Glossary
What is LUT (Letter of Undertaking)?
The yearly declaration that lets an exporter ship without paying IGST first and waiting for a refund.
Updated
In short
An LUT is a yearly declaration on the GST portal that lets an exporter make zero-rated supplies without paying IGST. SimpleERP does not file the LUT, but it bills overseas customers with no tax.
An LUT, or Letter of Undertaking, is a declaration filed on the GST portal in Form GST RFD-11 that lets a registered exporter export goods or services, or supply to an SEZ, without paying IGST. The exporter undertakes to complete the export within the time allowed. It is valid for one financial year and is filed before the first export of the year. Without it, the exporter pays IGST and claims a refund.
LUT (Letter of Undertaking): a worked example
Lakshmi Steel Furnitures files its LUT for FY 2026-27 in April 2026 and then ships 20 steel racks 4 shelf to a buyer in Colombo.
| Export under LUT | Export on payment of IGST | |
|---|---|---|
| Invoice value | ₹99,800 | ₹99,800 |
| IGST at 18% | Nil | ₹17,964, paid and later refunded |
| Cash tied up | None | ₹17,964 until the refund arrives |
| ITC on inputs | Claimed as a refund of unused credit | Used against the IGST paid |
FAQ
Questions, answered
Who can file an LUT?
Any registered person exporting goods or services, or supplying to an SEZ, can file an LUT, unless they have been prosecuted for tax evasion above the amount notified. Those who cannot must furnish a bond with a bank guarantee instead.
When should I file the LUT?
Before the first export of the financial year. It is valid for that year only, so file a fresh one each April. It is filed online in Form GST RFD-11 and is usually accepted on filing. Check the GST portal for the current process.
What must an invoice under LUT say?
It must carry the words "supply meant for export or supply to SEZ unit or SEZ developer for authorised operations under bond or letter of undertaking without payment of integrated tax", or the export wording as notified, along with the usual invoice fields.
Can SimpleERP bill in US dollars for an export?
SimpleERP cannot bill in US dollars: it has no multi-currency, so every invoice, export invoices included, is in rupees. Bill the rupee value at the exchange rate you use, record the foreign currency amount in the invoice notes, and keep the shipping bill with your records.
Related
Keep reading
Zero-rated supply
Exports of goods or services and supplies to SEZ units or developers, which carry no tax but keep input tax credit.
Read moreExport invoice
A GST invoice for supplies to a buyer outside India, carrying export wording, destination and shipping details.
Read moreIGST
GST at the full rate on supplies between states and on imports, collected by the centre.
Read more
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