Export Without Paying IGST Upfront with a Valid LUT

Any person registered under GST who intends to export goods or services, or to supply to an SEZ unit or developer, can file an LUT. It is not available to someone who has been prosecuted for tax evasion above the amount specified in the rules. Most regular exporters, including small businesses and freelancers, are eligible.

An LUT is valid for the financial year for which it is filed. A fresh LUT must be filed for each new financial year, ideally before the first export of that year. If you export without a valid LUT, you would need to pay IGST on the supply and then claim a refund, which ties up working capital.

Without an LUT, exports are still zero-rated, but you must pay integrated GST at the time of supply and later claim a refund of that tax. If you do neither, the department may treat the supply as taxable and demand tax with interest. Filing an LUT early in the year avoids both situations.

No. Both allow export without payment of IGST, but an LUT is a simple undertaking filed online, while a bond is a more formal instrument that may require a bank guarantee. Most eligible exporters use the LUT route. A bond is generally needed only by those who are not eligible to furnish an LUT under the rules.

Yes. Export invoices issued under an LUT should state that the supply is meant for export or SEZ supply under a Letter of Undertaking without payment of integrated tax, and it is good practice to quote the LUT reference number. This helps your buyer, customs and the GST department match the invoice with your filing.