The Goods and Services Tax (GST) system in India offers exporters the facility to export goods or services without paying Integrated GST (IGST) by filing a Letter of Undertaking (LUT). The LUT allows the exporter to make zero-rated exports without the burden of paying IGST upfront and later claiming a refund. This mechanism not only promotes ease of doing business but also preserves working capital for exporters. But a common query many businesses have is what the time limit for filing LUT in GST is?
In this article, we will explore the time limit for filing LUT in GST, where to file it, the process, the types, advantages, and its connection with Inverted Duty Refund. If you’re an exporter or service provider operating in India, this guide will clarify everything you need to know.
What is LUT in GST?
A Letter of Undertaking (LUT) is a document that allows registered taxpayers under GST to export goods or services without paying IGST. Instead of paying tax and claiming refunds later, the LUT enables direct exports under bond without tax payment. It’s especially beneficial for businesses dealing in zero-rated supplies.
The LUT must be furnished online through the GST portal in Form GST RFD-11 by all exporters who want to make exports without the payment of IGST.
Where to File LUT in GST?
The LUT must be filed electronically on the official GST portal. The filing process is managed under Form GST RFD-11, and once submitted; it is verified and approved by the jurisdictional GST officer.
Time Limit for Filing LUT in GST
One of the most important aspects of LUT compliance is timely filing. As per the GST rules, the LUT is required to be filed at the beginning of each financial year. Here’s a detailed explanation:
- Annual Filing: The LUT is valid for one financial year. For example, if you file LUT for FY 2025–26, it is valid from April 1, 2025, to March 31, 2026.
- Time Limit: It must be filed on or before the beginning of the financial year for which it is being submitted. Ideally, it should be filed before making any zero-rated supplies in the new year.
- Late Filing: If not filed on time, the taxpayer must pay IGST on exports and claim a refund later under the regular process. This could impact cash flow significantly.
Important Note: There is no government late fee or penalty for delayed LUT filing, but it does restrict the ability to make exports without payment of tax.
Advantages of Filing LUT in GST
Filing LUT provides several benefits to exporters and service providers. Here’s why it’s an essential part of compliance:
- Cash Flow Efficiency: Avoids the need to pay IGST upfront and wait for a refund.
- Faster Export Processing: Reduces paperwork and processing time at customs.
- Compliance Advantage: Establishes legal conformity with GST export rules.
- Better Working Capital: Helps maintain liquidity for small and medium exporters.
- Ease of Doing Business: Supports India’s vision to enhance export competitiveness.
Step-by-Step Process to File LUT in GST
Filing LUT is a straightforward online process. Here’s a step-by-step guide:
- Login to the GST portal
- Navigate to Services > User Services > Furnish Letter of Undertaking (LUT).
- Select the financial year for which LUT is being filed.
- Fill in the required details such as:
- Name and address of witnesses
- Declaration by the authorized person
- Upload supporting documents if needed (usually not required unless demanded by officer).
- Submit with DSC or EVC.
- A confirmation message and ARN (Acknowledgement Reference Number) will be generated.
- Download and keep a copy of the approved LUT for future reference.
Types of LUTs in GST
There is only one type of LUT under GST, used for exporters who wish to make zero-rated supplies without paying tax. However, in special circumstances, taxpayers not eligible to file LUT must furnish a Bond with Bank Guarantee.
Comparison:
| Basis | LUT | Bond with Bank Guarantee |
| Eligibility | Registered exporters with clean tax record | Others, including defaulters |
| Requirement of surety | No | Yes (Bank Guarantee may be required) |
| Process | Online on GST portal | Manual submission in certain cases |
| Validity | One financial year | Varies depending on bond terms |
Inverted Duty Refund and LUT – What’s the Connection?
The Inverted Duty Structure occurs when the input tax rate is higher than the output tax rate, leading to an accumulation of Input Tax Credit (ITC). Businesses facing this issue can claim an Inverted Duty Refund under GST.
Here’s how LUT and Inverted Duty Refund relate:
- Exporters under LUT do not pay IGST on output (exports).
- They continue to incur input taxes on raw materials and services.
- The accumulated ITC can be claimed back as a refund under Inverted Duty Structure.
So, while LUT enables export without tax payment, Inverted Duty Refund helps recover the unutilized ITC, making both mechanisms crucial for exporters.
Conclusion
Filing a Letter of Undertaking (LUT) in GST is not just a legal necessity but a practical solution for exporters aiming to manage their finances effectively. The time limit for LUT filing is crucial it must be submitted before the start of each financial year to continue making zero-rated supplies without paying IGST.
Combining LUT filing with Inverted Duty Refund claims ensures that exporters can operate with improved liquidity, lower compliance costs, and a competitive edge in global markets. Staying on top of these provisions guarantees seamless GST compliance and optimized business performance
FAQs
Q1. What is the validity of LUT under GST?
A: LUT is valid for one financial year (April to March). It must be renewed every year.
Q2. Can LUT be filed in the middle of a financial year?
A: Yes, but exports made before filing will require IGST payment. LUT is applicable only after approval.
Q3. Is there a penalty for late filing of LUT?
A: No direct penalty, but you must pay IGST on exports until LUT is approved.
Q4. Can I claim Inverted Duty Refund even after filing LUT?
A: Yes, LUT allows export without tax, while Inverted Duty Refund allows recovery of accumulated ITC.
Q5. Who is eligible to file LUT?
A: All registered exporters who have not been prosecuted for any tax offense exceeding ₹2.5 crores in the last 5 years.
Q6. Do I need to submit any documents while filing LUT?
A: Normally, no physical documents are needed. Details of witnesses and a declaration are sufficient unless additional documents are asked for by the officer.
Q7. What happens if I don’t file LUT?
A: You will be required to pay IGST on exports and later claim a refund, which can affect your working capital.
Q8. Can services be exported under LUT?
A: Yes, both goods and services can be exported under LUT without payment of IGST.
