If you are an exporter of goods or services from India, underding LUT for Export is important and obtaining a Letter of Undertaking (LUT) can save significant working capital by allowing exports without payment of IGST.
Instead of paying IGST first and claiming a refund later, eligible exporters can furnish an LUT and export without paying tax upfront.
This comprehensive guide explains everything about LUT for Export under GST, including eligibility, validity, online filing process, documents required, benefits, due date, and frequently asked questions.
If you are searching for LUT for Export, LUT under GST, or How to apply for LUT online, this guide covers everything you need to know.
What is LUT Under GST?
LUT (Letter of Undertaking) is a declaration furnished by an eligible exporter under the Goods and Services Tax (GST) law, allowing the export of goods or services without payment of Integrated GST (IGST).
By furnishing an LUT, the exporter undertakes to comply with the provisions of the GST law and complete exports within the prescribed timelines.
The facility is provided under Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017, read with Rule 96A of the CGST Rules, 2017.
Why is LUT for Export and Import?
Without an LUT, an exporter generally has two options:
Option 1
Export after paying IGST and later claim a refund.
Option 2
Export under LUT without paying IGST. Most exporters prefer the second option because it improves cash flow and reduces the blockage of working capital.
Who Can Apply for LUT?
Almost every registered exporter can furnish an LUT.
Eligible persons include:
- Exporters of goods
- Exporters of services
- Merchant exporters
- Manufacturers
- Software exporters
- Consultants providing services outside India
- Freelancers exporting services
- E-commerce exporters
However, persons prosecuted for tax evasion involving the prescribed monetary limit may not be eligible and may instead be required to furnish a bond with a bank guarantee.
Is There Any Turnover Limit for LUT?
No.
There is no minimum or maximum turnover limit for obtaining an LUT.
Whether your exports are worth ₹50,000 or ₹500 crore, you can apply for an LUT if you satisfy the eligibility conditions.
This makes LUT one of the most beneficial compliance mechanisms available under GST.
Benefits of Furnishing LUT
Obtaining an LUT offers several advantages:
1. Export Without Payment of IGST
The biggest benefit is that exports can be made without paying Integrated GST.
2. Better Cash Flow
No need to block funds by paying IGST first and claiming refunds later.
3. Faster Export Operations
Businesses can export immediately after furnishing LUT.
4. Reduced Compliance Burden
Avoids the refund process relating to payment of IGST on exports.
5. Improves Working Capital
Businesses retain liquidity that would otherwise remain blocked until refunds are processed.
Validity of LUT
An LUT remains valid for one financial year.
Every exporter must furnish a fresh LUT for each financial year.
For example:
- LUT filed for FY 2026–27 remains valid until 31 March 2027.
A new LUT should be filed before making exports in the next financial year.
Documents Required for LUT
Generally, the following information is required:
- GSTIN
- PAN
- Business Name
- Address of Principal Place of Business
- Authorized Signatory Details
- Witness Details (where required)
- Digital Signature Certificate (DSC) or Electronic Verification Code (EVC)
Since LUT filing is online, no physical documents are usually required to be submitted.
How to Apply for LUT Online?
The application can be filed through the GST Portal.
Step 1
Login to the GST Portal.
Step 2
Go to: Services → User Services → Furnish Letter of Undertaking (LUT)
Step 3
Select the relevant Financial Year.
Step 4
Fill in the required declaration.
Step 5
Upload supporting details if required.
Step 6
Verify using DSC or EVC.
Step 7
Submit the application. After successful submission, an Acknowledgement Reference Number (ARN) is generated.
Is LUT Approval Required?
Generally, LUT becomes effective upon successful filing on the GST Portal.
In most cases, no separate approval from the GST officer is required.
The ARN generated on successful submission serves as proof of furnishing the LUT.
Time Limit for Export Under LUT
The exporter must comply with the timelines prescribed under Rule 96A, including:
Export of Goods
Goods should generally be exported within the prescribed period from the date of issue of the invoice.
Export of Services
Payment in convertible foreign exchange or Indian Rupees (where permitted by the Reserve Bank of India) should generally be received within the prescribed period.
Failure to comply may attract the consequences provided under the GST law.
LUT vs Bond Under GST
| Particular | LUT | Bond |
|---|---|---|
| IGST Payment | Not Required | Not Required |
| Bank Guarantee | Not Required (Generally) | Usually Required |
| Filing Process | Simple | More Detailed |
| Cost | Nil | Higher Compliance Cost |
| Eligible Exporters | Yes | Mainly where LUT is not permitted |
For most genuine exporters, LUT is the preferred option.
Can Service Exporters Furnish LUT?
Yes.
Service exporters are also eligible to furnish LUT provided they satisfy the conditions prescribed under GST.
Examples include:
- IT Companies
- Legal Consultants
- Chartered Accountants
- Architects
- Designers
- Digital Marketing Agencies
- Freelancers
- Software Developers
Common Mistakes While Filing LUT
Businesses should avoid these common errors:
- Selecting the wrong financial year.
- Filing LUT after making exports.
- Forgetting to renew LUT every financial year.
- Incorrect GSTIN details.
- Wrong authorised signatory.
- Not complying with export timelines.
- Failure to maintain export documentation.
Frequently Asked Questions (FAQs)
What is LUT under GST?
A Letter of Undertaking (LUT) is a declaration that allows eligible exporters to export goods or services without payment of IGST.
Is LUT mandatory for exporters?
No. An exporter may either:
- Export under LUT without payment of IGST, or
- Export on payment of IGST and later claim a refund.
Is there any turnover limit for LUT?
No. There is no turnover limit for furnishing LUT under GST.
How long is LUT valid?
LUT remains valid for one financial year and must be renewed annually.
Can service exporters apply for LUT?
Yes. Eligible exporters of services can also furnish LUT.
Is bank guarantee required for LUT?
No. Unlike a bond, furnishing an LUT generally does not require a bank guarantee.
Can a freelancer exporting services apply for LUT?
Yes. Freelancers exporting services outside India may furnish LUT, subject to the GST provisions.
Conclusion
A Letter of Undertaking (LUT) is one of the most valuable compliance benefits available to exporters under the GST regime. By allowing exports without the upfront payment of IGST, it helps businesses preserve working capital, simplify compliance, and streamline export operations.
Since there is no turnover limit for obtaining an LUT, exporters of every size—from freelancers and startups to large manufacturers and service providers—can benefit from this facility. The key is to file the LUT at the beginning of each financial year, maintain proper export documentation, and comply with the prescribed timelines under the GST law.
The information in this article is general in nature and should not be relied upon as legal advice. If you require any further information, you may reach out at hello@lawfluencers.com.