GST LUT Filing —Export Without Paying IGST

GST LUT (Letter of Undertaking) is a legally binding undertaking filed by a registered exporter in Form RFD-11 on the GST Common Portal, allowing them to supply goods or services as zero-rated supplies without paying Integrated GST (IGST). The legal basis for LUT is Section 16(3)(a) of the IGST Act, 2017 read with Rule 96A of the CGST Rules, 2017. Under Section 16, all exports of goods and services, and supplies to SEZ units and SEZ developers, are treated as zero-rated supplies — meaning GST rate is effectively 0% on the final output, though inputs continue to carry GST credit.

For zero-rated supplies, a registered exporter has two options: (a) pay IGST on the export invoice and then claim a refund of the IGST paid from the GST department; or (b) file an LUT and export without paying any IGST at all. Option (b) — the LUT route — is strongly preferred by virtually all exporters because Option (a) requires paying IGST upfront (blocking working capital) and then waiting 3–6 months (sometimes longer) for the GST department to process and disburse the refund. With LUT, the working capital that would have been tied up in the IGST refund queue stays available in the business — a critical advantage for export-intensive businesses operating on thin margins with high invoice volumes.

The LUT is filed once per financial year (April to March) and covers all exports and SEZ supplies made during that year. Filing is entirely online on the GST portal — Form RFD-11 — and upon submission, an Application Reference Number (ARN) is generated instantly. No officer approval is required; the LUT becomes active the moment the ARN is generated. The ARN must be quoted on all export invoices issued under the LUT during that financial year. Taxvio ensures the LUT is filed accurately, on time (ideally before April 1 each year), and that the ARN reference is correctly incorporated into your export invoice template.

A frequently misunderstood point is that LUT does not mean you forgo Input Tax Credit on inputs used in exported goods or services. You can still accumulate ITC on purchases (raw materials, inputs, input services) and claim a refund of the accumulated ITC separately via Form RFD-01 within 2 years. This is the ITC refund on the LUT route — separate from the IGST refund on the non-LUT route. Taxvio assists with both LUT filing and subsequent ITC refund applications for exporters.

Filing an LUT is just the first step — there are specific compliance obligations that exporters must fulfil to remain validly covered under the LUT throughout the year. Failure to comply with these obligations can result in the exports being treated as taxable domestic supplies, triggering IGST demands with 18% per annum interest.

The most time-critical obligation is the export completion timeline. Under Rule 96A(1) of the CGST Rules, goods must be physically exported (customs cleared and goods leaving India) within 3 months of the export invoice date. For services, foreign exchange payment must be received within 1 yearof the service invoice date. If these timelines are not met, the exporter must pay IGST on the invoiced value plus 18% per annum interest — unless an extension is obtained from the jurisdictional Commissioner for sufficient cause.

For GSTR-1 reporting, all export invoices made under LUT must be reported in Table 6A (exports without payment of tax) of GSTR-1 — with the shipping bill number, port code, and export date for goods exports; and with the foreign exchange receipt details for service exports. If invoices are incorrectly placed in Table 4A (B2B domestic supplies) instead of Table 6A, ITC will be blocked for the buyer and refund claims will be rejected. Taxvio reconciles GSTR-1 export tables monthly as part of the return filing service to prevent such mismatches.