GST · Glossary
LUT (Letter of Undertaking)
Undertaking that lets exporters supply zero-rated GST services without paying tax.
A Letter of Undertaking is a one-page declaration filed annually on the GST portal under Rule 96A of the CGST Rules, 2017 (read with Section 16 of the IGST Act, 2017) that allows GST-registered exporters of services (including freelancers serving foreign clients) to invoice at zero GST. Without an LUT, you would have to either pay IGST on the invoice and claim a refund later, or charge IGST and claim refund — both add cash-flow lag.
LUT eligibility: any GST-registered taxpayer with no GST defaults in the prior FY, exporting goods or services. Renewal: annually before 31 March. Most Indian freelancers serving Upwork, Fiverr, or direct foreign clients file LUT in their first GST year and renew yearly.
Worked example
Arjun files LUT on 5 April 2026 for FY 2026-27. His US client pays USD 2,500 — invoice raised at 0% IGST under the LUT. FIRC arrives 3 weeks later; no upfront tax paid, no refund chase.
Practitioner tip
File LUT before raising the first export invoice of the FY — invoices issued before the LUT was active need IGST paid + refund, even if you file the LUT the same week.
GST rates & SAC codes
Browse all GST rates & SAC codes →Related glossary terms
- GSTIN — 15-character alphanumeric GST registration number assigned to every GST-registered taxpayer.
- FIRC (Foreign Inward Remittance Certificate) — Bank certificate confirming receipt of foreign currency payment.
More in GST
These definitions are educational. Tax laws change annually — verify with a Chartered Accountant before making GST or income-tax decisions.