The GST LUT Form, or Letter of Undertaking (LUT), is a crucial document for businesses engaged in exporting goods or services from India under the Goods and Services Tax (GST) regime. Its primary purpose is to allow exporters to make “zero-rated supplies” without having to pay Integrated GST (IGST) upfront.
What is a Letter of Undertaking (LUT) in GST?
A Letter of Undertaking is a declaration filed by an exporter stating that they will fulfill all the requirements prescribed under the GST law for exporting goods or services without paying IGST. It essentially acts as a guarantee to the government that the exporter will ensure the goods/services are indeed exported and all associated conditions are met.
Form GST RFD-11 is the specific form used to furnish the LUT online on the GST portal.
Purpose and Benefits of Filing GST LUT
The main purpose of filing an LUT is to facilitate exports and prevent the blocking of working capital for exporters.
Export without IGST Payment
This is the biggest advantage. By filing an LUT, exporters can supply goods or services for export without charging and paying IGST.
Improved Cash Flow
Exporters don’t have to pay IGST upfront on their exports, which means their working capital is not blocked. This significantly improves liquidity and cash flow for businesses involved in international trade.
Avoidance of Refund Process
If an exporter pays IGST on exports, they would then have to go through the often lengthy and cumbersome process of claiming a refund. An LUT bypasses this, saving time and administrative effort.
Simplified Compliance
The process of filing an LUT online is relatively straightforward, making it easier for eligible exporters to comply with GST regulations for zero-rated supplies.
Enhanced Competitiveness
Not having to factor in the upfront IGST cost makes Indian exports more competitive in the global market.
Who is Eligible to File GST LUT?
Generally, all registered persons engaged in the export of goods or services can furnish an LUT. However, there’s a key condition:
- The person or business should not have been prosecuted for any offence under the CGST Act, 2017, or the Integrated Goods and Services Tax Act, 2017, or any of the existing laws, where the amount of tax evaded exceeds ₹250 lakh (₹2.5 crore).
If an exporter does not meet this eligibility criterion, they cannot file an LUT and must opt for the alternative method (explained below).
Alternative to LUT: Export under Bond
If an exporter is not eligible to furnish an LUT (e.g., due to past prosecution for tax evasion exceeding the specified limit), they must furnish an Export Bond instead.
Export Bond
This is a financial guarantee provided to the jurisdictional GST officer. It typically involves a bond on non-judicial stamp paper, often accompanied by a bank guarantee (BG). The bank guarantee usually covers a certain percentage (e.g., 15%) of the estimated tax liability on the exports. The Commissioner has the power to waive the bank guarantee requirement based on the exporter’s track record.
Process
Filing a Bond generally involves more paperwork and a physical submission process compared to the online LUT.
Validity Period of GST LUT
- An LUT is valid for the entire financial year in which it is submitted.
- This means, for exports made in FY 2025-26 (April 1, 2025, to March 31, 2026), you need to file an LUT for FY 2025-26.
- A fresh LUT must be furnished for each financial year to continue availing the benefit of exporting without IGST payment. It is advisable to file the new LUT before the previous one expires (i.e., before April 1st of the new financial year).
Documents Required for GST LUT Filing
The process for filing LUT online has been streamlined, and generally, no physical documents need to be submitted to the jurisdictional office. However, you will need the following information and a few documents ready for reference:
- GSTIN of the taxpayer.
- GST Registration Certificate (for reference).
- Aadhaar Card/PAN of the authorized signatory.
Details of Two Independent Witnesses
Their names, occupations, and addresses. These witnesses effectively verify the declaration made in the LUT. You should also have their identity and address proofs for your records, as the GST portal may require these details.
Previous LUT (if applicable)
If you had filed an LUT manually in previous periods, you might need to upload a copy (PDF or JPEG, max 2 MB) when filing the new online LUT. However, this is usually for past manual filings, not for subsequent online filings.
How to File GST LUT Form Online (Step-by-Step Process)
The filing of GSTR RFD-11 is entirely online through the GST portal
Login to GST Portal
Go to www.gst.gov.in and log in using your GSTIN, username, and password.
Navigate to LUT Section
Go to “Services” > “User Services” > “Furnish Letter of Undertaking (LUT)”.
Select Financial Year
From the dropdown menu, select the financial year for which you want to file the LUT (e.g., “2025-26”).
Upload Previous LUT (if applicable)
If you have a manually furnished LUT from a previous period, you can upload it here.
Self-Declaration
Read and tick all the checkboxes under the “Self-Declaration” section. These are important declarations, including:
- Undertaking to export goods/services within three months (for goods) or receive payment within one year (for services) from the invoice date.
- Commitment to comply with all GST provisions related to exports.
- Agreement to pay IGST along with interest (18% p.a.) if the export conditions are not met.
Witness Details
Enter the Name, Occupation, and Address of two independent witnesses. These witnesses should be aware of your business operations and the declaration you are making.
Authorized Signatory and Place
Select the name of the authorized signatory (from the dropdown list) and enter the “Place” where the LUT is being filed.
Save and Preview
You can save the application at any stage (for up to 15 days) and preview it to ensure all details are correct.
Submit with DSC/EVC
- DSC (Digital Signature Certificate): Mandatory for companies and LLPs.
- EVC (Electronic Verification Code): For other taxpayers like proprietorships and partnerships (OTP sent to registered mobile and email).
ARN Generation
Upon successful submission, an Application Reference Number (ARN) will be generated. You will receive an SMS and email notification. You can download the acknowledgement for your records.
Mention ARN on Invoices
It is crucial to mention the generated ARN on all your export and SEZ invoices to validate the exemption from IGST.
Consequences of Not Filing GST LUT
If an eligible exporter fails to furnish a valid LUT (or Bond), they cannot make zero-rated supplies without paying IGST.
Mandatory IGST Payment
The exporter will be required to pay IGST on all their export supplies.
Blocked Working Capital
Their working capital will get blocked due to the upfront payment of IGST.
Refund Process
They will then need to go through the refund application process (Form GST RFD-01/01A) to claim back the IGST paid on exports. This process can be time-consuming and may lead to liquidity issues.
Potential Penalties/Demands
While typically a procedural lapse, consistently failing to adhere to the LUT requirement and instead relying on the refund mechanism can attract scrutiny or lead to challenges from tax authorities, especially if proper documentation is not maintained.
Loss of Benefits
The core benefits of GST for exporters (cash flow, ease of doing business) are undermined.
Filing the GST LUT is a straightforward and essential compliance step for exporters in India, allowing them to optimize their cash flow and streamline their international trade operations by avoiding upfront IGST payments. Get GST LUT form with our experts.