GST Export Under LUT: Complete Guide to Records and Refunds

What an export under LUT means

An eligible registered supplier can make a qualifying zero-rated supply without paying integrated tax upfront under a bond or Letter of Undertaking (LUT). Eligible input credit may accumulate because purchases bear tax while the qualifying outward supply does not generate output IGST under that route. A refund requires a separate application and conditions; neither an LUT acknowledgement nor an unused credit balance is a refund sanction.

Keep three questions separate in the working paper: does the supply qualify, is the chosen route available, and what amount is refundable? This guide follows the LUT and unutilised-ITC route. It does not calculate an export-with-payment-of-IGST claim, a deemed-export claim, or an inverted-duty claim using the same formula.

Eligibility: start with the supply and the supplier

For goods, establish that the goods actually leave India and connect the commercial and customs records. For services, check every statutory export condition: supplier in India, recipient outside India, place of supply outside India, eligible receipt of consideration, and the restriction concerning establishments of the same person. A foreign customer address or foreign-currency invoice alone is not enough. Indian-rupee receipts need the applicable RBI permission; do not assume every domestic-currency receipt qualifies.

SEZ supplies need a separate authorised-operations and endorsement review. They are not simply exports with a different customer name. Domestic exempt or nil-rated supplies should not be relabelled as zero-rated to obtain an ITC refund.

For LUT eligibility, confirm GST registration, the permitted zero-rated route and absence of a disqualifying prosecution history under the applicable notification. The GST Portal LUT FAQ describes the prosecution condition and declaration. Where that history exists, verify the exact notification and facts, and assess the bond route separately rather than treating a completed portal declaration as legal clearance.

Furnish and retain the financial-year LUT

File Form GST RFD-11 on the GST Portal for the financial year intended to cover the supplies. The portal route is Services, User Services, Furnish Letter of Undertaking. Review the declarations, witness details and authorised signatory before submission. Save the ARN and acknowledgement and connect them to the relevant GSTIN and year. A saved draft is not a filed LUT.

An LUT expires at the end of its financial year. Build the next-year review into the export process so an old acknowledgement is not copied into a new-year file. If supplies occurred before furnishing LUT, investigate the applicable regularisation guidance; do not backdate records or silently assume the delay has been accepted.

Build one evidence trail for each invoice

A useful export register has one row per invoice with links to the supporting file. Record the invoice number and date, recipient, supply description, currency, value, export route, LUT year, return period and unresolved exceptions. Keep the same identifier across the accounts, return working papers and refund statement.

For goods, add the shipping bill, port, customs export evidence, transport documents and the connection between invoice and shipment. For services, add the contract or order, scope of work, evidence of delivery, place-of-supply analysis, receipt date, bank/remittance evidence and permitted-currency basis. Preserve BRC or FIRC evidence where required for the applicable claim. A short checklist is useful only when the underlying documents can actually be retrieved.

Prepare an export invoice under the correct route

Check the invoice particulars required by Rule 46 and the export-specific endorsement for supply under bond or LUT without payment of integrated tax. Review GSTIN, document sequence, date, recipient and destination details, description, HSN or SAC, value and other applicable particulars. Preserve the INR conversion basis alongside the commercial-currency invoice.

Do not produce an ordinary domestic nil-rated invoice merely because the intended output IGST is zero. The invoice should make the chosen export route clear. A tax-breakdown calculator helps check arithmetic; it does not validate place of supply, issue an e-invoice, produce customs documentation or establish the entitlement to use LUT. Check e-invoicing and other document obligations separately where applicable.

Reconcile GSTR-1 with GSTR-3B

In GSTR-1, report export invoice details in the appropriate export section, including the without-payment route where applicable; review amendments and the relevant shipping-bill information for goods. Keep SEZ reporting distinct. Use the portal instructions for the return period rather than a screenshot from an older filing.

In GSTR-3B, reconcile the zero-rated outward-supply value in Table 3.1(b) with the outward-supply records and the permitted tax treatment. Review eligible ITC and reversals in Table 4 separately. Zero output IGST under LUT does not mean the registration has a nil return or no other liability. Domestic supplies, reverse charge, reversals, interest or fees may still need reporting and payment.

Prepare a bridge for differences caused by amendments, timing, credit notes or currency conversion. The refund working paper should explain a difference, not conceal it by forcing two totals to agree. Retain filed returns and acknowledgements with the final bridge.

Why ITC accumulates, and what enters Net ITC

Purchase tax can create credit while LUT exports create no output IGST to absorb it. Start with eligibility and the purchase-to-return reconciliation, not the closing ledger balance alone. Exclude blocked or otherwise ineligible credit and identify reversals. Imported supplies and reverse-charge credits need their own documentary and payment checks.

For Rule 89(4), Net ITC concerns eligible credit availed on inputs and input services in the relevant period. It excludes capital goods from this formula. A machine appearing in the credit ledger therefore does not automatically enter the LUT refund calculation. Keep any prior-period balance separate from credit entering the formula for the claim period. Check the current rule and relevant amendments before carrying historical exclusions forward.

The Rule 89(4) refund formula

The starting formula is: Refund amount = (turnover of zero-rated goods + turnover of zero-rated services) × Net ITC ÷ Adjusted Total Turnover.

Each named input has a legal definition. Export-goods values may need prescribed valuation limits; use a consistent qualifying export value in the numerator and denominator. Zero-rated service turnover uses the rule's receipt and completion adjustments, so it can differ from invoiced revenue. Adjusted Total Turnover is not necessarily the revenue shown in the financial statements. Document how book figures become each formula input.

The formula is also not the final sanction. Apply the eligible-credit checks, the relevant electronic-credit-ledger limits, duplicate-claim controls and other statutory restrictions. For a mixed business, retain the bridge for domestic supplies as well as exports; increasing export turnover without the corresponding denominator review can overstate the result.

Worked example: a formula estimate, then the ledger limit

Assume a reviewed claim period has qualifying zero-rated turnover of ₹8,00,000, Adjusted Total Turnover of ₹10,00,000 and eligible Net ITC of ₹75,000. Assume the turnover figures already reflect the applicable goods valuation or services receipt adjustments, capital-goods credit is excluded and there is no duplicate claim.

The formula gives ₹8,00,000 × ₹75,000 ÷ ₹10,00,000 = ₹60,000. This is 80% of the eligible Net ITC, not 80% of export sales and not a refund of all purchase GST.

Now assume the relevant period-end electronic credit ledger limit is ₹58,000 and the filing-date available balance is ₹55,000. Under those assumed ledger limits, the estimate is restricted to ₹55,000 before any further disallowance. The ₹60,000 formula output is therefore not the amount automatically receivable. These are invented teaching numbers, not a taxpayer case or a promise of sanction.

In the GST Refund Calculator, choose the LUT export route and enter verified formula inputs and the requested balances. Save the inputs and result with the calculation basis. Changing Net ITC to an unverified closing balance changes the question and can make the result misleading.

Apply, track and retain the refund record

Select the correct category and period in Form GST RFD-01. Review the applicable statements, invoice data, declarations and supporting documents against current portal instructions. Check the section 54 limitation and the relevant-date definition for the actual claim category; the usual two-year framework should not be reduced to a universal deadline measured from invoice date.

Reconcile the requested debit with the credit ledger and retain the filed application, ARN, acknowledgement, any deficiency memo, replies, orders and payment advice. Keep a claim register to prevent the same invoice or credit entering overlapping claims. Record amounts applied for, admitted, rejected, re-credited and paid separately so a pending application is not recorded as cash already received.

Exceptions and period changes to check

Rule 96A requires follow-up when goods are not exported within three months of invoice or service consideration is not received within one year, subject to a further period allowed by the Commissioner. The rule can require tax with interest within fifteen days after the applicable period expires. Maintain a dated exception list; a refund application does not close that monitoring obligation.

Circular 197/09/2023 discusses delayed export or realisation and the treatment after subsequent compliance. Relief or an extension needs the relevant facts and authority; do not infer automatic approval from a calendar reminder.

Notification 20/2024–Central Tax omitted Rules 89(4A), 89(4B) and 96(10), with related amendments. Do not apply those omitted provisions mechanically to later periods or assume the omission erases every historical restriction. Earlier circulars remain useful for the process but must be read with subsequent changes. Paid-IGST exports, SEZ claims, goods subject to export-duty restrictions, drawback interactions and special export incentives require their own review.

Common mistakes and a final review

• Treating a foreign customer or a zero-percent invoice as proof of zero-rated status.
• Reusing an expired LUT or confusing RFD-11 with the refund application RFD-01.
• Reporting LUT export turnover as nil-rated domestic turnover or filing a nil return despite reportable transactions.
• Using capital-goods credit, ineligible credit or an entire ledger balance as Net ITC.
• Copying invoice turnover into a services-refund formula without the receipt adjustments.
• Applying different export values in the numerator and Adjusted Total Turnover without support.
• Claiming the same invoice or credit twice, or treating the formula output as an approved refund.
• Forgetting realisation follow-up, amendments, a deficiency memo or the applicable limitation period.

Before filing, someone should be able to trace a selected invoice through its supply conclusion, LUT, evidence, return reporting and refund worksheet without reconstructing the story from memory. Use the related invoice, ITC, refund and form-finder tools for their stated questions, then complete the actual filing and review on the official portal. Official references below were consulted for this editorial expansion on 14 September 2026; verify later amendments and the exact claim period before use.