LUT in GST: How to Export Services Without Paying IGST

Quick answer: An LUT in GST is a Letter of Undertaking filed on Form GST RFD-11 that lets a registered exporter, including a freelancer billing foreign clients, export services without paying IGST. You file it online on the GST portal once per financial year, before your first export invoice, and then issue zero-rated invoices marked as supplies under LUT.

If you are an Indian developer, designer, consultant or agency billing clients abroad, the LUT is one of the most useful forms in GST. Without it, you pay 18% IGST on every export invoice and wait for a refund. With it, you pay nothing on the export itself. This guide explains when an LUT applies, the conditions for an export of services, how to file it step by step, what your invoice must say, and a worked example. If you are new to billing overseas, our guide to invoicing international clients covers the basics, and you can build the invoice itself with our free invoice generator.

This article is general information as of 2026, not tax or legal advice. Confirm the rules on the GST portal or with a chartered accountant before you rely on them.

What is an LUT under GST?

Exports of goods and services, and supplies to SEZ units and developers, are zero-rated supplies under section 16 of the IGST Act. Zero-rated means the supply carries no tax in the end, but you can still claim input tax credit on what you bought to make it. The CBIC text of section 16 of the IGST Act gives two ways to make a zero-rated supply:

• Under LUT or bond, without paying IGST, and then claim a refund of unused input tax credit.
• On payment of IGST, and then claim a refund of the IGST paid.

The LUT is your written promise that you will meet the export conditions, and that you will pay the tax with interest if you do not. Rule 96A of the CGST Rules sets out the details. Unlike a bond, an LUT needs no bank guarantee, which is why almost every eligible exporter uses it.

LUT vs paying IGST and claiming a refund

Point	Export under LUT	Export with IGST paid
IGST on the invoice	Nil	18% for most services, paid in cash or from credit
Cash flow	No tax outflow on the export	Tax paid upfront, recovered later
Refund claimed	Unutilised input tax credit, through RFD-01	IGST paid on exports, processed from your shipping or return data
Paperwork	One RFD-11 filing per financial year	No LUT, but a refund to follow on every period
Best for	Freelancers, agencies and most service exporters	Businesses that cannot file an LUT or have large credit to use

When is a service an export under GST?

The LUT only helps if your supply is actually an export. Section 2(6) of the IGST Act sets five conditions, and all of them must be met:

1. The supplier of the service is located in India.
2. The recipient is located outside India.
3. The place of supply is outside India.
4. You receive payment in convertible foreign exchange, or in Indian rupees where the Reserve Bank of India permits.
5. You and the recipient are not merely establishments of the same person, such as an Indian branch and its foreign head office.

The place of supply test is where most disputes arise. For most professional services, such as software development, design, writing and consulting, the place of supply is the recipient's location, so a client abroad means an export. Services tied to property or events in India, or performed on goods physically in India, follow different rules.

The intermediary change in 2026

For years, intermediaries such as agents arranging supplies between two other parties were taxed as if the place of supply was in India, so their commissions from foreign principals did not count as exports. Commentary on the Finance Act, 2026 reports that it omitted section 13(8)(b) of the IGST Act, with effect reported from 30 March 2026, so intermediary services now follow the general recipient-location rule. If you earn commissions from overseas principals, take advice on whether you can now invoice them under LUT.

Who can file an LUT, and do freelancers need GST registration?

Any registered person can file an LUT, except someone prosecuted for tax evasion of Rs 2.5 crore or more under the GST laws or the old indirect tax laws. That person must execute a bond instead.

The bigger question for freelancers is registration. Exports of services are treated as inter-state supplies, but service providers whose aggregate turnover is within the registration threshold, generally Rs 20 lakh or Rs 10 lakh in special category states, are exempt from registering. Export receipts count in that turnover. If you are below the limit and unregistered, you invoice without GST and without an LUT. Once you cross it, register first, using our guide to GST registration in India, then file the LUT before your next export invoice.

GST is separate from income tax. Many software and design freelancers also use presumptive taxation, explained in our guides to section 44ADA for professionals and section 44AD presumptive taxation for businesses.

How to file an LUT on the GST portal

The GST portal's user guide for furnishing an LUT describes the process. In short:

1. Log in to the GST portal and go to Services, User Services, Furnish Letter of Undertaking (LUT).
2. Select the financial year for which you are filing.
3. If you had a manually approved LUT for an earlier period, you can upload it, up to 2 MB.
4. Tick the self-declarations, including that you will export within the time allowed and pay tax with interest if you fail to.
5. Enter the name, address and occupation of two independent witnesses.
6. Enter the place and choose the authorised signatory, such as the proprietor, a working partner or a managing director.
7. Preview the form as a PDF, then sign with a digital signature certificate (DSC) or electronic verification code (EVC).
8. Note the ARN. You get an acknowledgement by SMS and email, and you can track it under View My Submitted LUTs.

The guide notes that if a tax officer takes no action within three working days, the status shows as Deemed Approved. File before your first zero-rated supply of the year; the portal guide says the LUT must be furnished before effecting such supply. Many exporters file in March for the coming year.

What your export invoice must show

An export invoice is still a GST tax invoice. Rule 46 of the CGST Rules requires an endorsement on export invoices issued without payment of tax. A compliant export invoice includes:

• The endorsement: "Supply meant for export under Letter of Undertaking without payment of integrated tax".
• Your name, address and GSTIN, and a unique invoice number from your invoice numbering system.
• The client's name and full overseas address, with country. A foreign client has no GSTIN.
• Place of supply shown as outside India (the portal uses code 96 for foreign country).
• The SAC code and description of the service.
• The value in the invoice currency, and the rupee value you will report. Our guide to foreign currency invoices explains conversion.
• IGST rate and amount shown as zero, and your LUT ARN as good practice.
• Bank details for an inward foreign remittance.

Clients in the United States may also ask for tax forms of their own. Our guide to the W-8BEN form for freelancers covers that side.

Payment and the one-year rule

Under rule 96A, for an export of services you must receive payment in convertible foreign exchange, or in rupees where permitted, within one year of the invoice date, or any further period allowed. CBIC's refund circular 125/44/2019-GST notes that if this does not happen, the exporter pays the IGST with interest, and can claim it back once payment is realised. How you get paid also matters for proof. Inward remittances through banks, and through platforms such as those compared in Wise vs Payoneer, generate the remittance advice or bank realisation records you will need for refunds.

Claiming a refund of unutilised credit

Exporting under an LUT means the GST you pay on inputs, such as a laptop, software subscriptions, a co-working desk or an accountant's fees, is not used up by output tax on the export. If you have little or no domestic sales, that credit simply builds up in your electronic credit ledger. Section 54 of the CGST Act lets you claim it back as a refund of unutilised input tax credit on zero-rated supplies, filed on Form RFD-01 on the GST portal, generally within two years of the relevant date. Rule 89 sets a formula, so the refund is limited to the share of credit that matches your export turnover. A refund goes through more smoothly when your invoices, GSTR-1, GSTR-3B and bank realisation records all tell the same story.

Worked example: a freelance developer under LUT

Priya is a GST-registered software developer in Bengaluru with a valid LUT for FY 2026-27. She invoices a US client USD 5,000 for a month of development work. For illustration, assume a conversion rate of Rs 85 per dollar on the invoice date.

Item	Without LUT (IGST paid)	With LUT
Invoice value in rupees (USD 5,000 at Rs 85)	Rs 4,25,000	Rs 4,25,000
IGST at 18%	Rs 76,500 payable to government	Nil
ITC on inputs that month (laptop and software, Rs 1,00,000 plus 18%)	Rs 18,000 used against the IGST	Rs 18,000 stays in the credit ledger
Cash tax paid upfront	Rs 76,500 minus Rs 18,000 = Rs 58,500	Rs 0
Refund to claim later	Rs 76,500 of IGST paid	Rs 18,000 of unutilised ITC

Without an LUT, Priya parts with Rs 58,500 of her own cash this month and waits for a refund. With an LUT, she keeps it, and can still apply for the Rs 18,000 of credit through RFD-01, or keep it to set off against any domestic sales. Over a year of similar invoices, the difference is roughly Rs 7 lakh of cash flow (12 months of Rs 58,500 is Rs 7,02,000).

She reports the invoice in GSTR-1 as an export of services without payment of tax, and in GSTR-3B as a zero-rated outward supply. Our comparison of GSTR-1 vs GSTR-3B explains where each figure goes, and the guide to input tax credit under GST covers the conditions for the Rs 18,000.

Common LUT mistakes to avoid

• Issuing export invoices in April before the new year's LUT is filed.
• Leaving out the LUT endorsement, or showing CGST and SGST on an export.
• Assuming every foreign client means an export, when the place of supply is in India.
• Receiving payment in rupees through a channel that is not RBI-permitted for exports.
• Letting receivables cross one year without tracking them.
• Filing an LUT while unregistered, which is not possible, instead of first checking the threshold.

Create your export invoice under LUT

An LUT in GST is a once-a-year filing that saves exporters from paying IGST on every foreign invoice. File it before your first export of the financial year, put the LUT endorsement on each invoice, and make sure payment arrives in foreign exchange within a year. You can create a zero-rated export invoice in any currency with our free invoice generator, or start from the startup invoice template. No sign-up is needed, and your PDF invoice is ready to send in a few minutes.