Any GST-registered person who intends to export goods or services, or supply to an SEZ unit or developer, without paying IGST must first furnish a Letter of Undertaking in Form GST RFD-11 under Rule 96A of the CGST Rules, 2017. It is filed online, is free, is valid for the financial year in which it is furnished, and must be in place before the first zero-rated invoice of each year. Every registered person is eligible except one who has been prosecuted for an offence under the GST or earlier laws involving tax evasion above ₹2.5 crore (Notification No. 37/2017-Central Tax). The LUT carries an undertaking that, for services, payment will be received in convertible foreign exchange within one year of the invoice date; if not, the IGST becomes payable with interest within fifteen days after the year ends. Exporting without an LUT means IGST should have been charged and paid; the remedy is to pay the tax and claim a refund, with the department often accepting a belatedly filed LUT for the year on a condonation basis.
Key facts
| Provision | Old reference (to 31 Mar 2026) | New reference (from 1 Apr 2026) | Rate / threshold | Timing | Form |
|---|---|---|---|---|---|
| Zero-rated supply without payment of tax | s. 16(3) IGST Act | Unchanged | Under bond or LUT | — | RFD-11 |
| LUT procedure | Rule 96A CGST Rules; Circular 8/8/2017-GST, 40/14/2018-GST | Unchanged | Online; no bank guarantee | Before first export of the financial year; valid for that financial year | Form GST RFD-11 |
| Eligibility | Notification No. 37/2017-Central Tax | Unchanged | All registered persons except those prosecuted for evasion > ₹2.5 crore | — | — |
| Realisation condition — services | Rule 96A(1)(b) | Unchanged | Within 1 year of invoice date (or extension by Commissioner) | Tax + interest payable within 15 days after expiry | — |
| Realisation condition — goods | Rule 96A(1)(a) | Unchanged | Export within 3 months of invoice date | Tax + interest within 15 days after expiry | — |
| Interest on tax paid late | s. 50 CGST Act | Unchanged | 18% p.a. | — | — |
What the LUT is
Section 16(3) of the IGST Act lets a registered person make zero-rated supplies without paying IGST, provided it furnishes a bond or a Letter of Undertaking. The bond route (with bank guarantee) is now confined to persons not eligible for an LUT. For everyone else, the LUT is a self-declaration on the GST portal — Form GST RFD-11 — undertaking to export within the prescribed time, to pay the tax with interest if the conditions are breached, and to abide by the GST law. No bank guarantee, no fee, no physical submission; an acknowledgement reference number is generated on filing.
Who files
- Exporters of goods.
- Exporters of services — including Indian subsidiaries billing their foreign parents, freelancers and consultants billing foreign clients, and (from 30 March 2026) intermediaries whose services now qualify as exports.
- Suppliers to SEZ units and developers for authorised operations.
- Deemed-export suppliers do not use the LUT route; they pay tax and claim refund.
A registered person with more than one GST registration files an LUT for each registration that will make zero-rated supplies.
When
The LUT is valid for the financial year in which it is furnished. File it in March for the year beginning 1 April, or at the latest before the first zero-rated invoice of the year. The portal opens the next year's filing in advance. A new registrant files on registration, before its first export. There is no statutory due date — the only consequence of delay is that supplies made before filing were made without the cover of an LUT.
The undertaking you are giving
Rule 96A(1) sets two conditions. For goods, the goods must be exported out of India within three months of the invoice date (or such further period as the Commissioner allows). For services, payment must be received in convertible foreign exchange — or in Indian rupees where the RBI permits — within one year of the invoice date, or a further period allowed by the Commissioner. If a condition is not met, the exporter must pay the IGST that would have been due, with interest at 18% under section 50 from the invoice date, within fifteen days after the expiry of the period. CBIC's circulars clarify that the LUT itself is not withdrawn automatically on a breach; once the tax and interest are paid, the LUT is restored, and if the proceeds are later received, the tax paid can be claimed as a refund.
Note the interaction with FEMA: the exchange-control realisation period is nine months from the invoice date (twelve months for rupee-settled exports), so a FEMA extension may be needed before the GST one-year condition is even approached.
Exports made without an LUT
If a company discovers that it exported in April to September without filing the year's LUT, the technical position is that those supplies were zero-rated supplies made without payment of tax and without the cover of an LUT. CBIC's Circular 37/11/2018-GST directed that the substantive benefit of zero-rating should not be denied for this procedural lapse, and that the delay in furnishing the LUT may be condoned ex post facto on the facts. In practice the exporter files the LUT immediately, writes to the jurisdictional officer seeking condonation for the earlier period with the export evidence, and keeps the correspondence on file. Where the officer insists, the alternative is to pay IGST on the earlier invoices and claim refund of tax paid under section 54 — cash-flow cost but no loss of credit. Refund applications for the uncovered period are the point at which the absence of an LUT surfaces, so fix it before claiming.
Worked example
An Indian subsidiary's finance team changes in March 2026 and nobody files the FY 2026-27 LUT. Export invoices of ₹2.4 crore are raised in April and May 2026 without IGST. The omission is noticed in June when preparing the first refund application.
- LUT in RFD-11 filed on 12 June 2026 — valid for FY 2026-27 from that date.
- Letter to the jurisdictional officer enclosing the April–May export invoices, FIRAs for amounts received, the agreement and the acknowledgement of the LUT, requesting condonation under Circular 37/11/2018-GST.
- Condonation received; the April–June quarter refund of ₹3.1 lakh of ITC is filed and processed.
- Had condonation been refused, IGST of ₹43.2 lakh on the ₹2.4 crore would have been paid through the credit ledger and cash, and claimed back as a refund of tax paid — recoverable, but a working-capital hit of several months.
The team adds a March calendar item: file next year's LUT the day the portal opens.
Common mistakes we see
- Assuming the LUT filed last year still covers this year. It is valid only for the financial year in which it was furnished.
- Filing the LUT after the first export invoice of the year and not seeking condonation for the gap.
- Not tracking the one-year realisation condition per invoice; long-outstanding receivables from the parent are a Rule 96A breach, not just a transfer pricing issue.
- Forgetting the second GST registration (a branch office in another state) that also exports.
- Believing a bond or bank guarantee is needed. Only persons ineligible for an LUT need a bond.
Frequently asked questions
Is the LUT mandatory for exporting services?
Only if you want to export without charging IGST. The alternative is to charge and pay IGST and claim it back as a refund — slower and cash-negative, so virtually every service exporter files the LUT.
How long is an LUT valid?
For the financial year in which it is furnished. A fresh LUT is filed each year, before the first zero-rated supply.
Is there a fee or a bank guarantee?
No. The LUT is filed online without fee or guarantee. A bond with bank guarantee is required only from persons not eligible to file an LUT.
Who cannot file an LUT?
A person prosecuted for an offence under the CGST Act, IGST Act or an earlier law where the tax evaded exceeds ₹2.5 crore — Notification No. 37/2017-Central Tax.
What if export proceeds are not received within one year?
Under Rule 96A the IGST becomes payable with interest within fifteen days after the one-year period (or any extension) expires. If the proceeds arrive later, the tax paid can be claimed as a refund.
Can a belated LUT cover earlier exports?
Strictly the LUT operates from filing, but CBIC Circular 37/11/2018-GST permits ex post facto condonation of the delay on the facts. File immediately, seek condonation in writing, and keep the export evidence.
Does the LUT cover SEZ supplies as well as exports?
Yes. One LUT covers all zero-rated supplies of the registration for the year — exports of goods, exports of services and supplies to SEZ units or developers.
Sources
Primary sources only. Statutory text is read from the official publication; where a provision has been renumbered, the pre-2026 reference is given alongside so older material can be reconciled.
- CGST Act, IGST Act, CGST Rules and GST circulars — CBIC
- GST portal — LUT (Form GST RFD-11), refunds and returns
- RBI Master Directions — Reporting under FEMA; External Commercial Borrowings; Overseas Investment; Export of Goods and Services; LRS
Last reviewed on 1 November 2026 by Monal Agarwal, FCA, VMS Jhunjhunwala & Co. Law stated as at that date; the Income-tax Act, 2025 and Income-tax Rules, 2026 apply from 1 April 2026.
