LUT Expiry Reminder + Renewal Calendar

LUT Framework — Rule 96A & Notification 37/2017

The Letter of Undertaking is a statutory mechanism that allows GST-registered exporters to make zero-rated supplies without payment of integrated tax. Filed in Form GST RFD-11 on the GST Portal, the LUT replaces the older bond-with-bank-guarantee mechanism for most exporters under CBIC Notification 37/2017-Central Tax dated 4 October 2017.

The legal architecture rests on three pillars: Section 16 of the IGST Act classifies exports and SEZ supplies as zero-rated, Rule 96A of the CGST Rules 2017 prescribes the LUT/bond mechanism for exporters opting for the without-payment route, and Notification 37/2017 liberalised LUT eligibility to most exporters. The LUT is the exporter's binding promise under the GST India framework to fulfill export obligations within prescribed timelines and to pay IGST plus interest if the commitment fails.

Eligibility Criteria

Per Notification 37/2017, any registered person engaged in zero-rated supply is eligible to furnish an LUT — except those prosecuted for tax evasion of ₹2.5 crore or more under the CGST Act, IGST Act, or any earlier indirect tax law. The eligibility test is at the time of filing. The exporter declares eligibility in the LUT itself. Subsequent disqualification can lead to retroactive rejection of the LUT and recovery of IGST on past zero-rated exports.

Validity Period

The LUT is valid for one financial year only, expiring on 31 March of the relevant FY. An LUT filed on 30 September 2025 for FY 2025-26 expires on 31 March 2026. The validity does not auto-renew. A fresh LUT must be filed at the start of each new FY, ideally before the first export of 1 April. Practitioners commonly file the new FY LUT in March of the preceding year to ensure continuity. This is one of the most missed annual compliance items, especially for small exporters who may not realise the LUT is FY-bound.

Authorised Signatory

The LUT must be signed by an authorised signatory of the registered person. For companies and LLPs, this is typically the Managing Director, whole-time director, or Company Secretary using DSC. For partnerships, a working partner. For proprietorships, the proprietor. For other entities, a person duly authorised by the board or governing body through resolution. The signatory must be active on the GST Portal as authorised signatory at the time of filing.

How to File Form GST RFD-11

Step-by-Step Process

1. Log in to the GST Portal with your credentials
2. Navigate to Services → User Services → Furnish Letter of Undertaking
3. Select the financial year for which the LUT is being filed
4. Upload the previous year's LUT acknowledgment if any (system reference)
5. Provide details of two independent witnesses — name, complete address, occupation
6. Tick the three undertakings on the form (export within timeline, observe GST provisions, pay IGST with interest on failure)
7. Sign using DSC for companies and LLPs, or EVC for proprietorships and individuals
8. Submit the application — ARN is generated immediately
9. Per Circular 40/14/2018-GST, the LUT is deemed approved on ARN generation — no manual approval typically required
10. Download the RFD-11A acknowledgment for your records

Documents Needed

• Previous year's LUT acknowledgment (if continuing)
• GST login credentials with valid DSC/EVC
• Witness 1 details — name, PAN-quality address, occupation
• Witness 2 details — name, PAN-quality address, occupation
• Authorised signatory details on GST Portal must be current

Auto-Approval Mechanism

The LUT was historically a manual-approval process. Following Circular 40/14/2018-GST dated 6 April 2018 (issued by CBIC and noted in ICAI guidance notes), the system was reformed to auto-approve LUT filings on ARN generation. The deemed approval is a system-generated order — no signature is needed. However, the deemed approval is conditional on subsequent eligibility verification by the proper officer. If post-filing the officer finds evidence of tax evasion prosecution above the ₹2.5 crore threshold, the LUT can be rejected ab initio with consequences for past exports. Exporters should confirm eligibility before filing rather than relying on auto-approval cushion.

Consequences of LUT Expiry or Failure

What Happens if LUT Expires

If your LUT expires and you continue exports, the supply loses its zero-rated benefit under Rule 96A. You must pay full IGST on each export at the applicable rate (typically 18% for services, varies for goods). The IGST can be claimed back through Form GST RFD-01 under Section 54 of the CGST Act, but this:

• Blocks working capital for the refund processing period (typically 60 days minimum)
• Adds compliance burden — separate refund application per FY
• Risks departmental scrutiny on the period of non-compliance
• May trigger Section 73/74 demand notices for past LUT-less exports if not voluntarily remedied
• Damages relationship with overseas buyers due to invoice value changes

Failure to Export Within Rule 96A Timeline

Even with a valid LUT, the exporter must comply with strict export timelines:

Under Rule 96A(1), the Commissioner may extend these timelines on application supported by valid reasons. Common acceptable reasons include shipping delays, COVID-type disruptions, contractual force majeure, and overseas customer payment cycle issues. The extension must be applied for proactively — retroactive extensions are difficult to obtain.

Interest on Failed Export Commitment

Where the export commitment fails, the exporter must pay IGST plus interest at 18% per annum from the date of invoice till the date of payment. The interest is non-condonable. The 18% rate is significantly higher than other GST interest rates (typically 18% for delayed payment per Section 50, but specific to LUT failure it operates as a recovery interest). Combined with the IGST liability, this can be a material business cost on a single failed export.

Key Case Law & Departmental Guidance

Position Confirmed by Indian Courts

While LUT is largely a procedural compliance, the substantive consequences of LUT failure (IGST recovery with 18 percent interest) have been consistently upheld by the Supreme Court of India in tax recovery jurisprudence such as Mafatlal Industries Ltd. The procedural deemed-approval and witness requirements have not been seriously challenged, and the operative framework remains the CBIC circulars described below.

Circular 40/14/2018-GST — Auto-Approval Reform

CBIC Circular 40/14/2018-GST dated 6 April 2018 reformed the LUT process by introducing automatic deemed approval on ARN generation. The reform addressed delays and discretionary rejection in the manual approval era. The circular clarified that the system-generated ARN itself constitutes acceptance of the LUT, and no separate manual order is required. However, the circular preserved the proper officer's right to subsequently verify eligibility and reject the LUT if disqualifying facts emerge. Practitioners rely on this circular for the deemed-approval position.

Circular 45/19/2018-GST — Non-GST and Exempt Goods

CBIC Circular 45/19/2018-GST dated 30 May 2018 clarified that LUT or bond is not required for export of non-GST goods (such as petroleum crude, motor spirit, high-speed diesel, natural gas, and aviation turbine fuel which are outside GST purview) or for exempted supplies that are zero-rated by other provisions. This narrowed the universe of supplies requiring LUT cover. Practitioners verifying LUT requirement should map the specific HSN against current GST coverage.

Circular 4/4/2017-GST — Original 12-Month Validity

The original Circular 4/4/2017 dated 7 July 2017 fixed LUT validity at 12 months. This was operationally aligned with financial year by Notification 37/2017 to expire on 31 March of the FY. The 12-month + FY-end alignment means an LUT filed on 30 September 2025 has only 6 months of utility before mandatory renewal. Practitioners often miss this short-cycle realisation, especially when first registering for export operations mid-year.

Practitioner Implications

• Build March-end LUT renewal task into compliance calendar. Treat it like financial year-end statutory tasks.
• Verify eligibility before filing. Subsequent disqualification can void the LUT retroactively, exposing past exports to IGST liability.
• Maintain witness consent letters. The two witnesses should sign supplementary consent confirming their role.
• Track Rule 96A timelines per invoice. Build a tracker with invoice date, expected shipping/FE date, and 3-month/1-year cliff.
• Apply for timeline extension proactively if export delays are anticipated. Retroactive extensions are difficult.
• Reconcile export data quarterly against LUT validity to catch any misaligned exports early.
• Don't rely solely on auto-approval. Subsequent verification by the proper officer can reverse the deemed approval if eligibility is questioned.

Common Mistakes Exporters Make

Forgetting to File New FY LUT

The single most common mistake — particularly for small exporters and first-time exporters — is forgetting that the LUT must be refiled annually. The previous year's LUT does not extend automatically. Exports made between 1 April and the new LUT filing date are technically without LUT cover and trigger IGST liability. The Patron LUT calendar tool is designed to prevent this through automated milestone reminders.

Filing LUT After First Export of FY

Even if the LUT is filed during the FY, exports made before the filing date are not retrospectively covered. Practitioners sometimes assume the LUT covers the entire FY uniformly — it does not. The LUT becomes operative only from its filing date. Exports between 1 April and filing date require IGST payment with subsequent refund through RFD-01.

Inadequate Witness Documentation

Witnesses are not just a formality. In disputes, the department may summon witnesses to confirm execution of the undertaking. Practitioners should obtain signed consent letters from witnesses, store witness PAN copies, and confirm witness availability before naming them in the LUT. Avoid using overseas-located witnesses or witnesses unrelated to the business.

Misjudging Rule 96A Timeline (RBI Master Direction Context)

For service exporters, the Reserve Bank of India Master Direction on Export of Goods and Services is the operative framework for what constitutes valid foreign-exchange receipt. INR receipts through Special Vostro Accounts of partner-country correspondent banks qualify; pure domestic INR does not. Misjudging this can defeat both LUT cover and refund eligibility.

Invoice-Date vs Shipping-Date Confusion

The 3-month timeline for goods export runs from invoice date, not shipping date. For complex export contracts where invoice precedes physical shipping by several weeks, this can cause unintended timeline pressure. Practitioners should align invoice timing with realistic export timeline and apply for extensions early where delays are anticipated. Similarly, the 1-year FE realisation timeline for services starts from invoice date, regardless of payment terms agreed with the client.

Ignoring Eligibility Threshold Changes

If the exporter is subsequently prosecuted for tax evasion of ₹2.5 crore or more, the LUT eligibility is lost — and the LUT can be revoked retroactively. Recent enforcement actions under CGST Sections 73/74 with criminal proceedings under Section 132 should trigger a fresh eligibility assessment. Practitioners advising on tax disputes should always consider impact on existing LUT status.

Using LUT Cover for Non-Eligible Supplies

The LUT covers exports and SEZ supplies under Section 16 IGST Act. It does not cover deemed exports under Section 147 (those follow a different refund mechanism with separate forms). Some exporters misclassify supplies and rely on LUT cover for transactions that needed deemed-export treatment. The mismatch surfaces during audits and can trigger IGST recovery.

Not Saving the RFD-11A Acknowledgment

The system-generated RFD-11A acknowledgment is the primary evidence of LUT filing. Some practitioners forget to download and archive it. During audits or refund verifications, the acknowledgment is the first document requested. Always download the RFD-11A immediately after filing and archive in the export compliance file.