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GST Export Guide — 2026
GST on Exports — LUT vs IGST Payment: Which Route is Right for You?
A complete, practical guide for Indian exporters covering zero-rated supply under GST, how to file an LUT (Letter of Undertaking), when to pay IGST and claim a refund, key conditions, time limits, and common mistakes that delay refunds.
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50,000+
Businesses Served
0%
GST Rate on Exports
3 Months
Export Time Limit (LUT)
60 Days
Refund Processing Time
Fundamentals
What Are Exports Under GST? Understanding Zero-Rated Supply
Exports of goods and services are treated as zero-rated supplies under Section 16 of the IGST Act, 2017. This means exports are not subject to GST — neither IGST, CGST, nor SGST is charged on the export invoice. More importantly, the exporter retains the right to claim Input Tax Credit (ITC) on inputs used in producing or supplying the exported goods or services, and can claim a refund of that ITC from the government.
Zero-rated does not mean the supply is exempt. It means the GST rate on the outward supply is zero — but unlike exempt supplies, the exporter does not lose the ITC on inputs. This is the key distinction that makes GST export treatment extremely beneficial for Indian exporters.
Under GST, an exporter has two routes to handle the zero-rated supply treatment:
Route 1 — LUT (Letter of Undertaking)
- Export without paying any IGST on the invoice
- Claim refund of accumulated ITC on inputs
- No upfront tax outflow — better cash flow
- Must file Form RFD-11 (LUT) before each financial year's exports
- Goods: must export within 3 months of invoice
- Services: receive payment in foreign currency within 1 year
Route 2 — Pay IGST & Claim Refund
- Pay IGST on the export invoice at applicable rate
- Claim full cash refund of IGST paid
- Requires upfront IGST Payment — affects cash flow
- No LUT filing required
- Refund is processed automatically for shipping bill-linked exports
- Suitable if cash ledger has surplus balance
Which route do most exporters choose? The LUT route is preferred by the vast majority of Indian exporters because it eliminates upfront IGST payment and directly improves working capital. setupfiling.in recommends the LUT route for all regular exporters unless there is a specific reason to pay IGST upfront.
LUT Explained
What Is an LUT (Letter of Undertaking) Under GST?
A Letter of Undertaking (LUT) is a declaration filed by an eligible exporter in Form RFD-11 on the GST portal. By filing an LUT, the exporter gives an undertaking to the government that they will:
- Export goods within 3 months from the date of issue of the tax invoice
- Receive payment for exported services in convertible foreign exchange (or INR where RBI-permitted) within 1 year of the invoice date
- Pay the applicable IGST with 18% interest if the export conditions are not fulfilled within the prescribed time limits
- Comply with all other GST provisions relating to exports
Once an LUT is filed and accepted, the exporter can issue export invoices with the notation "Supply meant for export/supply to SEZ unit or SEZ developer for authorised operations under LUT without payment of integrated tax" — and no IGST is charged on those invoices.
LUT Validity:
An LUT is valid for the entire financial year (April to March) in which it is filed. A new LUT must be filed before the first export of each financial year. There is no limit on the number or value of exports that can be made under a single LUT within the financial year.
Who Can File an LUT?
Any GST-registered exporter of goods or services is eligible to file an LUT, except exporters who have been prosecuted for any offence under the CGST Act or any other law for an amount exceeding ₹2.5 crore. Such exporters must furnish a Bond (with surety from a bank or a solvent individual) instead of an LUT.
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Manufacturer Exporters
Manufacturers who produce goods and directly export them. Can file LUT to export without IGST and claim ITC refund on raw materials and input services used in production.
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Merchant Exporters
Traders who purchase goods from domestic suppliers and export them. Can file LUT and receive goods from suppliers at concessional GST (0.1% for registered suppliers) under a tax invoice.
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Service Exporters
IT companies, BPOs, consultants, and other service providers exporting services. Must ensure all five conditions of "export of services" are met under Section 2(6) of the IGST Act.
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SEZ Suppliers
Supplies to SEZ units and SEZ developers are also treated as zero-rated under GST. An LUT covers both direct exports and supplies to SEZ units under the same filing.
Export of Services
Conditions for Export of Services Under GST — Section 2(6) IGST Act
For a service transaction to qualify as "export of services" (and be eligible for zero-rated treatment), all five conditions under Section 2(6) of the IGST Act must be simultaneously satisfied:
- Supplier is in India: The service provider must be located in India (registered or required to be registered under GST).
- Recipient is outside India: The service recipient must be a person located outside India.
- Place of Supply is outside India: The place of supply of the service, as determined by the IGST Act's place of supply rules, must be outside India.
- Payment received in foreign currency: The payment must be received in convertible foreign exchange — or in Indian Rupees where specifically permitted by the Reserve Bank of India (e.g., Nepal, Bhutan trade).
- Supplier and recipient are not merely establishments of the same person: The supplier and recipient cannot be branches or divisions of the same legal entity — they must be distinct persons.
Important for IT / Software Exporters:
If payment is received in Indian Rupees from a foreign client whose Indian bank account is used for payment, this may not qualify as "convertible foreign exchange" unless RBI has specifically permitted such payment. Always verify the payment mode with your CA before claiming zero-rated treatment.
Step-by-Step Process
How to File an LUT Online on the GST Portal — Step by Step
The LUT is filed in Form RFD-11 on the GST portal. The process takes approximately 10–15 minutes and is entirely online. Here is the complete process:
Log in to the GST Portal
Go to gst.gov.in and log in with your GSTIN credentials. Ensure your registered mobile number is active for OTP (if using EVC) or your DSC token is plugged in (if using DSC — mandatory for companies and LLPs).
Navigate to LUT Filing
Go to Services → User Services → Furnish Letter of Undertaking (LUT). The Form RFD-11 page will open. This section is available under "User Services" — not under "Returns".
If the option is not visible, check that your GSTIN is registered for exports. The LUT option appears only for taxpayers with export turnover or those who have declared export intent in their registration.Select Financial Year
From the dropdown, select the financial year for which you are filing the LUT (e.g., 2026–27). The LUT is year-specific — filing for the wrong year will require a fresh filing. You can file for the next financial year in advance before March 31 to ensure continuity.
Read and Confirm the Declaration
The form contains a pre-drafted undertaking stating you have not been prosecuted for tax offences above ₹2.5 crore. Read it carefully. Tick the checkbox to confirm. Enter your place (city) of business signing the undertaking.
If you or your company have any pending prosecution under the CGST Act, Income Tax Act, Customs Act, or FEMA for amounts exceeding ₹2.5 crore — you are not eligible for an LUT. You must file a Bond instead. Consult a CA before proceeding.Add Two Witnesses
Enter the name, address, and occupation of two witnesses. Witnesses can be employees, directors, partners, or other responsible persons of the business. Their details will appear on the filed LUT document.
Save, Sign & Submit
Click Save to save the draft, then Submit. Sign the LUT using:
EVC: OTP sent to the registered mobile number of the authorised signatory
Once submitted, the LUT is instantly accepted on the portal. Download and print the filed LUT (ARN acknowledgement). Keep it available at your place of business — the GST officer may ask for it during an audit or export verification.
DSC: Digital Signature Certificate — mandatory for private limited companies, public companies, and LLPs
Route Comparison
LUT Route vs IGST Payment Route — Detailed Comparison
The table below compares both export routes across all key parameters to help you choose the right option for your business:
| Parameter | LUT Route | IGST Payment Route |
|---|---|---|
| Tax on Export Invoice | Nil — no IGST charged | IGST charged at applicable rate (18%, 12%, 5%, etc.) |
| Cash Flow Impact | No upfront tax outflow — better working capital | IGST paid upfront from cash ledger — reduces liquidity |
| What is Refunded? | Accumulated ITC on inputs (not the export IGST) | Full IGST paid on export invoices |
| Refund Calculation | (Export Turnover ÷ Net Turnover) × Net ITC | 100% of IGST paid on export invoices |
| Pre-Condition | LUT filing (Form RFD-11) before first export of the year | No pre-condition — can export any time |
| Refund Form | Form RFD-01 (manual or auto for shipping bill) | Automatic refund based on GSTR-1 + Shipping Bill data (for goods); RFD-01 for services |
| Export Time Limit | Goods: 3 months; Services: 1 year (foreign exchange receipt) | No specific time limit for IGST refund eligibility (but file returns on time) |
| Risk if Conditions Not Met | IGST + 18% interest becomes payable on the export value | No additional risk — IGST already paid |
| Best Suited For | Regular exporters with high input purchases and ITC accumulation | Occasional exporters, or those with surplus cash ledger balance |
| Invoice Notation Required | Yes — LUT number and "without payment of IGST" note | No special notation — standard IGST tax invoice |
SetupFiling.in Recommendation:
For businesses with regular export activity and meaningful input purchases (raw materials, freight, professional services, software subscriptions), the LUT route is almost always superior. It preserves cash flow, eliminates upfront IGST payment, and allows structured ITC refund claims. Use the IGST route only if you have an existing cash surplus in your GST ledger or if your export turnover is very small.
ITC Refund Process
How to Claim ITC Refund on Exports (LUT Route) — Form RFD-01
When exporting under LUT, no IGST is charged on the invoice. The exporter is entitled to a refund of the accumulated ITC on inputs, input services, and capital goods used in producing or providing the exported goods or services. This refund is claimed in Form RFD-01 on the GST portal.
ITC Refund Formula — Export Under LUT
Refund Amount = (Export Turnover of Goods/Services ÷ Net Adjusted Total Turnover) × Net ITC
Net ITC = Total ITC availed minus ITC reversed during the period. Net Turnover = Total taxable + exempt + zero-rated turnover (excluding exempt supply turnover and nil-rated supplies in certain cases).
Step-by-Step Refund Claim Process (RFD-01)
Ensure GSTR-1 and GSTR-3B are Filed
Before applying for refund, confirm that all GSTR-1 returns are filed with correct export invoice details (Table 6A for direct exports, Table 6B for SEZ supplies). GSTR-3B must also be filed with ITC claimed. The refund cannot be processed if returns are pending.
Log in to GST Portal — Navigate to RFD-01
Go to Services → Refunds → Application for Refund → Select "Refund of ITC on export of goods/services without payment of tax (LUT/Bond)". Select the tax period for which refund is being claimed.
Fill RFD-01 with Turnover and ITC Details
Enter the export turnover (from GSTR-1), net adjusted total turnover, and net ITC (from GSTR-3B). The portal auto-calculates the eligible refund amount using the formula. Attach the Statement of Invoices (Statement 3 for goods; Statement 3A for services).
For export of goods, the shipping bill filed with Customs is auto-linked in the GST portal. Ensure the GSTIN, invoice number, and amounts on the shipping bill exactly match your GSTR-1. Mismatches are the most common reason for refund delays.Submit, Sign & Track ARN
Submit the RFD-01 application using EVC or DSC. An ARN (Application Reference Number) is generated — save this for tracking. The GST officer must process the refund within 60 days from the date of receipt of a complete application.
Documents Required for LUT Route ITC Refund
- Copy of LUT filed for the relevant financial year (ARN acknowledgement)
- Export invoices for the refund period
- Shipping bills (for export of goods) — auto-populated if filed correctly
- Foreign Inward Remittance Certificate (FIRC) or Bank Realisation Certificate (BRC) for export of services
- GSTR-2B of the refund period showing ITC availed
- Statement 3 (goods) or Statement 3A (services) with invoice details
- Self-certified copy of GSTR-3B for the relevant tax periods
IGST Refund Route
Claiming IGST Refund on Exports (IGST Payment Route)
When an exporter chooses to pay IGST on export invoices (instead of filing an LUT), the entire IGST paid is refundable. The refund mechanism differs for goods and services.
📦 For Export of Goods — Automatic Refund via ICEGATE
For goods exported via a shipping bill, the IGST refund is processed automatically by ICEGATE (Customs system) without a separate refund application — provided the following are correctly filed:
- GSTR-1 with export invoice details in Table 6A (with IGST amount)
- GSTR-3B with IGST paid in cash
- Shipping bill filed with Customs with matching GSTIN, invoice number, and IGST amount
Once GSTR-1 and the shipping bill data are matched by ICEGATE, the refund is credited directly to the exporter's bank account linked to the GSTIN. No manual RFD-01 required for this route.
💼 For Export of Services — Manual RFD-01 Required
For services, IGST refund is not automatic. The exporter must file Form RFD-01 manually on the GST portal with the following documents:
- Export service invoices with IGST charged
- FIRC (Foreign Inward Remittance Certificate) or BRC for each invoice confirming receipt of foreign exchange
- Statement 2 in Form RFD-01 with invoice-level details
- GSTR-1 with export service invoice details in Table 6B
Note on IGST Route Limitation: If you paid IGST from your ITC balance (electronic credit ledger) instead of cash, the refund is processed as a credit back to the ledger — not as a cash refund to your bank account. IGST paid in cash is refunded as cash. Choose wisely.
Time Limits
Key Time Limits for GST Export Compliance
Missing these deadlines triggers interest liability or loss of refund. Maintain an export compliance calendar with these dates:
LUT — Export goods within (from date of export invoice)
3 months
LUT — Receive foreign exchange for services within
1 year
Penalty if LUT export conditions not met
IGST + 18% interest
LUT validity period
Full financial year (1 April – 31 March)
Time limit to file RFD-01 refund application
2 years from the "relevant date"
Officer must process complete refund application within
60 days
Provisional refund (90%) for goods exporters (Rule 91)
Within 7 working days
Interest on delayed refund (after 60 days)
6% per annum
Relevant Date for Refund Limitation:
For export of goods by sea/air, the relevant date is the date the ship or aircraft leaves India. For goods by land, it is the date of crossing the border. For export of services under LUT, it is the date the foreign exchange is received. For IGST route services, it is the date of payment of IGST. The 2-year limitation runs from these dates — not from the invoice date.
Special Situations
GST Export Treatment in Special Situations
Supplies to SEZ Units — Treated as Zero-Rated
Supplies of goods or services to Special Economic Zone (SEZ) units and SEZ developers for their authorised operations are treated as zero-rated supplies under Section 16(1)(b) of the IGST Act. An LUT filed for direct exports also covers SEZ supplies — no separate filing is needed. The supplier can supply to SEZ without IGST under the LUT route, or charge IGST and claim refund.
Deemed Exports — Not Zero-Rated
Certain supplies are notified as deemed exports (e.g., supply of goods to EOU units, advance authorisation holders, projects under international competitive bidding). Deemed exports are not zero-rated — they attract GST. However, the supplier or recipient can claim a refund of the GST paid on such supplies. Deemed exports cannot be covered under an LUT.
Export of Software / Digital Services
Export of software, IT services, ITES, and digital services is treated as export of services under GST — subject to the five conditions of Section 2(6) of the IGST Act. Indian IT and software exporters can file an LUT, raise export invoices without IGST, and claim ITC refund. Maintaining proper FIRC / BRC documentation is critical for software exporters to substantiate the foreign exchange receipt.
Merchant Exporters — Procuring Goods at Concessional GST
A GST-registered merchant exporter can procure goods from a registered domestic supplier at a concessional GST rate of 0.1% (Notification No. 40/2017-CT(Rate)) for export, instead of the full applicable rate — provided the merchant exporter has filed an LUT and the goods are exported within 90 days of the supply date. The domestic supplier must export or the merchant exporter must export these goods.
Common Errors
8 Most Common GST Export Mistakes — And How to Avoid Them
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Exporting Without a Valid LUT
Not filing or renewing the LUT before the first export of a new financial year. Result: IGST becomes payable on the transaction. Fix: file the LUT before March 31 for the upcoming year.
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Mismatch Between Shipping Bill and GSTR-1
Invoice number, GSTIN, or IGST amount on the shipping bill not matching GSTR-1 Table 6A. This is the most common cause of automatic refund failure. Fix: reconcile shipping bill data with GSTR-1 before filing.
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Missing FIRC / BRC for Service Exports
Failing to obtain or maintain the FIRC (Foreign Inward Remittance Certificate) or BRC for every export service invoice. Without FIRC/BRC, the GST refund application will be rejected. Get BRC from your bank promptly after each remittance.
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Not Meeting 3-Month Export Deadline
Issuing a tax invoice under LUT but exporting the goods after 3 months. The exporter then owes IGST plus 18% interest on the export value. Track every LUT invoice's 3-month deadline actively.
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Claiming Excess Refund via Wrong Formula
Using export turnover in the refund formula incorrectly — including exempt supplies or nil-rated supplies in the net turnover denominator when they should be excluded. This causes refund excess or officer scrutiny.
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Not Filing GSTR-1 on Time
Delaying GSTR-1 filing causes export invoices to not appear in ICEGATE, blocking the automatic IGST refund process. File GSTR-1 on time every month — export refunds are linked to it.
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Wrong Place of Supply for Services
Treating an Indian-to-Indian transaction as export of services because payment comes from a foreign entity's Indian subsidiary. The recipient must be located outside India for zero-rated treatment.
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Applying for Refund After 2-Year Limit
Waiting too long to file the RFD-01 refund application and crossing the 2-year limitation period from the relevant date. Time-barred refunds cannot be claimed. File refund applications quarterly.
FAQ
Frequently Asked Questions — GST on Exports, LUT & IGST Refund
- What is a Letter of Undertaking (LUT) under GST?
An LUT is a declaration filed by an eligible exporter in Form RFD-11 on the GST portal. It allows the exporter to export goods or services without paying IGST on the export invoice. The exporter undertakes to comply with export conditions — primarily exporting goods within 3 months and receiving foreign exchange for services within 1 year. In return, the exporter can later claim a refund of accumulated ITC on inputs.
- What is the difference between the LUT route and the IGST payment route?
Under the LUT route, no IGST is charged on the export invoice and the exporter claims an ITC refund later. Under the IGST payment route, IGST is charged and paid on the export invoice and the full IGST paid is refundable. The LUT route avoids upfront tax outflow and is preferred for cash flow management. The IGST route may suit occasional exporters or those with surplus cash in their GST ledger.
- Who is eligible to file an LUT under GST?
Any GST-registered exporter — manufacturer exporter, merchant exporter, or service exporter — who has not been prosecuted for tax offences above ₹2.5 crore is eligible to file an LUT. Those with pending prosecution must furnish a Bond with surety instead of an LUT.
- How do I file an LUT online on the GST portal?
Log in to gst.gov.in → Services → User Services → Furnish Letter of Undertaking (LUT) → Select financial year → Confirm the declaration → Add two witnesses → Submit using EVC (OTP) or DSC. The LUT is instantly accepted and the ARN can be downloaded immediately.
- Is LUT filing mandatory every financial year?
Yes. An LUT is valid only for the financial year in which it is filed. A new LUT must be filed before the first export of each financial year. It is advisable to file the LUT for the new financial year before March 31 to ensure uninterrupted export capability from April 1.
- What happens if I export goods after 3 months of the LUT invoice date?
If goods are not exported within 3 months of the export invoice date, the LUT conditions are violated. The exporter must pay IGST on the export transaction along with interest at 18% per annum from the invoice date until the date of IGST payment. After paying IGST and interest, the exporter can apply for an IGST refund once the goods are eventually exported.
- How is the ITC refund amount calculated for LUT route exports?
The formula is: Refund = (Export Turnover ÷ Net Adjusted Total Turnover) × Net ITC. Net ITC is total ITC claimed minus ITC reversed. Net Turnover includes all taxable and zero-rated supplies adjusted as per the rules. The calculation is applied on the total ITC availed in the tax period, not just ITC directly attributable to exports.
- Can services be exported under LUT?
Yes, service exports can be done under LUT. The service must satisfy all five conditions of Section 2(6) of the IGST Act: supplier in India, recipient outside India, place of supply outside India, payment in convertible foreign exchange, and the supplier and recipient are distinct persons. The exporter must receive foreign exchange within 1 year of the invoice date to comply with LUT conditions.
- What is the time limit to apply for an export refund under GST?
The refund application in Form RFD-01 must be filed within 2 years from the "relevant date" — which for export of goods by sea/air is the date the ship or aircraft leaves India, and for services is the date foreign exchange is received. After 2 years, the refund is time-barred and cannot be claimed.
Related Services
Related GST & Export Compliance Services at SetupFiling.in
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