Letter of Undertaking for exports

Category: GST Services. From ₹999. Typical timeline: 2–3 days.

Overview

A Letter of Undertaking (LUT) filed in Form GST RFD-11 allows exporters to supply goods or services abroad, or to SEZ units, without paying IGST upfront, instead of the alternative route of paying tax and later claiming a refund. It is a one-year validity undertaking that must be renewed annually for uninterrupted zero-rated export supplies.

Who needs it

• Exporters of goods and services wanting to avoid blocking working capital in upfront IGST payment
• IT/ITES and consulting businesses billing overseas clients under export of services
• SEZ suppliers wanting zero-rated supply without tax outflow
• Businesses that previously used the refund route and want to switch to the LUT route for cash flow efficiency

Eligibility

• Any GST-registered exporter of goods or services can file an LUT
• The exporter must not have been prosecuted for tax evasion of ₹2.5 crore or more under the CGST Act or existing law
• Applicable only to registered persons intending to supply goods/services for export or to SEZ without payment of IGST
• Those ineligible for LUT must instead furnish a bond with bank guarantee

Documents required

• GST registration certificate
• PAN of the entity
• KYC and authorisation letter of the signatory
• Details of two independent witnesses (name, address, occupation)
• Prior LUT/bond details if renewing

Process

1. Eligibility check — Confirm the entity has not been prosecuted for tax evasion above the prescribed threshold.
2. Form RFD-11 preparation — Complete the online LUT form with witness details and authorised signatory information.
3. Online submission — Submit Form RFD-11 on the GST portal under Services > User Services > Furnish Letter of Undertaking.
4. Acknowledgment generation — The portal generates an ARN and LUT acknowledgment immediately upon successful submission.

Government fees

• LUT filing (Form RFD-11): Nil — no government fee for filing

Professional fee

Kanoons charges ₹999 for LUT preparation, filing and download of the acknowledgment for the financial year.

Timeline

LUT filing is typically completed in 2–3 working days, and the portal usually generates the acknowledgment instantly upon submission.

Deliverables

• Filed LUT acknowledgment with ARN
• Form GST RFD-11 copy for records
• Reminder set-up for next year's renewal

Frequently asked questions

How long is an LUT valid?

An LUT is valid for one financial year and must be filed afresh each year before making export supplies without IGST payment.

What happens if an export shipment is made without a valid LUT?

The exporter would need to pay IGST on that shipment and later claim a refund, or file the LUT before the next export.

Do service exporters also need an LUT?

Yes, any registered exporter of goods or services can and should file an LUT to avoid upfront IGST payment.

Common mistakes

• Not renewing the LUT at the start of a new financial year before making exports
• Providing incorrect or unreachable witness details in the form
• Confusing LUT with a bond, which is required only for entities ineligible for LUT
• Making export supplies without a valid LUT and forgetting to pay IGST upfront as an alternative

Penalties for non-compliance

• Exporting without a valid LUT or without paying IGST can lead to demand of the tax with interest at 18% per annum
• Failure to realise export proceeds within the prescribed period under FEMA can affect LUT validity and require the exporter to pay tax with interest
• Furnishing false information in the LUT can invite penalty under Section 125 of the CGST Act

Legal references

• Central Goods and Services Tax Act, 2017, Section 16 — zero-rated supply provisions
• CGST Rules, 2017, Rule 96A — export under LUT/bond without payment of tax
• Circular No. 8/8/2017-GST — clarifications on furnishing of LUT