Export under LUT or with IGST: which should you choose?
Updated · Sources linked below
The two options
| Under LUT (no IGST) | With IGST | |
|---|---|---|
| Tax at export | None | IGST paid at the export rate |
| What you claim back | Refund of unused input tax credit | Refund of the IGST paid |
| Cash tied up | Less | More, until the refund arrives |
| Paperwork first | File an LUT (Form GST RFD-11) each financial year | None extra |
| Invoice endorsement | SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX | SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX |
The deadlines under LUT
- Goods must be exported within three months of the invoice date (unless the officer allows longer).
- For services, payment must be received in foreign exchange (or INR where permitted) within the allowed period.
- If the deadline is missed, pay the IGST with interest.
With IGST: how the refund works
For goods, the shipping bill filed with customs is treated as your refund claim, once your GSTR-1 and GSTR-3B for the month are filed and match. For services, you file a refund application on the GST portal.
Questions people also ask
Who can file an LUT?
Any GST-registered exporter, except those prosecuted for tax evasion above ₹2.5 crore, who must furnish a bond instead.
How often do I file an LUT?
Once a financial year, on the GST portal, before you make exports for that year.
Do I show the amount in INR on an export invoice?
GST invoices are in rupees. You can add the foreign currency value and exchange rate as extra information.
Is GST charged on exports at all?
Exports are zero-rated: either no IGST under LUT, or IGST paid and refunded, so tax doesn't end up as a cost.
Official sources
- CBIC — CGST Rules, 2017, Rule 96A (export under LUT)
- CBIC — CGST Rules, 2017, Rule 96 (IGST refund on goods)
- CBIC — CGST Rules, 2017, Rule 46 (export endorsement)
This guide explains the rules in plain words; it isn't legal or tax advice. Rules change, so check the sources or ask a Chartered Accountant for your situation.