Exporting services? Renew your LUT before 1 April
A Letter of Undertaking lasts one financial year. Without a current one, IGST must be paid on exports and claimed back later.
Businesses that export services, from software and consulting to online courses sold to students abroad, can supply them without paying IGST by furnishing a Letter of Undertaking (LUT) in Form GST RFD-11 on the GST portal.
An LUT is valid for one financial year. A new one is needed each year, and it should be in place before the first export invoice of that year.
If it lapses
Exports made without a valid LUT are supplies on payment of IGST. The tax can be claimed back as a refund, but the money is locked up in the meantime, and the refund takes time and paperwork.
The other conditions
Export of services also depends on payment being received in convertible foreign exchange, or in Indian rupees where the RBI permits, and on the supplier and recipient not being establishments of the same person. Keep the bank realisation records against each invoice.
Our clients with export income have their LUTs filed in March each year.
General information, current at the date shown. It is not advice on your circumstances; write to us before acting on it.