Overview
Exports are considered zero-rated supply under GST, which allows companies to export products or services without paying taxes and yet be eligible for an Input Tax Credit (ITC) return. Filing a Letter of Undertaking (LUT) is one of the essential requirements to receive this benefit. LUT filing is even more important due to recent compliance improvements, as late submission can have a direct effect on working capital and refund eligibility.
Under GST, what is LUT?
An exporter’s statement that they would export goods or services without paying IGST and in accordance with GST regulations is called a Letter of Undertaking (LUT).
👉 LUT is submitted on the GST site using Form GST RFD-11.
Why Refund Claims Require LUT
1. Exporting without paying taxes
LUT permits exporters to provide products and services without having to pay IGST.
This keeps working capital from being blocked.
👉 In the absence of LUT, the exporter must first pay IGST before requesting a refund.
2. Direct ITC Refund Eligibility
Exporters that use LUT can immediately request a refund for any unused ITC.
guarantees quicker and more efficient handling of refunds
3. The Need for Legal Compliance
According to GST rules, LUT is a need for zero-rated supply.
Refund benefits may be denied for noncompliance.
Important LUT Filing Updates (2026)
- Annual Filing Requirement
Each fiscal year, LUT must be submitted.
Applicable from April through March
For instance, the LUT for FY 2026–2027 needs to be submitted at the start of the year.
2. Tight Connection to Refund Procedures
Applications for refunds are now directly related to LUT status.
Refund claims might be made if LUT is not filed.
Postponed Rejection
- Completely Online Procedure
LUT filing is entirely digital.
There is no need for a physical surrender.
Submitted via the GST site with an EVC or digital signature - Quicker Approval Process
LUT is often authorised right away after submission.
Most of the time, no manual intervention
Effects on Exporters
1. Enhanced Cash Flow
Exporters can increase liquidity by operating without having to pay IGST up front.
2. The possibility of delayed refunds
If LUT is not filed on time, it may result in:
Blockage of refunds
An additional responsibility of compliance
Advice for Companies
At the beginning of each fiscal year, file LUT.
Before submitting export invoices, confirm the LUT status.
Keep accurate export records.
Align export data with GST returns in conclusion
For exporters to guarantee seamless GST refund processing, mandatory LUT filing has emerged as a critical requirement. It guarantees quicker access to ITC reimbursements in addition to helping to avoid paying export taxes.
Final Advice:
To prevent refund delays and cash flow problems, always file LUT on time and maintain compliance.
