LUT in GST – Complete Guide for Letter of Undertaking
Exporting goods or services from India offers massive growth potential for startups. However, the initial tax burden can often drain your working capital. This is where the LUT in GST comes into play. If you are an exporter looking to save on taxes and improve cash flow, understanding LUT means the difference between a thriving business and a cash-strapped one.
At Best Expert GST Consultants – Startup Portal, we simplify complex compliance so you can focus on scaling your business. In this guide, we break down everything you need to know about the Letter of Undertaking in GST.
What is LUT in GST? (LUT Full Form and Meaning)
The full form of LUT is Letter of Undertaking. In the context of Indirect Taxes, LUT full form in GST refers to a legal document filed by registered taxpayers to export goods or services without the upfront payment of Integrated Goods and Services Tax (IGST). By filing GST RFD-11, exporters “undertake” that they will fulfill all export requirements within the prescribed timelines.
- LUT Full Form: Letter of Undertaking.
- LUT Meaning: A declaration allowing zero-rated supplies (exports) without paying tax.
- LUT Means in GST: It is an alternative to the “Export with Payment of Tax” route, specifically designed to prevent capital blockage.
Purpose of LUT Filing under GST
The primary purpose of GST LUT filing is to facilitate “Zero Rated Supplies.” Usually, when you sell something, you collect tax. In exports, the government wants to encourage international trade, so they allow two options:
Pay IGST and later claim a refund.
File an export LUT and pay 0% tax upfront.
By using the letter of undertaking for GST, startups can keep their money in the business rather than waiting months for the tax department to process refund claims.
Who Can Apply for LUT in GST?
Not everyone is eligible for LUT in export. To apply for a LUT certificate, a taxpayer must meet the following criteria:
- The person or entity must be registered under GST.
- They must intend to supply goods or services to foreign countries or Special Economic Zones (SEZ).
- The applicant must not have been prosecuted for tax evasion exceeding ₹2.5 Crores.
- If an exporter does not meet the “clean record” criteria, they may have to furnish a LUT bond (Bank Guarantee) instead of a simple letter.
LUT for Export Without Payment of IGST
When you operate under L U T in GST, your invoice will mention “Supply meant for export/supply to SEZ unit or SEZ developer for authorized operations under letter of undertaking without payment of integrated tax.”
Key Requirements for LUT Export:
- For Goods: Export must be completed within 3 months from the date of invoice.
- For Services: Payment must be received in convertible foreign exchange within 1 year.
If these conditions aren’t met, the exporter must pay the IGST along with 18% interest. This is why maintaining a valid LUT number is crucial for compliance.
Benefits of Filing LUT for Exporters
Filing for a letter of undertaking gst offers several strategic advantages for Indian businesses:
- No Working Capital Blockage: You don’t have to pay tax out of pocket and wait for refunds.
- Ease of Compliance: The GST LUT is filed once per financial year.
- Cost Efficiency: Avoids the costs associated with bank guarantees (unless you are required to file a bond).
- Faster Processing: Since there is no refund claim involved for the tax amount, there is less administrative friction.
How to Apply / File LUT in GST (GST RFD-11)
The LUT application process is entirely online. At Startup Portal, we recommend keeping your DSC (Digital Signature) or EVC (Aadhar OTP) ready.
Step-by-Step LUT Filing Process:
- Login: Access the GST Portal (www.gst.gov.in) with your credentials.
- Navigate: Go to Services > User Services > Furnish Letter of Undertaking (LUT).
- Select Period: Choose the Financial Year for which you are filing the GST LUT.
- Upload Previous LUT: If you had a LUT copy from the previous year, upload it (though this is now optional in most cases).
- Fill Details: Enter the names of two independent witnesses.
- Sign & Submit: Use DSC or EVC to submit the form GST RFD-11.
Once submitted, the system generates a LUT number in GST, and you can immediately download your LUT certificate.
How to Download LUT from GST Portal
Once your application is successful, you might need the LUT copy for your customs broker or bank.
- Go to Services > User Services > View/Download Certificates.
- Click on the download button next to the L U T certificate.
- The downloaded LUT certificate will contain your unique LUT no and the validity period.
Validity of LUT (Letter of Undertaking)
A common question is: “How long is my lut no valid?”
- The LUT in GST is valid for one financial year only (e.g., April 1st to March 31st).
- Exporters must file a fresh LUT application at the start of every new financial year to continue enjoying tax-free exports.
- If you fail to renew it, you must pay IGST on exports from April 1st onwards.
Conclusion
Understanding what is LUT in GST is the first step toward building a globally competitive business. It eliminates the hassle of tax payments and ensures your capital is spent on growth rather than stuck in government departments. Whether you call it gst lut, lut certificate, or letter of undertaking, its value remains the same: seamless international trade.
Filing your lut for export might seem technical, but with the right partner, it’s a breeze. Startup Portal is dedicated to helping entrepreneurs navigate the complexities of gst lut filing and other business services.
Scale Your Export Business with Startup Portal!
Don’t let tax compliance slow down your global ambitions. At Startup Portal, we provide end-to-end support for LUT in GST, Company Registration, and Trademarking.
Our Experts Can Help You With:
- Instant GST LUT filing for the current financial year.
- Assistance in downloading your lut certificate and managing renewals.
- Professional advice on lut meaning in gst for your specific industry.
- Full compliance management so you never miss a deadline.
Ready to export tax-free?
- [Click Here to Get Your LUT Filed Today!]
- Contact us at: +918975400253 / +917249645760
Startup Portal – Your Partner in Business Growth.