LUT for Export Business – Complete Guide to Filing, Benefits & GST Compliance
Understand what a Letter of Undertaking (LUT) is, who can file it, step‑by‑step online filing, validity, and how LUT helps you export goods and services without paying IGST.
LUT = Zero IGST on Exports
File one declaration per year and export goods or services without paying IGST upfront.
Quick Summary – LUT for Export Business
- What: LUT (Letter of Undertaking) is a declaration filed on the GST portal to export without paying IGST.
- Who: Any GST‑registered exporter of goods or services, without prosecution for tax evasion of ₹2.5 Cr+.
- Validity: One financial year – must be renewed annually.
- Benefit: Preserves cash flow, no upfront IGST payment, enables ITC refund.
- Process: Online filing via GST portal, free of cost, effective immediately.
- Without LUT: Must pay IGST on exports and claim refund later.
What is LUT Under GST?
LUT stands for Letter of Undertaking. Under Rule 96A of the CGST Rules, 2017, any registered person exporting goods or services can file an LUT on the GST portal. This is a self‑declaration that the exporter undertakes to comply with all export obligations and will realise the export proceeds in convertible foreign exchange. By filing an LUT, the exporter can ship goods or provide services without paying IGST at the time of export. The LUT is valid for one financial year. For example, if a garment exporter in Tirupur files an LUT in April 2026, all their exports during FY 2026‑27 can be made without IGST payment. DisyTax has filed over 3,000 LUTs for export businesses. Start with our GST basic terms to build a strong foundation.
Why is LUT Required for Export Business?
Under GST, exports are zero‑rated as per Section 16 of the IGST Act. The exporter has two options: (a) export under LUT without paying IGST, or (b) export with payment of IGST and claim a refund. The LUT route is preferred because it eliminates the need to block working capital in IGST payments. Without LUT, every export invoice would require IGST payment – for a business exporting ₹1 crore worth of goods at 18% GST, that means paying ₹18 lakhs upfront and then waiting for a refund. LUT avoids this cash flow burden entirely. It also simplifies invoicing – you simply issue an export invoice without GST. LUT is not a tax saving tool; it is a cash flow management tool that is essential for any regular exporter.
Who Can File LUT Under GST?
Any registered person who exports goods or services can file LUT, subject to one condition: they must not have been prosecuted for any offence under the CGST Act involving tax evasion exceeding ₹2.5 crore. Both goods exporters and service exporters (freelancers, IT companies, consultants) are eligible. There is no turnover‑based restriction. Even a small freelancer exporting services worth ₹5 lakhs per year can file LUT. The only disqualification is if you have been prosecuted for tax evasion above the specified threshold. If you have a clean GST record, you are eligible. The LUT can be filed by the proprietor, partner, or authorised signatory of the business using DSC or EVC.
Eligibility Criteria for LUT Filing
The eligibility for LUT is defined under Rule 96A of the CGST Rules. The criteria are:
- Valid GST Registration: You must be a registered person under GST.
- No Prosecution: You must not have been prosecuted under Section 132 of the CGST Act for tax evasion of ₹2.5 crore or more. If prosecuted for a lower amount, you are still eligible.
- Export Activity: You must be engaged in the export of goods or services. LUT is not applicable for domestic supplies.
- IEC (for goods): For goods exporters, Import Export Code is required. For service exporters, IEC is not mandatory but is good to have.
Example: A freelance web developer earning USD from US clients is eligible. An auto parts manufacturer exporting to Germany is eligible. Both can file LUT online.
LUT for Export of Goods
Goods exporters – manufacturers, traders, or merchant exporters – can file LUT to export goods without IGST. When filing the shipping bill with Customs, the exporter must mention the LUT ARN and mark the export as "Without payment of IGST". The goods leave India without any GST burden. The exporter can later claim a refund of accumulated ITC on raw materials, packaging, and other inputs. For example, a rice exporter in Punjab files LUT and ships a container to Saudi Arabia. The export invoice shows 0% GST. The exporter claims ITC refund on the GST paid for paddy, milling, and packing.
LUT for Export of Services
Service exporters – IT companies, consultants, freelancers, digital marketers – also use LUT. Unlike goods, there is no shipping bill for services. The LUT declaration is made on the export invoice. The exporter issues an invoice without GST, mentioning the LUT ARN. In GSTR‑1, the export is reported in Table 6A. The exporter can claim ITC refund on software, hardware, and other expenses. For example, a graphic designer in Mumbai working with a client in the UK issues an export invoice with the LUT declaration. The client pays in GBP. The designer files GSTR‑1 and claims ITC on Adobe subscription and laptop.
Benefits of Filing LUT Under GST
No Upfront IGST
Export without paying IGST. Save working capital and improve cash flow.
ITC Refund Eligible
Claim refund of accumulated input tax credit on all export‑related expenses.
Simple Invoicing
Issue export invoices without GST. Just add the LUT declaration.
One‑Time Annual Filing
File once per financial year. Valid for 12 months from the date of filing.
Global Competitiveness
Zero‑rated exports make your pricing competitive internationally.
Compliance Ease
Avoid complex refund claims for IGST paid on exports.
Export Without Payment of IGST Using LUT
Once your LUT is active, you can export any number of shipments or service invoices without paying IGST. The process works as follows:
- Issue Export Invoice: Create an invoice without GST, with the declaration "Supply meant for export under LUT without payment of IGST". Mention the LUT ARN.
- For Goods: File the shipping bill with Customs, selecting the LUT option. Goods are cleared without IGST.
- For Services: Deliver the service to the foreign client. No GST is charged.
- Report in GSTR‑1: In Table 6A, report the export invoice with the LUT option. The GST portal validates the LUT automatically.
- Claim ITC Refund: Since your output is zero‑rated, the ITC on inputs accumulates. File Form GST RFD‑01 to claim a refund.
Example: A jewellery exporter in Jaipur files LUT. They export a consignment of silver jewellery to the USA. The export invoice shows $10,000 (approx ₹8.3 lakhs) with 0% GST. No IGST is paid. The exporter claims ITC refund on silver purchase, making charges, and packaging.
Documents Required for LUT Filing
LUT filing is primarily declaration‑based. You do not need to upload physical documents. However, you should have the following ready:
- GSTIN and login credentials: For accessing the GST portal.
- Digital Signature Certificate (DSC) or Aadhaar‑linked mobile for EVC: For signing the LUT.
- IEC (Import Export Code): While not mandatory for LUT filing itself, it is required for goods exports and should be linked to your GSTIN.
- Bank account details: As per GST registration, for refund purposes.
No physical documents are submitted. The LUT is a simple online form. DisyTax files LUTs for clients without any paperwork hassle.
Step‑by‑Step Process to File LUT Online
Filing an LUT is a quick online process. Follow these steps:
- Login to GST Portal: Go to gst.gov.in and log in with your GSTIN and password.
- Navigate to LUT Filing: Click on Services → User Services → Furnish Letter of Undertaking (LUT).
- Select Financial Year: Choose the financial year for which you want to file the LUT (e.g., 2026‑27).
- Fill the Declaration: The system auto‑populates your details. You need to confirm that you have not been prosecuted for tax evasion of ₹2.5 Cr or above and that you will comply with all export obligations.
- Sign the LUT: Use your Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) to sign.
- Submit: Click on submit. The LUT is filed instantly and is effective immediately. You will receive an Application Reference Number (ARN).
There is no fee for LUT filing. The entire process takes less than 5 minutes. DisyTax offers LUT filing as a service – we file it within 24 hours on your behalf.
LUT Validity Under GST
The LUT is valid for one financial year. For example, an LUT filed on 15th April 2026 for FY 2026‑27 is valid until 31st March 2027. It covers all exports made during that financial year. You must file a fresh LUT before the start of the next financial year. If you forget to renew, your exports after 31st March will not be covered under LUT, and you will have to pay IGST on them. The LUT does not have a mid‑year expiry; it runs for the entire financial year. DisyTax sends automatic reminders to clients for LUT renewal every March.
Renewal of LUT Every Financial Year
The LUT must be renewed annually. The process is identical to the initial filing – you simply file a new LUT for the next financial year. There is no concept of automatic renewal. If you forget to renew, your exports will not be covered, and you may face demands for IGST along with interest. It is best to file the LUT for the upcoming financial year in the last week of March or the first week of April. DisyTax handles LUT renewals for all its clients proactively.
Consequences of Export Without LUT
If you export without a valid LUT, you must pay IGST on every export invoice. The IGST rate is the same as the domestic GST rate for that product or service (e.g., 18%). This ties up your working capital. You then need to claim a refund of the IGST paid. For goods, the refund is automatic when the shipping bill data matches GSTR‑1. For services, the refund process is manual via RFD‑01. Additionally, if you export without LUT and fail to pay IGST, the export is not zero‑rated, and you may lose the right to claim ITC. It is strongly recommended to file LUT before your first export of the financial year.
LUT vs Export With Payment of IGST
| Parameter | Export Under LUT | Export With Payment of IGST |
|---|---|---|
| Upfront IGST | Not required | Required on each export |
| Cash Flow | Preserved | IGST blocks working capital |
| Refund Process | ITC refund via RFD‑01 | IGST refund automatic (goods) / RFD‑01 (services) |
| Compliance | Annual LUT filing | No LUT required; pay IGST each time |
| Best For | Regular exporters | Occasional or first‑time exporters |
GST Return Filing After LUT Filing
Filing LUT does not change your return filing obligations. You must still file:
- GSTR‑1: Report all export invoices in Table 6A with the LUT option selected.
- GSTR‑3B: Report export turnover as zero‑rated supply. Claim ITC.
- GSTR‑9: Annual return.
The LUT ARN is validated by the portal when you report exports in GSTR‑1. If the LUT has expired or is not filed, the portal may restrict you from filing export details under the LUT option. Ensure your LUT is active before you file your returns.
Common Mistakes While Filing LUT
❌ Forgetting to renew LUT at the start of the financial year
✅ Solution: Set a calendar reminder for the last week of March. File LUT for the new FY before 1st April.
❌ Filing LUT with incorrect GSTIN or business details
✅ Solution: Verify all auto‑populated details on the portal before submitting. Update your profile if needed.
❌ Not having IEC linked with GSTIN for goods exports
✅ Solution: Ensure your IEC is updated and linked with your GSTIN on the DGFT portal before filing LUT.
❌ Filing LUT but not mentioning the ARN on export invoices
✅ Solution: Always include the LUT ARN and the declaration on every export invoice.
Penalties and Compliance Requirements
- Non‑compliance with LUT conditions: If you fail to realise export proceeds or violate any condition, the LUT may be revoked, and you may be required to pay IGST along with interest.
- Export without LUT or IGST: The export may be treated as a domestic supply, and you may be liable to pay full GST along with penalty.
- Late filing of returns: ₹50/day per return (₹25 CGST + ₹25 SGST).
- Prosecution: In case of wilful tax evasion, prosecution under Section 132 may apply.
Maintaining proper export documentation and timely filing of returns are essential to keep your LUT valid. See our GST late fees and cancellation rules.
Frequently Asked Questions (FAQs) on LUT for Export Business
What is LUT under GST?
LUT (Letter of Undertaking) is a declaration that allows exporters to export without paying IGST. It is filed online and valid for one financial year.
Who can file LUT under GST?
Any GST‑registered exporter of goods or services, provided they have not been prosecuted for tax evasion of ₹2.5 Cr or above.
How to file LUT online?
Login to GST portal → Services → Furnish LUT → Select FY → Fill declaration → Sign with DSC/EVC → Submit.
Is LUT mandatory for exporters?
No, but highly recommended. Without LUT, you must pay IGST on exports and claim refund, which affects cash flow.
What is the validity of LUT?
One financial year. File a fresh LUT before the start of each new financial year.
Do I need IEC to file LUT?
For goods exporters, IEC is required. For service exporters, it is not mandatory but recommended.
What happens if I don't renew LUT?
Your exports will not be covered under LUT. You will have to pay IGST on them and claim a refund.
Can I file LUT if I have both goods and services exports?
Yes, one LUT covers both goods and services exports. You don't need separate LUTs.