What is LUT and why freelancers need it
LUT stands for Letter of Undertaking. It is a one-page declaration you file on the GST portal under Section 16 of the IGST Act (Rule 96A of CGST Rules). It tells the government: “I will export services and receive foreign exchange within 1 year. In return, let me invoice at 0% tax.”
Without LUT, every export invoice must charge 18% IGST. Your client pays more, or you absorb the hit. Then you file for a refund that takes 2-6 months. On $5,000/month billing, that is approximately Rs 75,000/month locked up in refunds.
Bottom line: If you are GST-registered and bill clients outside India, file LUT. It costs nothing, takes 5 minutes, and saves you from charging 18% extra on every invoice.
With LUT vs without LUT
| With LUT | Without LUT | |
|---|---|---|
| Tax on invoice | 0% (zero-rated) | 18% IGST |
| Client pays | Invoice amount only | Invoice amount + 18% |
| Refund process | None needed | File for IGST refund (2-6 months) |
| Cash flow impact ($5k/mo) | Zero | ~Rs 75,000/month locked up |
| Invoice declaration | “...under LUT without payment of IGST” | “...on payment of IGST” |
| Filing effort | 5 minutes, once a year | Refund paperwork every quarter |
Who can file LUT
Any GST-registered person exporting services. This includes:
- Software developers, IT consultants
- Designers (UI/UX, graphic, brand, motion)
- Content writers, marketers, SEO specialists
- Management consultants, business analysts
- Any freelancer billing a client outside India
No minimum turnover. Even if you earn below Rs 20 lakhs, you can file LUT as long as you have GST registration (voluntary registration is fine).
Only exception: You have been prosecuted for tax evasion exceeding Rs 250 lakhs (Rs 2.5 crore). In that case, you file a Bond instead. This will never apply to 99.9% of freelancers.
How to file LUT on the GST portal
The form is GST RFD-11. It takes about 5 minutes and gets approved instantly.
Log in to the GST portal
Go to gst.gov.in and sign in with your GSTIN and password.
Navigate to LUT
Top menu: Services → User Services → Furnish Letter of Undertaking (LUT)
Select financial year
Choose the current FY from the dropdown (e.g., 2025-26).
Add two witnesses
Enter names, addresses, and occupations of two independent witnesses. Can be your CA, a family member, or a business associate.
Check the self-declaration boxes and submit
Verify using DSC (Digital Signature) or EVC (OTP to your registered mobile). Click Submit.
Done. Save your ARN.
You get an ARN (Application Reference Number) immediately via SMS and email. No approval wait. Download and save the acknowledgment PDF.
No documents needed. LUT is entirely self-declaratory. No cover letter, no financials, no supporting documents to upload. Just the form + two witness details.
What your invoice must say
Every export invoice must carry this declaration. Without it, the invoice is non-compliant.
Mandatory declaration (copy this)
“Supply meant for export under Letter of Undertaking without payment of IGST”
Optional but recommended: also mention the LUT ARN and validity period on your invoice, like:
LUT ARN: RD2704250012345 dated 01/04/2025, valid till 31/03/2026
With evrything.online, the export declaration prints automatically when you select a client outside India and have LUT enabled in your settings.
Validity and renewal
- LUT is valid for one financial year (April 1 to March 31)
- It does NOT auto-renew. You must file a fresh LUT every year.
- File the new one on April 1 (or before your first export invoice of the new FY)
- Set a calendar reminder for March 31 every year
Common mistakes
Filing late at start of new FY
If you raise an April invoice without filing LUT for the new FY, that invoice technically has no LUT coverage. File on April 1.
Forgetting the declaration on the invoice
The export declaration is mandatory. Without it, the invoice is non-compliant even if LUT is filed.
Not tracking the 1-year payment window
Foreign exchange must be received within 1 year of the invoice date. If not, you owe IGST + interest. Chase late-paying clients before this deadline.
Wrong GSTR-1 reporting
Export invoices go in Table 6A. Select “Without payment of tax”. Port code for services: ZZZZZ. Shipping bill: leave blank or enter 0.
Not keeping FIRC/e-FIRA
Your bank issues a Foreign Inward Remittance Certificate for each payment. Keep it filed with the corresponding invoice. You will need it for audits.
LUT vs Bond
You will almost certainly never need a Bond. Here is the difference:
| LUT | Bond | |
|---|---|---|
| Who | Everyone (default) | Prosecuted for evasion > Rs 250 lakhs |
| Bank guarantee | Not needed | 15% of estimated tax liability |
| Cost | Free | Bank guarantee fees |
| Filing | Online, instant | Physical bond + bank involvement |
How to report in GST returns
Filing LUT is step one. You also need to tell the GST system about your export invoices when you file your regular returns. There are three returns where this comes up. Your CA probably handles this, but you should know what is happening.
| Return | When | What you do |
|---|---|---|
| GSTR-1 | Monthly or quarterly | List each export invoice in Table 6A. Pick “Without payment of tax”. Port code: type ZZZZZ (this is a special code meaning “services, no physical shipment”). Leave shipping bill number blank. |
| GSTR-3B | Monthly | Your total export revenue goes in the “Zero-rated outward supplies” row. Tax payable stays zero. This is just a summary — the details are already in GSTR-1. |
| GSTR-9 | Once a year (annual return) | The total export turnover for the year shows up here. Just make sure it matches what you reported in GSTR-1 throughout the year. If your CA files this, verify the numbers. |
If you use a CA:Just tell them you have LUT and are exporting services. They will handle the return filing. The key thing is that they mark your invoices as “export without payment of tax” and not as regular domestic sales.
Government links
Ready to send your first export invoice?
Turn on “Export under LUT” in settings. The declaration, zero tax, and currency conversion all happen automatically.
Create your first export invoice freeHave more questions? vasundhra@evrything.online