FORM RFD 11: FILING OF LUT

FORM RFD-11: FILING OF LUT (Letter of Undertaking) — Complete Guide for FY 2026-27

Form RFD-11 is the GST mechanism that lets exporters and SEZ suppliers ship goods or services without paying IGST upfront. Filed under Rule 96A of the CGST Rules 2017, a Letter of Undertaking (LUT) is valid for one financial year, must be renewed before 1 April for FY 2026-27, and requires no bank guarantee for most exporters. Skip it — or let it lapse mid-year — and every zero-rated invoice you raise becomes an IGST liability the moment it is raised, with interest accruing from the invoice date, not the date you discover the problem.

The Legal Framework: Section 16, IGST Act and Rule 96A, CGST Rules

Zero-rated supply is defined under Section 16 of the Integrated Goods and Services Tax Act, 2017. The section covers two categories:

• Export of goods or services or both
• Supply of goods or services or both to a Special Economic Zone (SEZ) unit or an SEZ developer

Zero-rated does not automatically mean tax-free at the time of supply. Section 16(3) gives the exporter a choice between two routes:

1. Pay IGST at the applicable rate on the export invoice and then claim a refund from the government
2. Supply under bond or LUT and move zero-rated goods or services out without payment of IGST

The procedural vehicle for option 2 is Form RFD-11, governed by Rule 96A of the CGST Rules 2017. The undertaking commits the exporter to complete the export within prescribed time limits and to pay IGST with interest if those limits are breached. It is not a one-time lifetime filing — it must be renewed for every financial year.

Who Must File Form RFD-11

Any registered person who wants to use the LUT route for zero-rated supplies must file this form. The categories are:

• Exporters of goods — physical goods leaving India under a shipping bill or bill of export
• Exporters of services — where the place of supply is outside India and payment is received in convertible foreign exchange, or in Indian rupees where permitted by the Reserve Bank of India
• Suppliers to SEZ units — goods or services supplied to a unit located within a Special Economic Zone in India
• Suppliers to SEZ developers — including infrastructure and construction services to the developer entity itself

If you are an IT services company billing a foreign client in USD, a garment manufacturer exporting to the EU, a consultant providing advisory to a foreign subsidiary, or a logistics firm servicing an SEZ unit in SEEPZ or Kandla — you need a valid LUT in place before you raise the first invoice of the year.

A company that both exports and sells domestically files a single LUT for the GSTIN. It covers all zero-rated outward supplies from that registration during the financial year.

LUT vs Bond: Which Route Do You Qualify For

Most regular exporters qualify for LUT and do not need a bond. The distinction matters because a bond requires a bank guarantee, whereas an LUT does not. Here is how eligibility works:

LUT is available if:

• You are a registered person (regular taxpayer, not a composition dealer)
• You have not been prosecuted for any offence under the CGST Act or IGST Act where the amount of tax evaded exceeds Rs. 2.5 crore (as currently notified by CBIC)

You must file a bond (with bank guarantee) if:

• You have been prosecuted for tax evasion above the notified threshold
• A proper officer specifically directs a bond in your case

The turnover-based restriction that existed in the early GST years has been removed. A startup exporting Rs. 10 lakh of software services per month qualifies for LUT on the same footing as a large manufacturer. If you have a clean prosecution record, file LUT — there is no reason to tie up bank guarantee funds under a bond.

Step-by-Step Filing on the GST Portal

The entire process is online on www.gst.gov.in. There is no physical submission, no stamp paper, and no departmental visit required.

Pre-filing checklist

Before you start the session, keep ready:

• Your GSTIN credentials (username and password)
• DSC (Digital Signature Certificate) registered on the portal or your EVC (Electronic Verification Code) mobile number
• The ARN of the previous year's LUT (for reference — not mandatory to upload)
• Names, addresses and occupations of two independent witnesses

Portal navigation

1. Log in to www.gst.gov.in with your GSTIN and password
2. Go to Services → User Services → Furnish Letter of Undertaking
3. From the dropdown, select the financial year: 2026-27
4. The system auto-populates your legal name, trade name, GSTIN and registered address — verify these
5. Review the pre-filled undertaking text which sets out the conditions you are accepting (export within time, payment of IGST with interest on breach, non-claim of drawback already availed)
6. Fill in Witness 1 and Witness 2 details: full name, occupation and full address — these must be individuals, not company entities
7. Scroll to the declaration section and confirm the authorised signatory details
8. Submit using DSC if you are a company or LLP; use EVC if you are a proprietorship or partnership (EVC sends an OTP to the registered mobile number)
9. On successful submission, the system generates an Application Reference Number (ARN) — download and save the acknowledgement PDF immediately

The whole process takes 10–15 minutes if you have the signatory details and DSC token ready. File on a weekday morning when portal traffic is lower.

After filing

• Print or save the LUT acknowledgement with ARN — this is your proof of filing
• Mention "Supply under LUT" and the ARN on every zero-rated tax invoice you raise during FY 2026-27
• In GSTR-1, report all export supplies in Table 6A (Exports) and select "LUT/Bond" in the applicable column; for SEZ supplies, use Table 6B

What the Undertaking Actually Commits You To

An LUT is not a formality — it is a legally enforceable undertaking. Rule 96A spells out two key time conditions that, if breached, trigger IGST liability:

Time limit for goods exports

Export of goods must be completed (i.e., goods must leave India, evidenced by the shipping bill and let export order) within 3 months from the date of issue of the tax invoice. If the goods have not been exported within 3 months, the exporter must pay IGST on the supply along with interest at 18% per annum from the invoice date until the date of payment.

Time limit for services exports

For exported services, the payment in convertible foreign exchange must be received within one year from the date of issue of the invoice (or within the period permitted under FEMA for repatriation, whichever is earlier). Failure to receive payment within this window similarly attracts IGST plus 18% interest from the invoice date.

The drawback condition

The LUT also contains an undertaking that the exporter has not and will not claim drawback of IGST paid on inputs used in exported goods where such drawback has already been taken as a refund under another mechanism. This prevents double benefit.

If you breach any of these conditions, the LUT-based benefit for that specific supply is lost, and IGST applies with interest — but the LUT itself remains valid for other supplies unless the department specifically withdraws the facility.

Worked Example: Quantifying the Cash Flow Benefit of LUT

Consider Saraswati Tech Solutions, a Pune-based IT services exporter, for FY 2026-27:

Without LUT: Saraswati must pay Rs. 86.4 lakh in IGST across the year, file refund applications under Rule 89, and wait 60–90 days (at minimum) for each refund tranche. At a working capital borrowing cost of 12% per annum, even 75 days of blocked capital on Rs. 86.4 lakh costs approximately Rs. 2.14 lakh in interest expense — money the company pays a bank to recover its own legitimate refund.

With LUT: Zero IGST outflow. Rs. 86.4 lakh stays in the current account earning return or reducing the overdraft. The Rs. 2.14 lakh finance cost disappears entirely.

The cost of filing the LUT: 15 minutes of an executive's time, once a year.

What happens if Saraswati raises a May 2026 invoice before filing LUT

Say the accounts team forgot to renew the LUT and raised a Rs. 40 lakh invoice on 5 May 2026 for services delivered to a US client. The client pays in USD on 10 May 2026.

• IGST on Rs. 40 lakh @ 18% = Rs. 7,20,000
• Interest from 5 May 2026 to (say) 20 June 2026 when it is discovered and paid = 46 days @ 18% p.a.
• Interest = Rs. 7,20,000 × 18% ÷ 365 × 46 = Rs. 16,351
• Total cost of the oversight: Rs. 7,36,351 — which now has to go through a refund cycle to recover

The LUT for future invoices can be filed immediately, but the May 5 invoice is permanently exposed to IGST unless the company pays the tax and claims a refund under the regular refund route.

SEZ Supplies — Specific Considerations

Supplies to SEZ units and developers are zero-rated under Section 16 of the IGST Act, but they are domestic supplies not exports. A few distinctions apply that exporters sometimes miss:

• The supply must be accompanied by an endorsed LUT ARN just like goods exports
• The SEZ unit must provide an endorsement from the Specified Officer of the SEZ confirming that the goods/services have entered the SEZ for authorised operations — this is the equivalent of a shipping bill for SEZ supplies and is critical for GST compliance
• Services supplied to an SEZ employee for personal use (canteen, housekeeping billed to the individual) do not qualify as SEZ zero-rated supplies
• If your customer is an SEZ unit operating in DTA mode for a specific transaction, confirm in writing whether the transaction is from the SEZ unit's GSTIN or their DTA entity — they may have separate GSTINs and the benefit applies only to the SEZ GSTIN

In GSTR-1, SEZ supplies go into Table 6B (not Table 6A which is for overseas exports). Report them correctly from day one — correcting this in an amendment later attracts scrutiny.

Common Pitfalls and How to Avoid Them

1. Starting the year without renewing the LUT

FY 2026-27 began on 1 April 2026. If you are reading this in May 2026 and have not yet filed your LUT, file it today. It cannot be backdated, and every zero-rated invoice raised between 1 April 2026 and your filing date is technically exposed to IGST. Pragmatically, pay IGST on any April invoices outstanding, claim the refund, and ensure the LUT is in place before any further supplies.

2. Wrong authorised signatory

The LUT must be signed by a person authorised to sign on the company's behalf under its GST registration. If your DSC on the portal belongs to your finance manager but the GST registration lists only the director as authorised signatory, the LUT filing is vulnerable to a show-cause notice. Verify the authorised signatory list under your GSTIN profile before filing.

3. Citing incorrect or no ARN on invoices

Once the LUT is filed, the ARN must be mentioned on every zero-rated invoice under the description line or narration — e.g., "Supply under LUT, ARN: AD231026001234K." Invoices without this reference create audit trail problems during export refund scrutiny or SEZ authorised officer verification.

4. Treating services payment deadline casually

The one-year payment receipt condition for services exports is a real obligation. If a foreign client delays payment beyond the RBI deadline and you have not applied for an extension through your authorised dealer bank, the underlying supply loses LUT protection. Track your receivables aging against the invoice dates, not just for debtor management but for GST compliance.

5. Failing to update if DSC expires mid-year

If your signatory's DSC expires between April and March, you cannot update the LUT for that year — but this does not void the already-filed LUT. For the next year, renew the DSC before attempting the LUT filing.

6. Assuming one GSTIN's LUT covers all registrations

Each GSTIN is a separate registration. If your company has GST registrations in Maharashtra and Karnataka, you need to file an LUT under each GSTIN that will be used for zero-rated supplies. A single pan-India LUT does not exist.

FY 2026-27 Practical Calendar

Key Takeaways

• Form RFD-11 is an annual filing — one per financial year, per GSTIN — and there is no dispensation for exporters who forget to renew before April 1.
• No bank guarantee is required for an LUT as long as you have not been prosecuted for tax evasion above Rs. 2.5 crore (as currently notified); a bond with bank guarantee is only for those who do not qualify.
• The portal path is: Services → User Services → Furnish Letter of Undertaking; sign with DSC (companies/LLPs) or EVC (proprietorships/partnerships).
• Quote the ARN on every zero-rated invoice — missing this reference creates audit exposure even if the LUT is validly filed.
• Time limits matter: 3 months from invoice date for goods exports; 1 year for services payment receipt — breach either and IGST plus 18% interest applies from the invoice date.
• SEZ supplies need the same LUT discipline as overseas exports and must be reported in Table 6B of GSTR-1, not Table 6A.
• If you have already raised invoices in FY 2026-27 without a valid LUT, the immediate corrective action is to pay the IGST on those invoices, file the LUT for future supplies, and initiate a refund application — not to hope the issue goes unnoticed.