LUT Filing for Exporters and GST Refunds

An exporter’s biggest GST headache is rarely the tax rate. It is cash. If you pay IGST on every export invoice and then wait months for a refund, your working capital is locked up in the department’s hands. If you export under a Letter of Undertaking instead, you avoid paying IGST upfront, but you then end up with unused input tax credit that has to be claimed back through a refund application. Between these two routes sit a handful of forms, a one-year validity period, and a set of conditions that are easy to miss. That is why LUT filing for exporters, and the GST refund process that follows it, deserve a careful look before the next shipment goes out.

This guide explains what an LUT is, who can use it, how it connects to GST refunds, what to prepare, and where the limits lie. It is general information, not tax advice for any particular business.

What Is an LUT, and Why Does It Matter?

Exports are treated as zero-rated supplies under GST. That means no GST is ultimately borne by the exporter, and the law gives two ways to achieve this. The first is to export on payment of IGST and later claim a refund of that IGST. The second is to export without paying IGST by furnishing a Letter of Undertaking (LUT) and then claim a refund of the input tax credit that accumulates because no output tax was paid.

The LUT is a declaration, made electronically on the GST portal in Form GST RFD-11 under Rule 96A of the CGST Rules, 2017. It replaces the older practice of executing a bond with a bank guarantee for most eligible exporters. By filing it, the exporter undertakes to bring the foreign exchange proceeds into India within the prescribed time, and to pay the tax with interest if the conditions are not met.

LUT filing for exporters matters because the rest of the process depends on it. Without a valid LUT in force, an export invoice is treated as a supply on which IGST is payable, and the refund route changes from accumulated ITC to refund of IGST paid.

Who Can File an LUT?

Registered persons making zero-rated supplies can generally furnish an LUT, covering exports of goods, exports of services, and supplies to Special Economic Zone (SEZ) units and developers. A key eligibility condition is that the person should not have been prosecuted for tax evasion exceeding a specified amount, which is ₹2.5 crore under Rule 96A. Other conditions apply, so check the current rule before filing.

For exports of services, the supply must meet the definition of export of services, which includes conditions such as the supplier being located in India, the recipient being outside India, the place of supply being outside India, and payment being received in convertible foreign exchange or in Indian rupees where RBI permits. A supply to a related entity that is merely an establishment of a distinct person does not qualify.

LUT Filing for Exporters: How It Works

The process is done entirely on the GST portal:

1. Log in with your GST credentials.

2. Go to Services, then User Services, then Furnish Letter of Undertaking.

3. Select the financial year for which the LUT is being furnished.

4. Complete the declaration, including the details of two independent witnesses.

5. Upload or enter any information requested, such as the previous year’s LUT if it was approved manually.

6. Sign with a digital signature or EVC and submit.

7. Download the acknowledgement and keep it with your export records.

The GST system has enabled the LUT for FY 2026-27, and it is generally acknowledged immediately when filed with a digital signature or EVC.

Validity and Timing

An LUT is valid for one financial year only. An LUT filed for FY 2026-27 covers supplies from 1 April 2026 to 31 March 2027, and a fresh LUT is needed every year. Although the law does not give a fixed calendar due date, it should be in force before you make your first zero-rated supply without paying IGST in the year, which in practice means filing in April or even earlier.

If you are reading this in the middle of the year and have not yet filed an LUT for FY 2026-27, file it immediately, and speak to a GST professional about any exports already made since April, since the tax treatment of those invoices depends on the facts.

The Two Export Refund Routes

Route 1: Refund of accumulated ITC (LUT route). If you export without paying IGST, the credit on your inputs and input services may pile up. You can claim a refund of the eligible part of that credit by filing Form GST RFD-01 on the GST portal, with supporting statements of invoices and the computation. The refund is calculated using a formula in Rule 89(4), which is broadly: turnover of zero-rated supply divided by adjusted total turnover, multiplied by net ITC. Net ITC excludes certain credits, such as on capital goods, and the formula’s inputs have their own definitions and limits.

Route 2: Refund of IGST paid (payment route). If you export on payment of IGST, you can claim a refund of that IGST. For exports of goods, the shipping bill itself generally serves as the refund application once the exporter has filed the relevant returns (GSTR-1 and GSTR-3B) and the export details match, and the refund is processed through Customs. For services, a separate application is needed. This route is governed by Rule 96.

You cannot normally claim both refunds on the same export supply, so choose the route that fits your cash flow and the nature of your business. Exporters who buy mostly from suppliers charging GST and have a lot of ITC often prefer the LUT route, while those with little credit may prefer to pay IGST and claim it back.

Other Refund Situations

Supplies to SEZ units and developers. These are zero-rated supplies, and the supplier can choose the LUT route or pay IGST and claim a refund, subject to the documentation required.

Inverted duty structure. Where input GST rates are higher than output rates, credit can accumulate even without exports. A separate refund provision applies, with its own formula. Recent changes have extended the provisional refund concept to some such cases, so check the latest rules.

Timelines and Process

A GST refund application must generally be filed within two years from the relevant date, which differs by type of refund. After you file Form GST RFD-01, the officer should issue an acknowledgement in Form GST RFD-02, usually within 15 days if the application is complete. For zero-rated supplies, a provisional refund of 90% of the claimed amount may be sanctioned in eligible cases, with the balance following after verification, and the final order is expected within 60 days of the application date. If the refund is delayed beyond the statutory period, interest may be payable. A deficiency memo can be issued if documents are missing, in which case you may have to correct and refile, which resets the clock.

Documents Commonly Required

For LUT filing: GSTIN and registration details, authorised signatory details, the financial year, witness details, and a digital signature or EVC.

For refunds, depending on the route: export invoices, shipping bills and export general manifest details, bank realisation certificates or foreign inward remittance certificates for services, GST returns (GSTR-1, GSTR-3B, and annual return where relevant), ITC reconciliations, statements of invoices and the Rule 89 computation, and a certificate from a chartered accountant for larger claims as the rules require.

How to Prepare Before You File

Before LUT filing for exporters or a refund application, spend a short time on these points:

• Confirm you are eligible and that the LUT for the current financial year is on the portal.

• Reconcile export invoices, shipping bills, and GST returns, so that the same numbers appear everywhere.

• Keep proof of realisation of foreign exchange, especially for services.

• Compute net ITC and the zero-rated turnover carefully, using the definitions in the rules.

• Identify credit that is ineligible or blocked, so it is not claimed.

• Check the period for which you are claiming and the two-year limit.

• Keep soft copies of all statements and acknowledgements.

Common Mistakes in LUT Filing for Exporters and Refunds

The most common error is forgetting to renew the LUT for the new financial year, which turns zero-rated invoices into IGST-payable ones. Mismatches between shipping bill data and GSTR-1, or between GSTR-1 and GSTR-3B, are another frequent cause of stuck IGST refunds. In ITC refund claims, people often use the wrong turnover or include ineligible credit, producing an inflated refund and a later demand. Others file RFD-01 without proper statements or documents, triggering deficiency memos. Service exporters sometimes miss the foreign exchange realisation requirement. Finally, exporters assume a refund follows automatically from the LUT, when it is a separate claim with its own conditions.

Understanding the Limits

General guidance on LUT filing for exporters and GST refunds can help you choose the right route, organise documents, and avoid typical errors, but it cannot approve or speed up a refund. Eligibility, calculation, and processing depend on the law, the facts of each export, the accuracy of your records, and verification by the department or Customs. Rules, forms, and procedures are revised regularly, and a refund is never guaranteed merely because an LUT has been filed. For large claims, complex supply chains, or a refund already rejected, a GST practitioner or chartered accountant should review the facts before you proceed.

How Calling Daddy Can Help

Exporters often know they should file an LUT and claim a refund, but are unsure which form comes first, how the formula works, or why a claim keeps getting stuck. Calling Daddy helps exporters understand LUT filing for exporters, the refund routes available, and the documents needed, and helps them organise their records before they file. We will always tell you plainly when your case needs a GST professional rather than general guidance.

Frequently Asked Questions

1. What is LUT filing under GST?
It is the process of furnishing a Letter of Undertaking in Form GST RFD-11 so that an eligible registered person can export goods or services without paying IGST, subject to conditions.

2. Is an LUT required for every exporter?
Not necessarily. An exporter who chooses to pay IGST on exports does not need one. It is needed for exports without payment of IGST.

3. Does filing an LUT automatically give me a refund?
No. An LUT allows export without IGST. A refund of accumulated ITC is a separate claim with its own conditions and documents.

4. How long is an LUT valid?
One financial year. A fresh LUT is needed for every year.

5. Which form is used for a GST refund of accumulated ITC?
Form GST RFD-01, filed on the GST portal with the required statements.

6. How is the refund of IGST paid on exports processed?
For goods, the shipping bill generally acts as the refund application once the returns are filed and the details match, and Customs processes it.

7. What is the time limit to claim a refund?
Generally two years from the relevant date, which depends on the type of refund.

8. How can I check the status of my refund?
Log in to the GST portal and use the refund tracking facility.

Final Thoughts on LUT Filing for Exporters

Exporting is hard enough without letting tax paperwork trap your cash. Careful LUT filing for exporters at the start of the year, followed by clean records and a well-prepared refund claim, keeps your money moving and your compliance record tidy. If you are unsure which route suits your business or why a refund has stalled, reach out to Calling Daddy and take the first step with clarity.