What is LUT ? How to file LUT ? Documents required for LUT ?

 Under the Goods and Services Tax (GST) Act, exports are treated as zero-rated supplies. This means exporters do not have to bear the burden of GST on their exports. However, exporters normally have two options:

Export with payment of IGST and claim refund later, or

Export without payment of IGST by filing an LUT (Letter of Undertaking).

Most exporters choose the second option because it improves their cash flow and avoids the refund process.

What is LUT (Letter of Undertaking)?

LUT (Letter of Undertaking) is a declaration filed by a registered exporter on the GST portal stating that they will comply with the GST rules while exporting goods or services without paying Integrated GST (IGST).

By filing an LUT, the exporter promises the government that they will fulfill all export conditions and bring the export proceeds within the prescribed time.

This facility is provided under Rule 96A of the GST Rules.

Once the LUT is approved, the exporter can make zero-rated supplies without payment of tax during that financial year.

Purpose of LUT in GST

The main purpose of LUT is to avoid payment of IGST at the time of export. Without LUT, exporters would need to:

Pay IGST on export invoices

Wait for the refund from the government

This process can block working capital. Therefore, LUT helps exporters save time and maintain better liquidity.

Who Can File LUT?

Any registered taxpayer who exports goods or services can file an LUT.

The following persons are eligible:

Exporters of goods outside India

Exporters of services to foreign clients

Suppliers to SEZ Units

Suppliers to SEZ Developers

Earlier, exporters had to submit a bond with a bank guarantee if they were not eligible for LUT. But now most exporters can file LUT easily online.

Conditions for Filing LUT

To file LUT, the taxpayer must satisfy certain conditions:

The taxpayer must be registered under GST.

The taxpayer should not have been prosecuted for tax evasion exceeding ₹2.5 crore under GST or previous laws.

The exporter must comply with export rules and regulations.

If these conditions are satisfied, the exporter can submit LUT online.

Documents Required for LUT

Generally, very few documents are required to file LUT. These include:

GSTIN (GST Registration Number)

Authorized signatory details

Two witnesses’ name and address

Digital Signature Certificate (DSC) or EVC verification

Since the process is completely online, physical documents are not usually required to be submitted.

Validity of LUT

An LUT is valid for one financial year only.

For example:

LUT filed for FY 2025–26 will be valid until 31 March 2026.

Exporters must file a new LUT every financial year to continue exporting without paying IGST.

How to File LUT on the GST Portal (Step-by-Step Process)

The LUT can be filed online through the official portal of the

Goods and Services Tax Network.

Step 1: Login to GST Portal

Visit the GST portal and login using your GSTIN and password.

Step 2: Go to User Services

Navigate to:

Services → User Services → Furnish Letter of Undertaking (LUT)

Step 3: Select Financial Year

Choose the financial year for which you want to file the LUT.

Step 4: Fill the Declaration

Tick the required declaration confirming that you will follow the GST rules for exports.

Step 5: Enter Witness Details

Provide details of two witnesses, including their names and addresses.

Step 6: Verify and Submit

Submit the application using:

Digital Signature Certificate (DSC), or

Electronic Verification Code (EVC)

Step 7: Generate ARN

After submission, an Acknowledgement Reference Number (ARN) will be generated as confirmation.

You can also download the LUT certificate from the portal.

Advantages of Filing LUT

Filing LUT provides several benefits to exporters:

1. No Need to Pay IGST

Exporters can export goods or services without paying IGST.

2. Better Cash Flow

Since tax payment is avoided, working capital remains available for business operations.

3. Simple Online Process

The LUT filing process is fully online and quick.

4. No Bank Guarantee Required

Unlike bonds, LUT does not require any bank guarantee or security.

5. Faster Export Transactions

Exporters can conduct international trade without waiting for tax refunds.

Conclusion

The Letter of Undertaking (LUT) is an important facility for exporters under GST. It allows exporters to make zero-rated supplies without paying IGST, thereby reducing the financial burden and improving business cash flow.

Exporters must ensure that they file the LUT every financial year on the GST portal and comply with all export regulations.

By using LUT properly, businesses involved in international trade can simplify their tax compliance and focus more on expanding their exports.

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