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GST Letter of Undertaking (LUT): A Complete Guide

Are you familiar with India’s essential export regulations?

If you receive payments from abroad in foreign currency, you are exempt from paying GST.

Per the export regulations set by the Indian government, the export of goods and services is considered a zero-rated supply if payments are received in foreign currency.

Since payments are received later, the GST department requires suppliers to pay IGST on each transaction and then claim a refund of the IGST paid once the goods or services are exported. Alternatively, there is an option to forego GST payment.

The Letter of Undertaking (LUT). But what exactly is an LUT, and how can you leverage it for smoother exports? This blog aims to be your one-stop guide to effectively understanding and utilizing the GST LUT.

What is a GST LUT?

Think of the LUT as a legal commitment to the government, declaring your intent to fulfill all GST obligations related to your exports.

It helps you do better tax planning and allows you to export goods or services without paying the Integrated Goods and Services Tax (IGST) upfront. This can significantly improve your cash flow and working capital.

Who needs an LUT?

Any person can apply for LUT in GST RED 11, if they intend to supply goods or services to Overseas or SEZs for their authorized operations under Rule 96A CGST 2017.

Conditions of LUT:

By applying the LUT, the registered person legally agrees to pay the tax due along with the interest. Within a period of —

  • 15 days after the expiry of three months, or a further period if allowed by the Commissioner, from the invoice date for export, if the goods are not exported out of India, or

  • 15 days after the expiry of one year, or a further period if allowed by the Commissioner, from the invoice date for export, In a condition that the payment of such services is not received by the exporter in convertible foreign exchange.

Also, in terms of Circular No. 45/19/2018 dated 30.05.2018, it has been clarified that in respect of refund claims on account of export of non-GST and exempted goods without making upfront payment of integrated tax, LUT/bond is not required.

The Government vides Notification No. 37/2017 – Central Tax dated 04.10.2017 has clarified that any registered person who has been prosecuted for any offense under GST or any existing laws in force with tax evaded exceeding Rs.2.5 crores shall not be eligible for furnishing LUT.

Benefits of using an LUT:

  • Improved cash flow: By avoiding upfront IGST payment, you free up working capital for other business needs.

  • Faster exports: No need to report the tax liability in the export invoices, hence easy settlement by the importers.

  • Simplified compliance: LUT simplifies documentation and compliance processes for exports.

  • Tax Planning: It helps you to plan your GST return, which gives you the freedom of easy export


  • KYC documents of two witnesses

  • Nature of employment of witnesses

  • Copy of last year’s LUT (if any).

Steps to obtain an LUT:

Eligibility check: Ensure you meet the eligibility criteria mentioned above.

File Form GST RFD-11: This form requires details like your GSTIN, financial year, and witness information. You can file it online on the GST portal post-digital signature by primary/any other authorized signatory.

Submit with Digital Signature Certificate (DSC) or EVC (Electronic Verification Code): Choose your preferred signing method and submit the form.

Procedure for submitting a LUT certificate.

  • First, you have to visit the GST portal to submit the LUT certificate. Under “SERVICE TAB,” Select “USER SERVICES.”

  • In the drop-down, there is an option to FURNISH LETTER OF UNDERTAKING (LUT)

  •  After selecting this option, you have to choose the financial year for which you want to upload a certificate instead of uploading a PDF copy of the last financial year’s LUT (if any).

  •  Enter the names of the two witnesses along with their addresses and occupations, after which you have to fill in the form.

  • After completing this process, you can preview the form. The application can be signed with a digital signature certificate or an electronic identification code.

  • The letter suggests two options. Once signed and submitted, the form cannot be edited. You can download the undertaking application form from the GST portal.

Important points to remember:

  • An LUT is valid for a financial year. You need to renew it annually.

  • Failure to comply with GST obligations after furnishing an LUT can lead to penalties (including interest) and cancellation of the LUT.

  • Maintaining proper records and documentation to support your export claims is crucial.

At Mercurius, we offer our clients support and guidance with various GST-related issues, including GST registration, filing returns, refund claims, and audits. If you have any queries about GST compliance, please contact us.


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