Everything exporters and SEZ suppliers need to know about filing a Letter of Undertaking under GST — eligibility, process, validity, and benefits over paying IGST.
GST LUT Filing for Exporters and SEZ Units — Complete 2026 Guide
For businesses that export goods or services, or supply to Special Economic Zones, GST law offers a choice: pay IGST on the supply and later claim a refund, or export under a Letter of Undertaking (LUT) without paying tax upfront at all. Most regular exporters prefer the LUT route, since it avoids blocking working capital in a refund cycle that can take weeks to process.
This guide explains what an LUT is, who is eligible to file one, the step-by-step filing process, its validity period, and a practical comparison between exporting under LUT versus paying IGST and claiming a refund — so exporters and their finance teams can choose the approach that best suits their cash flow and compliance bandwidth.
What Is a Letter of Undertaking (LUT) Under GST
A Letter of Undertaking is a self-declared document filed by a GST-registered exporter, undertaking to fulfil all requirements prescribed for exporting goods or services without payment of integrated tax (IGST). By filing an LUT, an exporter is legally permitted to make zero-rated supplies — exports of goods, exports of services, and supplies to SEZ developers or units — without charging or paying IGST at the time of supply.
This is distinct from the alternative route, where an exporter pays IGST on the export invoice and subsequently applies for a refund of that tax paid. Both routes fall under the "zero-rated supply" framework in GST law, which is designed to ensure that Indian exports are not burdened with domestic tax costs, keeping them competitive internationally.
Why LUT Matters for Exporters
For a business making export or SEZ supplies, the LUT route has a direct and material effect on cash flow. Without an LUT, IGST must be paid upfront on every export invoice, and that amount remains locked up until the refund is processed and credited back — a cycle that can take anywhere from a few weeks to considerably longer depending on documentation completeness and departmental processing timelines.
For exporters with regular, high-volume shipments, this working capital lock-up can be substantial. Filing an LUT removes this friction entirely: exports proceed without any IGST outflow, freeing up capital that would otherwise sit in the refund pipeline. This is precisely why LUT filing has become the default choice for most established exporters, while the pay-IGST-and-refund route is generally used only by businesses that are ineligible for LUT or that have specific commercial reasons to prefer it.
Beyond cash flow, filing an LUT also reduces the compliance burden associated with refund applications — fewer refund claims mean less documentation, fewer queries from the department, and a lower chance of refund-related disputes or delays. For a business managing multiple export shipments every month, this can translate into a meaningfully lighter compliance workload across the year.
Who Is Eligible to File an LUT
Broadly, any GST-registered person intending to supply goods or services for export, or to a Special Economic Zone unit or developer, without payment of integrated tax, is eligible to file an LUT — with one significant exception. A taxpayer who has been prosecuted for any offence under the GST law (or the erstwhile indirect tax laws it replaced) involving tax evasion of an amount exceeding the threshold prescribed under the relevant provision is not eligible to furnish an LUT, and must instead furnish a bond with a bank guarantee to undertake zero-rated supplies without tax payment.
In practice, this exclusion affects a very small proportion of businesses. The vast majority of exporters — whether goods exporters, IT and ITES service exporters, or suppliers to SEZs — qualify for the simpler LUT route rather than the bond-and-guarantee route. There is generally no minimum turnover threshold that a business must cross before it becomes eligible to file an LUT; even a newly registered exporter with modest initial shipment volume can typically apply.
Step-by-Step: How to File LUT on the GST Portal
1. Log In to the GST Portal
Access the official GST portal using the business's registered credentials and navigate to the LUT filing section, typically found under the services or user services menu, labelled for furnishing a Letter of Undertaking.
2. Select the Relevant Financial Year
An LUT must be filed separately for each financial year, so the first step within the form is choosing the financial year for which the undertaking is being furnished.
3. Fill in Self-Declaration Details
The online form requires confirming a set of self-declarations — essentially that the exporter will comply with the conditions of export within the prescribed timelines, will pay applicable IGST along with interest if goods or services are not exported within the stipulated period, and will comply with other GST law requirements for zero-rated supply.
4. Provide Witness Details
The form requires the name, occupation, and address of two independent witnesses. This is a standard requirement for the undertaking, similar to what would be needed for a physical bond document.
5. Attach the Previous LUT (If Applicable)
If the business held an LUT for the preceding financial year, it is common practice to attach a copy of that earlier LUT, though the portal's exact requirements should be checked at the time of filing since procedural details are occasionally updated.
6. Submit Using Digital or Electronic Verification
The form is submitted using either a digital signature certificate or an electronic verification code, depending on the entity type and how the business's GST registration is configured.
7. Download the Acknowledgement
Once submitted successfully, the portal generates an acknowledgement reference number and allows the exporter to download the filed LUT. This acknowledgement should be retained carefully, since it may be requested by customs authorities, banks processing export remittances, or during any departmental verification.
Validity of an LUT
An LUT filed on the GST portal is valid for the entire financial year in which it is furnished — from the date of filing through to the end of that financial year (typically 31 March). It does not carry forward automatically; a fresh LUT must be filed at the start of every new financial year before the exporter can continue supplying under the without-payment-of-tax route for that year.
Because of this annual requirement, it is worth building a recurring compliance reminder into the business's calendar, ideally filing the fresh LUT in the opening days of the new financial year, so there is no gap in coverage between the expiry of the old LUT and the filing of the new one. A gap, even a short one, can create ambiguity about whether shipments made during that window were validly covered, which is best avoided entirely through timely renewal.
LUT vs Paying IGST and Claiming Refund
Both routes achieve the same underlying policy goal — exports are not burdened with GST — but they differ substantially in mechanics:
Exporting under LUT:
- No IGST is paid at the time of export, preserving working capital
- No separate refund application is needed for the tax itself, since none was paid
- Input tax credit accumulated on inputs and input services used for the export can still be claimed as a refund of unutilised input tax credit
- Requires only an annual filing, with no per-shipment tax payment or refund cycle
Paying IGST and claiming refund:
- IGST is paid upfront on every export invoice, tying up working capital until the refund is processed
- A refund application must be filed for each period, along with supporting shipping bill and invoice data
- The refund process for IGST paid on exports is generally faster than the input-tax-credit refund route, since it is largely linked to shipping bill data, but it still involves a waiting period
- May suit exporters with very low export volume, or specific situations where the business prefers not to file an LUT for any reason
For most regular exporters, especially those with consistent shipment volumes, the LUT route is the more efficient choice because it avoids the recurring cash flow drag of paying and reclaiming tax on every export transaction. Businesses with irregular, occasional export activity sometimes find the administrative overhead of either route roughly comparable, but even then, LUT tends to be simpler since it removes the need to track and follow up on individual refund applications.
Practical Details and Compliance Tips
- File early in the financial year. Delaying LUT filing means either pausing zero-rated exports or paying IGST in the interim, so filing within the first few days of April each year avoids disruption.
- Retain the acknowledgement copy for every financial year, as banks handling export remittances and customs authorities may request it during document checks.
- Maintain shipping bill and export invoice records meticulously, since these support both the zero-rated treatment and any input tax credit refund claims linked to the export.
- Track the export realisation timeline. Export proceeds are generally expected to be realised within the period prescribed under foreign exchange regulations; failure to do so within the stipulated timeframe can require payment of IGST with interest on that particular transaction.
- File LUT under the correct GSTIN if the business has multiple registrations across states, since LUT coverage is registration-specific, not PAN-wide.
- Coordinate with the finance and logistics teams so that shipping documentation, invoicing, and the LUT filing calendar stay aligned, particularly for businesses with high shipment frequency where even a short administrative gap can affect several transactions.
Common Pitfalls in LUT Filing
- Forgetting to file a fresh LUT at the start of a new financial year, leading to an unplanned requirement to pay IGST until the new LUT is filed.
- Filing under the wrong GSTIN for businesses operating from multiple states, leaving one registration without LUT coverage.
- Not retaining the acknowledgement, causing delays when a bank or customs authority requests proof of LUT filing.
- Assuming LUT eliminates all refund needs — input tax credit on inputs used for export may still require a separate refund claim even when exporting under LUT.
- Missing the export realisation timeline, which can trigger an unexpected IGST-plus-interest liability on an otherwise zero-rated transaction.
- Confusing LUT with a bond — only taxpayers excluded from LUT eligibility (typically due to specific prosecution history) need to furnish a bond with bank guarantee instead.
- Not reviewing eligibility annually — a business's circumstances can change year to year, so it is worth confirming continued eligibility for the simpler LUT route each time a fresh filing is due, rather than assuming it automatically remains available.
Frequently Asked Questions
Is LUT mandatory for all exporters?
No. LUT is optional in the sense that an exporter can instead choose to pay IGST on exports and claim a refund. However, for businesses with regular export volume, LUT is generally the preferred route since it avoids tying up working capital in the refund cycle.
How long does it take to get an LUT approved?
LUT filing on the GST portal is largely a self-declaration process, and the acknowledgement is typically generated immediately or shortly after submission, without a lengthy departmental approval step, unlike a bond application which may need review.
Does LUT cover both goods and services exports?
Yes. LUT applies to zero-rated supplies broadly, which includes export of goods, export of services, and supplies made to SEZ developers or SEZ units, all without payment of integrated tax.
What happens if export proceeds are not realised in foreign currency within the prescribed period?
If export proceeds are not realised within the timeframe prescribed under applicable foreign exchange regulations, the exporter may be required to pay IGST along with applicable interest on that specific export transaction, even though it was made under LUT.
Can input tax credit still be claimed if exports are made under LUT?
Yes. Exporting under LUT means no IGST is charged on the outward export supply, but input tax credit accumulated on inputs, input services, and capital goods used for making that export can still be claimed as a refund of unutilised input tax credit, subject to the applicable conditions and documentation.
Does a business need a new LUT for every export shipment?
No. A single LUT filed for a financial year covers all zero-rated export and SEZ supplies made by that GSTIN during that year — there is no need to file a fresh LUT for each individual shipment or invoice.
What documents are needed to file an LUT?
The online LUT filing form primarily requires self-declaration details and information about two witnesses; a copy of the previous year's LUT is often attached as supporting reference, though specific document requirements should be verified on the portal at the time of filing since procedures can be updated periodically.
Can a newly registered exporter file an LUT immediately?
Generally, yes — a newly registered GST taxpayer intending to export can file an LUT as soon as the registration is active, provided they are not among the limited category excluded due to prosecution-related ineligibility, allowing them to begin zero-rated exports without a waiting period.
Why Founders Choose Legal Suvidha
For 14 years we have taken founders end-to-end — from choosing the right structure and incorporating, to first-year compliance, funding readiness, and ongoing ROC/GST/tax filings — so you never have to switch providers as you grow.
- One team for the whole journey — start, launch, post-launch and every annual filing after.
- Fixed, all-inclusive pricing — professional plus government fees itemised, no hidden charges.
- A dedicated CA/CS who owns your case and does not disappear after payment.
- 6,000+ founders served, 4.9/5 rating, DPIIT-recognised, 100% online.
Talk to a Legal Suvidha expert today for a free consultation and an exact, transparent quote on WhatsApp (8130645164).
