How to export goods without paying IGST using an LUT

If your business exports goods out of India, or provides services to overseas clients, you are doing a great thing for the economy. The government rewards this by making exports a "Zero Rated Supply". However, the standard procedure requires you to first pay IGST out of your pocket, and then apply for a refund. This blocks massive amounts of your working capital. The solution? The LUT.

What is a Letter of Undertaking (LUT)?

An LUT is a document that you submit to the GST department. It essentially says: *"I promise that I am actually exporting these goods, and if I fail to export them within three months, I will pay you the full IGST plus 18% interest."*

Once you file this LUT, you can export your goods or services at 0% GST. You don't have to pay anything upfront, and you don't have to wait months for a refund. It saves your cash flow.

Who is Eligible?

Almost any registered GST taxpayer who intends to supply goods or services for export can apply. The only exception is if you have been prosecuted for tax evasion exceeding ₹250 Lakhs under the CGST Act. In that case, you must provide an actual Bank Guarantee instead of just a letter.

How to Apply for It

The process is completely online and practically instantaneous. You do not need to visit a government office.

1. Log in to the GST Portal.
2. Go to Services > User Services > Furnish Letter of Undertaking (LUT).
3. Select the Financial Year you are applying for. (LUTs are only valid for one financial year. You must renew it every April 1st).
4. Fill out the form with the names and details of two independent witnesses.
5. Submit it using DSC or EVC (Aadhaar OTP).

What Happens If You Forget?

If you export without filing the LUT for that financial year, the export will be treated as a normal inter-state sale. You will be forced to pay the IGST, and you will have to go through the painful process of claiming a refund later.