest is payable within fifteen days after the later of two dates. One is a year from the invoice date; the other is the end of the FEMA realisation period, with any RBI extension. The Commissioner may allow more time.
The FEMA period changed recently. The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 came into force on 1 October 2026, already amended on 22 September 2026. Regulation 5(1) requires realisation within nine months from the invoice date for services, and twelve months where the export is invoiced or settled in Indian rupees. The authorised dealer bank can extend it on request. For most foreign-currency service exports, one year therefore remains the later date, unless the bank grants a longer extension.
The illustrations below use invoices raised after 1 October 2026.
| Illustration | Relevant period ends | Last date to pay IGST with interest if the condition fails |
|---|---|---|
| Software services invoiced on 10 November 2026 for USD 12,000 (₹10,08,000 at ₹84), no extension | FEMA: 10 August 2027; one year: 10 November 2027 (later) | 25 November 2027, on IGST of ₹1,81,440 (assuming an 18% rate) |
| Same invoice, bank extends realisation to 15 months | FEMA as extended: 10 February 2028 (later) | 25 February 2028 |
| Goods invoiced on 5 December 2026 for ₹6,50,000, not shipped | Three months: 5 March 2027 | 20 March 2027, on IGST of ₹1,17,000 (assuming an 18% rate) |
Interest is charged under section 50(1) of the CGST Act; the GST interest calculation under Rule 88B explains how it is worked out. Missing the date has a second cost. Under Rule 96A(3) the LUT benefit is withdrawn at once and the amount is recovered under section 79, so every export until you pay must go out on payment of IGST or under a bond. Under Rule 96A(4) the facility is restored as soon as the amount is paid.
A late shipment is not automatically fatal. Para 5.1 of Circular 37/2018 says that where goods have actually been exported even after three months, the officer should not insist on IGST being paid first. The Commissioner may also extend the time limit after the event; the same principle applies to services.
Claiming back the input tax credit on LUT exports
The point of exporting under LUT is that credit on inputs and input services is refunded in cash. The claim is filed in Form GST RFD-01 using the formula in Rule 89(4) of the CGST Rules: refund = (turnover of zero-rated goods + turnover of zero-rated services) × Net ITC ÷ Adjusted Total Turnover. For goods, the zero-rated turnover taken in the formula is capped at 1.5 times the value of like goods supplied domestically by the same or a similarly placed supplier. This is a different claim from the inverted duty structure refund under Rule 89(5), which has its own formula.
The documents differ for goods and services. Circular 37/2018 (para 12) says realisation of export proceeds is not a pre-condition for a goods refund, so officers should not ask for it. For services, receipt of convertible foreign exchange is part of the definition of export itself, and the refund file includes the BRC or FIRC for each invoice claimed (para 14.2). Para 7.2 also says a fresh self-declaration should not be demanded with every refund claim where exports were made under LUT.
