Export Under GST
IGST Payment vs LUT
Zero-Rated Supplies · Rule 96A · Form GST RFD-11 · Working Capital Strategy
Missed Day 1? Watch the Introduction Reel
Day 1 covered the Export Ecosystem, IEC, FEMA basics, Incoterms & India’s export overview. Catch up before diving into Day 2!
India is rapidly becoming a global export hub. Whether you export goods through Amazon Global, sell products overseas, or provide services to foreign clients — one critical decision every exporter must make is:
“Should I export with payment of IGST, or under LUT without IGST?”
This decision directly affects your cash flow, working capital, GST refunds, and compliance burden.
Exports Are Zero-Rated Supplies
Two Routes to Achieve Zero Tax on Exports
GST law provides two legal pathways — choose the one that suits your business.
Route 1 — Pay IGST
Pay first, claim refund later
- 1Issue export invoice with IGST charged
- 2Pay IGST via ITC or Cash Ledger
- 3Export goods / supply services
- 4File GSTR-1, GSTR-3B, Shipping Bill & EGM
- 5Claim IGST refund from Government
Route 2 — LUT (No IGST)
File undertaking, export freely
- 1File LUT in Form GST RFD-11
- 2Issue export invoice — IGST = NIL
- 3Export goods / supply services
- 4Receive foreign exchange within timelines
- 5No refund needed — working capital preserved
₹1 Crore Export — Side by Side
Today’s Class Notes
Day 2 Notes — Export Under GST · IGST vs LUT Mind Map
Click image to zoom · Download full PDF on WhatsApp Channel
What is LUT?
LUT — Letter of Undertaking
LUT is filed in Form GST RFD-11. By filing LUT, the exporter gives a legal undertaking to the Government that all export-related GST provisions will be complied with. In return, the Government permits exports without upfront payment of IGST.
Addressed to “The President of India”
LUT is formally furnished to the President of India through the jurisdictional GST authority. This demonstrates that LUT is not merely a procedural formality but a legal undertaking — carrying real legal responsibilities and consequences.
Three Critical Undertakings in LUT
Export Within Prescribed Time
The exporter promises to export goods or services within the timelines specified under Rule 96A.
🖥️ Services: 1 year from invoice date (foreign exchange receipt)
Comply with All GST Laws
The exporter promises to follow the GST Act, GST Rules, export provisions, documentation requirements, and all return filing obligations.
Pay IGST + Interest if Conditions Violated
If export conditions are not fulfilled, the exporter agrees to pay IGST along with 18% interest per annum from the invoice date until the date of payment.
Form GST RFD-11 — LUT Sample
Form GST RFD-11 — Letter of Undertaking
[See Rule 96A] · Click image to view in full
Rule 96A — Foundation of LUT
📘 Rule 96A of CGST Rules
🎯 Purpose
Governs the entire framework of exports without payment of tax under LUT.
⏱️ Time Limits
Prescribes timelines for export of goods (3 months) and realisation of service payments (1 year).
💰 Recovery
If conditions violated — IGST + 18% interest per annum recovered from the exporter.
📋 Compliance
Lays down documentation, return filing and undertaking compliance requirements.
IGST vs LUT — Complete Comparison
| Particulars | 💳 IGST Route | 📋 LUT Route |
|---|---|---|
| Tax Payment Required | Yes — Upfront | No — NIL |
| Working Capital | Blocked till refund | Fully preserved |
| Refund Dependency | High | None |
| Cash Flow Impact | Adverse | Positive |
| Upfront Cost | IGST amount | Zero |
| Compliance Form | GSTR-1, 3B, Shipping Bill | GST RFD-11 + above |
| Annual Renewal | Not required | Required every FY |
| Best For | Excess ITC holders | MSMEs, Startups, Freelancers, Service exporters |
Exporter’s Compliance Checklist
✅ Pre-Export Compliance Checklist
Common Mistakes by Exporters
Exporting Before Filing LUT
Can create GST complications and attract recovery proceedings.
Not Renewing LUT Annually
May result in GST demands and interest liability on all exports.
Incorrect Shipping Bill Details
Can delay automatic IGST refunds significantly.
Delayed Foreign Remittance
May violate Rule 96A — attracting IGST + 18% interest.
Return vs Export Data Mismatch
Can result in refund rejection or departmental queries.
Day 2 Video Summary
Instagram Reel — Day 2 · Export Under GST: IGST vs LUT
Watch, Save & Share with fellow exporters and CA aspirants
The content shared on this channel is purely for educational purposes. As a Chartered Accountant, I strive to provide accurate and insightful information related to GST, Income Tax, Accounting, and Tax Planning. However, please note that the content should not be considered as professional advice or a substitute for personalized consultation. For specific matters, please consult a qualified professional.