LUT under GST for Export of Services (India)

You sign your first overseas client, raise the invoice in dollars, and then realise you are not sure whether to charge 18% IGST on it. The answer, for most Indian SaaS and services exporters, is no IGST at all, but only if one small filing is already sitting on the GST portal.

That filing is the Letter of Undertaking, or LUT. It is the difference between exporting cleanly with zero IGST and locking up cash in a refund cycle you did not need. This guide covers what a LUT is, who can file it, how the two export routes compare, the annual renewal, and the one timing rule that founders get wrong more than any other.

1 What a LUT actually is

Under GST, an export of services is a zero-rated supply. Zero-rated does not mean exempt: it means the supply is taxed at a rate of zero while you still keep the right to claim input tax credit on your costs. That is a much better position than an exempt supply, where credit is lost.

To make a zero-rated supply of services, the law gives you two routes. Either you pay IGST on the export and claim it back later as a refund, or you file a Letter of Undertaking and export without paying IGST at all. The LUT, filed in Form GST RFD-11 on the GST portal, is simply your written promise that you will complete the export and meet the conditions. Once it is accepted, every export invoice you raise in that year carries no IGST.

2 When your service counts as an export

The LUT is only relevant if what you sell genuinely qualifies as an export of services. Under the IGST Act, five conditions must all be met.

• The supplier is located in India.
• The recipient is located outside India.
• The place of supply is outside India.
• Payment is received in convertible foreign exchange (or in Indian rupees where the RBI permits).
• The supplier and recipient are not merely establishments of the same person (so a branch billing its own head office does not count).

Most SaaS subscriptions sold to overseas customers, and most agency or consulting work delivered to foreign clients and paid in dollars, tick all five boxes. Where founders slip is on the payment condition: the money must land as foreign exchange, and your bank must issue a Foreign Inward Remittance Certificate (FIRC) or the equivalent as proof.

3 LUT route versus paying IGST and claiming a refund

Both routes are legal and both let you keep your input credit. The difference is entirely about cash and effort.

4 Who can file, and the one timing rule that matters

Any registered person who intends to make zero-rated supplies can file a LUT. The only bar is that it is not available to someone who has been prosecuted for tax evasion of ₹2.5 crore or more. In practice, essentially every SaaS company, digital agency and services exporter qualifies.

Now the point that matters most, and the reason this guide exists.

Because a LUT is valid for one financial year only, it lapses on 31 March and must be refiled. If you forget to renew in April and export in the gap, you are back in the same problem: exports made before the new year’s LUT is accepted are not covered. Ankit’s standard advice to founders is blunt: file the LUT at the very start of the financial year, every year, and take the whole question off your plate.

5 How to file the LUT, step by step

The filing is entirely online and usually takes a few minutes once your details are ready.

6 Your LUT compliance checklist

1. Confirm your services meet all five export conditions, especially payment in foreign exchange.
2. File the LUT in Form GST RFD-11 at the start of the financial year, before any export invoice.
3. Save the LUT acknowledgement and ARN with your GST records.
4. Endorse every export invoice as a supply under LUT without payment of IGST, quoting the ARN.
5. Keep FIRC or bank realisation proof for each overseas payment received.
6. Track your unutilised input tax credit and claim the refund on your Indian costs.
7. Diarise the renewal for the first week of April every year, without fail.
8. Never export in the gap between financial years while the new LUT is still pending.

7 FAQs

Disclaimer: This article is general information as of September 2026 and is not tax or legal advice. GST law, the LUT process and export conditions can change. Confirm your specific position with a qualified professional before acting.