Rohit registered for GST and was about to bill a US client ₹1L. Default GST flow: charge 18% IGST = ₹18,000, pay to govt, claim refund 60 days later. "Or just file LUT once a year and bill at 0% directly," his CA mentioned.
One 15-minute form removed the entire cash-flow drag. Most exporters don't know it exists.
- LUT (Letter of Undertaking, Form RFD-11) lets exporters bill foreign clients at 0% IGST.
- Without LUT: charge 18% IGST → pay → refund later (60+ days). Painful.
- With LUT: bill at 0% directly. Just mention LUT ARN on the invoice.
- File once per FY. Takes 15 minutes online. Free.
Why LUT exists
Exports are zero-rated under GST. The law gives exporters two ways to claim that benefit:
Without LUT
Pay-then-refund
Charge 18% IGST on exports. Pay it. File RFD-01. Wait 30-60 days for refund. Cash flow drag.
With LUT
Bill at 0% directly
No IGST upfront. Bill ₹1L = receive ₹1L. Cleaner, faster, no refund chase. Still claim refund of input GST separately via RFD-01.
Who can file LUT
- Any GST-registered taxpayer who supplies zero-rated supplies (exports or supplies to SEZ)
- No turnover threshold — even a freelancer with one US client can file
- Cannot be filed if you're prosecuted for tax evasion > ₹2.5cr (rare)
The 5-step filing
GSTIN + password.
Form RFD-11 opens.
Current or upcoming FY (file in April for the new year).
Name, occupation, address. Anyone — colleague, friend, accountant. No signatures needed on the portal; you self-declare.
ARN issued instantly. Save it. You'll quote this ARN on every export invoice for the year.
What to put on export invoices (post-LUT)
- "Supply meant for export under Letter of Undertaking without payment of integrated tax"
- LUT ARN and date
- GST 0% (CGST/SGST/IGST all zero)
- Place of supply: country code "96" for export
- For services: convertible foreign currency mention
LUT expires at FY end. File a fresh one in early April every year. Forget = your exports default back to "pay IGST + refund" mode. Calendar this.
What if you don't file?
Default rule kicks in: every export invoice must show 18% IGST. You pay it monthly via GSTR-3B. Then file RFD-01 every quarter to claim refund. Multi-month cash flow lag.
For a service exporter doing ₹50L/year — that's ~₹9L IGST cycling through every quarter. With LUT: zero.
LUT is the freest 15 minutes a service exporter can spend. Most don't know it exists. Those who do, never go back.
Quick answers
Technically need to pay IGST + claim refund for those exports. File current-year LUT immediately and apply for retroactive validation (officer may accept).
Bond = with bank guarantee (15% of tax involved). Earlier mandatory for some categories. LUT replaced bond for most exporters from 2017 — no bank guarantee needed.
Yes — same RFD-11 covers all zero-rated supplies (goods exports, service exports, supplies to SEZ).
Yes — file RFD-01 (refund of unutilised ITC). Separate from LUT. Quarterly is the practical sweet spot.
If payment is in INR via convertible foreign exchange route, generally OK. Pure INR receipt may disqualify as export of service — confirm with CA per case.
When you might want help
The LUT itself is DIY-simple. Where it pays back: setting an annual reminder (most exporters forget the April renewal), pairing LUT with quarterly RFD-01 refund discipline, and ensuring invoice template + chartered accountant + bookkeeping all reflect 0% IGST consistently.
Want LUT + refund handled annually?
One annual call. We file LUT in April, quarterly refunds, and reconcile against your books.