If you are exporting goods or services without paying GST, filing an LUT (Letter of Undertaking) is essential to avoid unnecessary tax blockage.

What is LUT under GST?

LUT (Letter of Undertaking) is a document that allows exporters to supply goods or services without paying IGST. Instead of paying tax and claiming a refund later, you can export tax-free using LUT.

Who can file LUT?

You can file LUT if:

• You are a registered GST taxpayer
• You are exporting:
  • Goods outside India
  • Services to foreign clients
• You have not been prosecuted for tax evasion exceeding ₹2.5 crore

Legal Provision

• As per Section 16 of the IGST Act, 2017, exports are treated as zero-rated supplies
• Rule 96A of the CGST Rules, 2017 allows export under LUT without payment of IGST

Simple Meaning:
Government allows exports without GST to promote international trade.

Benefits of Filing LUT

• No need to pay IGST on exports
• No need to claim refunds (saves time & cash flow)
• Simplifies compliance
• Faster working capital cycle

Documents Required for LUT

• GST Registration Certificate
• PAN of the business
• IEC Code (Import Export Code)
• Identity & Address proof of authorized signatory

How to File LUT (Step-by-Step)

1. Login to GST Portal
2. Go to Services → User Services → Furnish LUT
3. Select financial year
4. Fill required details
5. Upload previous LUT (if applicable)
6. Sign using:
   • DSC (for companies/LLPs)
   • EVC (for others)
7. Submit

Validity of LUT

• LUT is valid for one financial year
• Must be renewed every year

When LUT is Not Allowed?

If LUT conditions are not fulfilled, exporter must:

• Pay IGST on exports
• Then claim refund later

Practical Example

Suppose a freelancer exports services worth ₹10,00,000:

• Without LUT → Pay GST (₹1,80,000) → Claim refund later
• With LUT → No GST payment → Better cash flow

Practical Tip / CA Insight

Always file LUT at the beginning of the financial year (April) to avoid last-minute issues.
Also ensure LUT is filed before making export invoices, otherwise complications may arise.

FAQs

1. Is LUT mandatory for exporters?

Yes, if you want to export without paying GST.

2. Is LUT required every year?

Yes, it must be filed annually.

3. Can LUT be filed offline?

No, it must be filed online via GST portal.

4. What happens if LUT is not filed?

You must pay IGST and then claim refund.

5. Is LUT required for service exporters?

Yes, LUT applies to both goods and services exporters.

Conclusion

Filing LUT is a simple but powerful compliance tool for exporters to save tax blockage and improve cash flow. Timely filing ensures smooth export operations without unnecessary GST burden.

For expert guidance on this topic, contact your tax professional today.