Letter of Undertaking (LUT) under GST


Before understanding the concept of LUT, it is important to understand the meaning of zero-rated supply under GST.

What is Zero-rated supply?

Zero-rated supply is defined in sec 16(1) of IGST Act. The extract of the same is as follows:

zero rated supply” means any of the following supplies of goods or services or both, namely:

(a) export of goods or services or both; or

(b) supply of goods or services or both for authorised operations to a Special Economic Zone developer or a Special Economic Zone unit.


Therefore, based on the above definition, the following are covered within the meaning of zero-rated supply:

  • Export of goods and export of services
  • Supplies to SEZ unit or SEZ developer


Options available to a supplier of zero-rated supply:

A supplier of zero-rated supply has the following two options. They can either:

  • Export on payment of integrated tax (IGST) or
  • Export without payment of integrated tax (IGST) under bond or LUT


What is a Letter of Undertaking?

A Letter of Undertaking (LUT) is a legal document that businesses can furnish to the Government to avail benefits under GST, particularly when dealing with exports and supplies to SEZ unit/developer. The primary purpose of a LUT is to increase exports by reducing the compliance procedure for claiming taxes paid for the furtherance of business. It is a cost-effective approach for promoting overseas business as it allows a registered person to export without payment any GST.


Who is required to apply for LUT?

A registered person who is availing the option to export goods or services or supply to SEZ without payment of IGST is required to furnish a Letter of Undertaking (LUT). An LUT should be executed prior to making such export/SEZs supply. LUT will help him to claim the benefit of not paying IGST on export/supply to SEZ.


Benefits of LUT under GST:

  • Exemption from IGST on Exports:

When an exporter provides an LUT, they can supply goods to foreign buyers without paying Integrated Goods and Services Tax (IGST). This exemption encourages and facilitates international trade, making Indian products more competitive in the global market. The goods/services exported from India would be competitive in the global market as the customer does not have to bear the incidence of tax.


  • Simplifying the Export Procedure:

LUT eliminates the need for exporters to pay taxes and then claim a refund later. This simplifies the export process, making it more efficient and reducing the financial burden on businesses engaged in international trade.


  • Improved Cash Flow:

Since the taxpayer is not paying the tax at the time of export, his working capital will not be affected. Further, he can use that money into business for a better overall result.


  • Easy to obtain:

The LUT under GST is a basic online form that makes it simple for taxpayers to apply for and receive tax exemption on exports/SEZ supplies.


Procedure for Obtaining an LUT:

Application: The application for an LUT can be filed online through the GST portal. The exporter needs to provide necessary details and supporting documents to complete the application process.


Verification and Approval:  First step is to login to GST portal, Go to ‘SERVICES’ Tab > ‘User Services’ > Select ‘Furnish Letter of Undertaking (LUT)’. Then fill in the required fields (Name of witness, occupation and address). To apply you can either sign the document through a DSC or OTP. At last, a confirmation message will appear.


Validity: One financial year

For example, if application for LUT for FY 2023-24 is furnished on 2nd March 2024, then the LUT would remain valid till the last date of that financial year i.e., 31st March 2024. A fresh LUT need to be executed for FY 2024-25.


Details required:

  • Witness details which include their name and address,
  • A consent letter of witness,
  • Previous year LUT approved by the department,
  • Since there is no physical submission of documents, it is advised to maintain a separate folder for all the documents required for future reference.



          In some cases, if the goods are exported before filling of LUT, then the department could levy GST on the said export. LUT is mandatory for exporting or supplying goods/services to SEZ unit/developer without payment of IGST. Though it could be said that non-furnishment of LUT is merely a procedural lapse and export benefits cannot be denied, the matter will eventually end up into litigation. Hence, it is always suggested to apply for LUT before the start of the financial year to avoid unnecessary litigation.



LUT under GST plays a pivotal role in facilitating and promoting international trade by providing tax exemptions to exporters. It not only simplifies the export process but also contributes to the ease of doing business. Businesses engaged in international trade should familiarize themselves with the LUT requirements and procedures to optimize their operations and enhance their global competitiveness in the dynamic world of business. Business should take advance of the benefit extended by the government.

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