Letter of Undertaking (LUT)
Definition
A declaration filed by an exporter in India to make zero-rated supplies (exports or supplies to SEZs) without paying integrated GST upfront. It avoids blocking working capital in a tax that would otherwise have to be claimed back as a refund.
Why it matters
Without an LUT, an exporter must pay IGST on exports and then claim a refund, tying up cash. The LUT lets qualifying exporters ship tax-free and keep that cash in the business.
Common questions
How often is an LUT filed?
An LUT is generally furnished for each financial year before making zero-rated supplies without payment of tax.
Related Terms in India GST
DRC-03
The form used to make a voluntary or prompted payment of GST — for example to settle a shortfall found during reconciliation, pay interest, or respond to a notice — outside the normal return. It records the payment and the reason against the taxpayer's ledger.
Electronic Cash Ledger
The online ledger on the GST portal that holds money a taxpayer has deposited to meet tax, interest, penalty and fee liabilities. Amounts move into it when challans are paid and out of it when liabilities are set off.
Electronic Credit Ledger
The online ledger on the GST portal that records a taxpayer's available input tax credit. Credit flows in from eligible purchases and is used to set off output tax liability, subject to the rules on the order of utilisation.
Electronic Liability Ledger
The GST portal ledger that records all tax, interest, penalty and other amounts a taxpayer owes for a period, and shows how those liabilities have been discharged from the cash and credit ledgers.
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