Exporting services from India is zero rated under GST, but you only get to invoice foreign clients without charging 18% IGST if you have filed a Letter of Undertaking first. The LUT is free, it is filed on the GST portal in about ten minutes, and it counts as accepted once the portal issues its acknowledgement number. The catch is timing: it must be in place before the invoice date.
This is one of the few pieces of Indian tax admin that is genuinely simple and genuinely free. It is also one people discover three invoices too late.
What the LUT actually does
When you provide services to a client outside India and get paid in foreign currency, that is an export of services. Exports are zero rated, which means GST should not add cost to them.
There are two ways to achieve that. You can charge 18% IGST to your foreign client, pay it, and then claim a refund, which blocks your working capital for months and makes your invoices look strange to overseas clients. Or you can file a Letter of Undertaking, which is a formal promise to the department that you are exporting, and then invoice at zero IGST from the start. That is GST on your own invoice to the client, a separate charge from the GST a payment platform adds to its own fee: our breakdown of what Wise India actually charges shows how the 18 percent GST on Wise’s conversion fee and e-FIRC fee is a different, much smaller line that has nothing to do with your LUT.
Everyone sane picks the second. The LUT is the paperwork that makes it legal.
Do you even need GST registration?
Worth settling before anything else, because these are separate questions and get muddled constantly.
GST registration is generally required once your turnover crosses the threshold. For services sold across state lines, which is how exports are treated, Notification 10/2017, Integrated Tax exempts you from registering while all India aggregate turnover stays within ₹20 lakh a year, or ₹10 lakh in some special category states. Below that, many freelancers are not required to register at all, in which case the LUT question does not arise yet. If you are earning modest amounts from AI training platforms, you are quite possibly not in GST territory. Our fuller walkthrough of that threshold, the exact notification text and what the registration process looks like once you do cross it, covers the question this section only settles in passing.
The LUT only matters if you are registered. If you are, and you invoice foreign clients, you want one.
How to file it, step by step
- Log in to the GST portal and go to Services, then User Services, then Furnish Letter of Undertaking (LUT).
- Select the financial year the LUT should apply to.
- Fill in the undertaking. The wording is standard and you are not drafting anything.
- Enter two witnesses: full name, complete address and occupation for each. They can be employees, family members or business associates, and they do not need a GSTIN.
- Sign it. Companies and LLPs must use a digital signature certificate. Proprietors and individuals can use EVC through an Aadhaar OTP, which is far less hassle.
- Submit, and note the Application Reference Number you receive.
How fast it is accepted is where the official sources disagree. CBIC Circular 40/14/2018 says an LUT is deemed accepted as soon as the acknowledgement with its Application Reference Number is generated. The GST portal’s own user manual lists a separate Deemed Approved status that applies if no tax official acts within 3 working days. The circular is the legal instruction, so the ARN is the moment that matters, but keep the acknowledgement either way. The government charges nothing for this. If a website offers to file your LUT for a fee, understand that you are paying purely for someone to fill in a short form you could complete yourself.
The timing rule that catches people
An LUT applies from its filing date onward. It does not work retrospectively. That means it must be in place before you raise the invoice it is meant to cover.
The LUT is filed per financial year, and the portal manual says its status changes to Expired at the end of that year. For FY 2026-27 the commonly cited filing date was 31 March 2026, and that has now passed. If you are registered, invoicing foreign clients and have not filed one this year, filing today covers invoices from today forward, not the ones you raised in April. What does not work is invoicing in April, remembering in September, and expecting the LUT to reach backwards. The FY 2027-28 LUT follows the same convention, which puts it at 31 March 2027.
The practical habit: file it at the start of every financial year, before your first foreign invoice, and put a reminder in your calendar for the following March. The bank end of the same export, and the proof of it, is covered in what FIRA and eFIRA are and why your bank wants them.
LUT file karna kitna mushkil hai?
Genuinely not difficult. The form is short, the wording is prescribed, the only slightly annoying part is having two witnesses’ full addresses and occupations to hand. Gather those before you start rather than halfway through.
Budget ten minutes. The hard part of GST is elsewhere.
Does the Finance Act 2026 intermediary change affect you?
Only if you arrange work between a foreign client and someone else rather than doing it yourself. Section 13(8)(b) of the IGST Act used to keep such intermediary services inside India, so they carried 18% IGST even for clients abroad. Per the GST Council’s March 2026 newsletter, that clause went on 30 March 2026, when the Finance Act 2026 received assent. Agents can now meet the export test, and then need an LUT like anyone else. Whether you count as one is a chartered accountant’s call.
What happens if you did not file one
If you invoiced foreign clients without an LUT in place, the correct treatment is that IGST was payable on those invoices, with a refund claim to follow. That is recoverable but tedious, and it is exactly the working capital problem the LUT exists to avoid.
This is a good moment for a chartered accountant rather than a blog. Do not attempt to quietly backdate anything.
This is general information, not tax advice. What applies to you depends on your residency status, total income and the nature of your work. Speak to a chartered accountant before you file.
Once the GST side is settled, the other half of the picture is income tax, where the most over recommended provision in Indian freelancing content is Section 44ADA. A lot of online work does not actually qualify for it. Both sit under receiving foreign payments in India, alongside the fee maths for PayPal, Payoneer and Wise. Earning too little to register? Then whether you need an ITR under 2.5 lakh is the better next question.
What do you need in front of you before starting the form?
The LUT itself takes about ten minutes. Gathering the details halfway through is what turns it into an afternoon.
| You need | Detail | Note |
|---|---|---|
| GST portal login | Your credentials | You must already be registered for GST |
| Financial year | The year the LUT applies to | It runs per financial year, not indefinitely |
| Witness 1 | Full name, complete address, occupation | No GSTIN required |
| Witness 2 | Full name, complete address, occupation | Can be an employee, family member or associate |
| Signing method | Aadhaar OTP for individuals, DSC for companies and LLPs | EVC via Aadhaar is far less hassle |
The witness requirement surprises people most. They are not guaranteeing anything financially, and they do not need to be in business. You simply need two identifiable adults with addresses, which in practice means asking a family member before you open the form rather than during it.
The three GST questions people run together
Most confusion in this area comes from treating three separate questions as one.
- Do I need to register for GST at all? A threshold question, commonly twenty lakh rupees for services. Many freelancers earning modest amounts are simply not required to register, and for them the LUT does not arise.
- Is my work zero rated? Providing services to a client outside India and being paid in foreign currency is an export of services, which is zero rated.
- How do I get the benefit of that? By filing an LUT before you invoice, so you can charge zero IGST rather than charging 18% and reclaiming it later.
Answering these in order prevents the most common mistake, which is an unregistered freelancer worrying about an LUT they do not yet need, or a registered one invoicing foreign clients without one and creating a refund problem for themselves.
This is general information, not tax advice. What applies to you depends on your residency status, total income and the nature of your work. Speak to a chartered accountant before you file.
What has changed since this was first published?
- Correction, September 2026. The August 2026 version said an LUT usually auto approves within one to two working days. CBIC Circular 40/14/2018 deems it accepted on generation of the ARN, and the portal manual shows a Deemed Approved status after 3 working days without action. Both are now stated above.
- September 2026. The FY 2026-27 filing date of 31 March 2026 has passed. The timing section now covers filing part way through the year and the 31 March 2027 date for FY 2027-28.
- Added September 2026. The August 2026 version did not mention that section 13(8)(b) of the IGST Act was omitted with effect from 30 March 2026, per the GST Council’s March 2026 newsletter.
- September 2026. The ₹20 lakh registration threshold for inter state services rechecked against Notification 10/2017, Integrated Tax: unchanged.
Related reading
- How to receive foreign payments in India
- Section 44ADA, and who actually qualifies
- What FIRA and eFIRA are, and why your bank wants them
- PayPal vs Payoneer vs Wise, with the real fee maths
Frequently asked questions
What is an LUT under GST?
A Letter of Undertaking is a declaration that lets you invoice foreign clients at zero IGST for exported services, instead of charging 18% and claiming a refund later.
LUT file karne ka kitna kharcha hai?
Nothing. The GST portal charges no fee. Any service charging you for it is charging for form filling you can do yourself in about ten minutes.
How long does LUT approval take?
It typically auto approves within one to two working days, with no officer intervention. You receive an Application Reference Number on submission.
Do the two witnesses need a GSTIN?
No. Witnesses can be employees, family members or business associates. You need their full name, complete address and occupation only.
Can I file an LUT after I have already invoiced?
An LUT applies from its filing date forward, not retrospectively. Invoices raised before it was in place are treated as if IGST was payable, which is recoverable but tedious.
Do I need GST registration to earn from foreign platforms?
Registration is generally required once turnover crosses the threshold, commonly twenty lakh rupees for services. Below that many freelancers are not required to register, and the LUT question does not yet apply.
What do I need before filing an LUT?
GST portal login, the financial year it applies to, two witnesses with full name, address and occupation, and a signing method. Individuals can use an Aadhaar OTP rather than a digital signature.
Do the LUT witnesses take on any liability?
No. They do not need a GSTIN and are not guaranteeing anything financially. You need two identifiable adults with addresses and occupations, which is why family members are commonly used.
Platform rules and rates change without notice. This page was verified in September 2026 and we recheck it monthly. If you hit something different, tell us in the comments and we will update it.
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