LUT - Letter of Undertaking

A Letter of Undertaking (LUT) is a declaration filed by a GST-registered exporter that lets them export goods or services, or supply to a Special Economic Zone, without paying Integrated GST (IGST) upfront. It is the standard route for zero-rated supplies under Section 16 of the IGST Act, 2017, and is furnished in Form GST RFD-11 under Rule 96A of the CGST Rules, 2017. By filing an LUT, the exporter undertakes to fulfil the export conditions; if they fail, they become liable to pay the tax with interest.

Legal basis

Section 16 of the IGST Act allows a zero-rated supply to be made in two ways: under an LUT or bond without payment of tax (claiming refund of unutilised input tax credit), or on payment of IGST (claiming refund of the tax paid). Notification No. 37/2017 – Central Tax extended the LUT facility to almost all registered exporters, replacing the earlier bond-only regime.

Who can file, and validity

• Any registered person exporting goods/services or supplying to an SEZ can file, except those prosecuted for tax evasion exceeding Rs 2.5 crore under GST or an earlier law — they must furnish a bond with bank guarantee instead.
• An LUT is valid for one financial year and must be filed afresh online each year on the GST portal.

Conditions to keep it valid

Goods must be exported within three months of the export invoice date, and for services the foreign-exchange payment must be received within one year. If these deadlines are missed, the exporter must pay the applicable IGST along with 18% interest, failing which the LUT facility can be withdrawn until dues are cleared.