LUT - Letter of Undertaking Export Without Upfront IGST Payment
For Indian exporters, one GST decision has an outsized effect on cash flow: whether to pay IGST upfront on every export shipment and claim it back later, or use a Letter of Undertaking (LUT) to export without paying it at all. For most eligible exporters, the LUT route is the difference between capital sitting locked up in a refund queue and capital staying in the business.
This guide covers what an LUT is, why it matters, who's eligible, how to furnish it on the GST Portal, and the conditions that come attached to it.
For Indian exporters, one GST decision has an outsized effect on cash flow whether to pay IGST upfront on every export shipment and claim it back later, or use a Letter of Undertaking (LUT) to export without paying it at all. For most eligible exporters, the LUT route is the difference between capital sitting locked up in a refund queue and capital staying in the business.
This guide covers what an LUT is, why it matters, who's eligible, how to furnish it on the GST Portal, and the conditions that come attached to it.
What Is an LUT?
LUT stands for Letter of Undertaking. Under Section 16(3) of the IGST Act, 2017, an eligible registered person can furnish an LUT to make zero-rated supplies without payment of IGST, subject to the conditions and procedures prescribed under GST law.
In simple terms: an LUT allows qualifying exports to be made without paying IGST upfront. Instead of paying tax on the export and later applying for a refund, an exporter who has furnished a valid LUT can ship goods or services directly without that outlay.
Why Does LUT Matter for Exporters?
The core benefit is working capital. Without an LUT, an exporter pays IGST at the time of export and then waits for that amount to be refunded a process that ties up cash for weeks or months per shipment, which adds up quickly for businesses exporting regularly.
When an eligible exporter exports under LUT, the qualifying zero-rated supply is made without payment of IGST in the first place, so there's no tax outlay to recover. Separately, the law also provides for refund of unutilised input tax credit (ITC) for eligible zero-rated supplies made without payment of integrated tax, subject to prescribed conditions meaning exporters using LUT can still claim back ITC accumulated on their inputs, just without the added step of paying and reclaiming IGST on the export itself.
For businesses managing frequent shipments, this distinction directly affects how much working capital is available at any given time for growth, inventory, or operations rather than sitting in a government refund pipeline. Many exporters pair LUT filing with proper export documentation planning so that GST compliance and shipping paperwork move in sync rather than becoming two separate bottlenecks.
LUT ≠ GST Exemption
This is a distinction worth being precise about: furnishing an LUT does not mean an exporter is exempt from GST compliance.
Exports are treated as zero-rated supplies under the IGST Act a specific classification, not a blanket exemption. The LUT is simply the mechanism that enables an eligible registered person to make that qualifying zero-rated supply without payment of IGST. All other GST obligations return filing, invoicing requirements, and compliance with the conditions attached to the LUT still apply in full.
How Do You Furnish an LUT?
LUT is furnished electronically on the GST Portal, in Form GST RFD-11. The process is:
- Log in to the GST Portal.
- Navigate to Services → User Services → Furnish Letter of Undertaking (LUT).
- Select the financial year for which the LUT is being furnished the portal requires this at the start of the process.
- Complete and submit Form GST RFD-11.
An LUT is generally furnished for a full financial year, so exporters need to file a fresh one at the start of each new financial year to keep exporting under the LUT route without interruption. Getting the GST side of export compliance right alongside your shipping documentation is where a lot of exporters run into friction Zipaworld's ZipAI EximGPT can help answer compliance and classification questions that come up while preparing an export shipment, so LUT filing doesn't become a separate headache from the logistics itself.
LUT Comes With Conditions
An LUT is an undertaking, not a free pass. Exporters using the LUT route must comply with the prescribed conditions, safeguards, and procedures under GST law, including timelines for realising export proceeds and completing the export itself.
If the applicable conditions aren't fulfilled for instance, if goods aren't exported within the prescribed time frame tax and interest consequences can arise under the relevant provisions, specifically Rule 96A of the CGST Rules, 2017. In practice, this means LUT is a compliance commitment that needs to be tracked shipment by shipment, not a one-time filing that can be forgotten about for the rest of the year.
The Takeaway
For eligible exporters, LUT provides a GST-compliant route to make qualifying zero-rated exports without payment of IGST freeing up working capital that would otherwise sit in a refund cycle.
- LUT ≠ GST exemption.
- LUT = export without upfront IGST payment, subject to conditions.
Keep the GST Side and the Shipping Side Moving Together
Getting both the GST filing and the shipment logistics right matters equally here. If you're coordinating LUT-based exports alongside customs documentation, Zipaworld's Customs Clearance services and digital freight forwarding platform help keep the shipping side of the process moving as smoothly as the tax side, with Track and Trace giving visibility into shipment status once goods are on the move.
Important Note
This content is for general awareness and does not constitute tax, legal, or professional advice. Applicability may vary based on the exporter, transaction, and prevailing GST provisions. Exporters should verify current requirements on the GST Portal or consult a tax professional before filing.