A Letter of Undertaking (LUT) is a declaration filed on the GST portal in form RFD-11 that lets you export goods or services, or supply to SEZ units, without paying IGST upfront. Without a valid LUT you must pay IGST on every export and claim a refund later, which locks up working capital. An LUT is valid for one financial year and must be filed fresh each year.
Filing is quick: submit RFD-11 online, usually accepted immediately, and note the acknowledgment number. From then on, export invoices are raised without IGST, citing the LUT. The undertaking commits you to completing the export and realising payment within the prescribed timelines — if goods aren't exported or foreign payment isn't received in time, the tax becomes payable with interest.
This matters well beyond traditional exporters. Freelancers, IT and design agencies, and consultants billing overseas clients in foreign currency are typically making zero-rated exports of services — with an LUT, they charge no GST and keep full ITC refunds available on their inputs. Many discover the LUT only after months of either wrongly charging GST to foreign clients or paying IGST they didn't need to.
The recurring mistake is forgetting renewal. The LUT dies on 31 March; exports billed in April before the new one is filed are technically without a valid LUT. Put the renewal in your March compliance list and file before the new financial year starts — it takes minutes and costs nothing.
Reviewed to the law in force in FY 2026-27. General information, not advice — confirm the position for your facts before acting.