Letter of Undertaking (LUT) for GST Exports: Complete Filing Guide

Complete guide to filing a Letter of Undertaking GST in form RFD-11, enabling zero-rated exports without paying IGST upfront, valid for one financial year.

Why Exporters Need an LUT

Exports of goods and services are zero-rated supplies under Section 16 of the IGST Act, meaning the supplier need not bear any GST burden. Exporters have two options: pay IGST upfront and claim a refund later, or supply without paying IGST under a Letter of Undertaking (LUT) and claim a refund of accumulated input tax credit. The LUT route is overwhelmingly preferred because it avoids tying up working capital in the form of IGST that may take months to refund. For SaaS companies, IT freelancers, and goods exporters, filing an LUT is effectively the first step into the export business.

Filing RFD-11 Online

Form RFD-11 is filed online on the GST portal under Services > User Services > Furnish Letter of Undertaking (LUT). The form requires basic taxpayer details, the financial year for which the LUT is being furnished, and the names and addresses of two independent witnesses. No documents need to be uploaded for a standard LUT, though earlier the rules required a CA certificate and bond. Once submitted with DSC or EVC, the ARN is generated immediately and the LUT is considered furnished without any officer-level approval.

Eligibility, Validity, and Renewal

Any registered exporter who has not been prosecuted for tax evasion of Rs. 2.5 crore or more under GST or earlier laws is eligible to file an LUT. The LUT is valid for one financial year (1 April to 31 March) and must be renewed every year, typically in the first week of April. If the LUT is not renewed in time and you ship before filing, you must pay IGST and claim a refund instead. Setting an annual calendar reminder for the LUT renewal is the single most important compliance habit for an exporter.

Consequences of LUT Conditions Breach

The LUT carries undertakings that the exporter will complete the export within three months from the invoice date, receive payment in convertible foreign exchange (or INR where permitted by RBI) within one year, and observe all conditions of the IGST Act. Failure to do so results in the LUT being deemed withdrawn, and the exporter must pay IGST with 18 percent interest from the original supply date. Repeated breaches can lead to the export benefit being denied for future shipments. Most breaches happen because payment is delayed beyond one year, often in long-tail SaaS contracts.

Managing LUT Compliance With BillBabu

BillBabu tags every export invoice with the relevant LUT number and financial year, monitors the three-month export completion clock and the one-year forex receipt clock, and alerts you when any invoice approaches breach. It also generates the per-invoice realization status from your bank import, making the annual LUT renewal a one-click affair. For a small exporter shipping 20 to 50 invoices a month, this prevents a quiet breach from snowballing into a future demand notice.

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