Exporters have two choices: pay IGST on exports and claim it back as a refund, or file a Letter of Undertaking and export without paying tax at all. For most exporters, the LUT is the smarter route — it keeps cash in the business instead of locking it up in a refund queue. This guide covers who can file, how the two routes compare, and the annual renewal that catches exporters out.
- An LUT lets you export goods or services without paying IGST upfront.
- It is filed on the portal in Form RFD-11 and must be renewed every financial year.
- Almost any registered exporter can file, unless prosecuted for large-scale tax evasion.
- The LUT route avoids tying up working capital in a refund claim.
LUT vs paying IGST and claiming a refund
| Export under LUT | Pay IGST, claim refund | |
|---|---|---|
| Cash blocked | None | IGST until refund lands |
| Refund paperwork | Only for accumulated ITC | Full IGST refund claim |
| Best for | Regular exporters | Occasional exporters |
| Filing | RFD-11, once a year | RFD-01, each claim |
Who can file an LUT
Any registered exporter of goods or services can file an LUT, provided they have not been prosecuted for tax evasion above the specified threshold. It is filed on the GST portal in Form RFD-11 and applies for the whole financial year in which it is furnished.
Why it matters
- No IGST is blocked on your exports, so working capital stays free.
- No refund claim to chase for the tax you never paid.
- It must be renewed at the start of each financial year.
“An LUT is a once-a-year filing that saves exporters months of refund paperwork. Renew it every April.”
Frequently asked questions
How long is an LUT valid?
An LUT is valid for one financial year. You must file a fresh RFD-11 at the start of each new financial year to keep exporting without IGST.
Can service exporters file an LUT?
Yes. Exporters of services, not just goods, can furnish an LUT to supply zero-rated services without paying IGST.
Is any bank guarantee needed with an LUT?
For eligible exporters, the LUT replaces the earlier bond-and-bank-guarantee requirement, so no bank guarantee is generally required.
Missing the LUT means paying tax you could have avoided. Our GST refund and LUT service files and renews it for you. See all GST services.
