What is a LUT and why exporters of services need one
If you export services and you're GST-registered, a Letter of Undertaking (LUT) is what lets you invoice without charging GST upfront and then claiming a refund later — instead, you commit to meeting export conditions and skip the tax entirely at the point of invoicing.
The problem an LUT solves
Without an LUT, a GST-registered exporter technically has to pay IGST on the export invoice and then separately claim a refund from the government — a process that ties up cash and adds paperwork. An LUT lets you skip that entirely: you export without charging or paying GST upfront, provided you meet the export conditions.
Who needs one
Any GST-registered business or freelancer regularly invoicing clients outside India for services should generally file an LUT, since it directly improves cash flow by removing the pay-now-refund-later cycle on every export invoice.
How it works in practice
- File the LUT (Form GST RFD-11) on the GST portal — it's typically valid for one financial year and needs to be renewed annually.
- Once filed, mark export invoices as "Supply meant for export under LUT without payment of IGST."
- You still need to meet the underlying export conditions — payment received in convertible foreign exchange, and the recipient located outside India.
What happens if you don't file one
You can still export services without an LUT, but you'll need to pay IGST on the export invoice and then file for a refund separately — a slower, more paperwork-heavy path that most regular exporters avoid once they discover the LUT alternative.