What is a GST Letter of Undertaking (LUT) and why does it matter for an India subsidiary that exports?

Exports are treated as zero-rated supplies under GST, meaning no GST is ultimately meant to be borne on them. There are two ways to achieve this: pay GST on the export invoice and then claim a refund, or file a Letter of Undertaking (LUT) with the GST authorities, which allows the exporter to invoice without charging GST in the first place.

For an India subsidiary with regular export or cross-border service billing to its foreign parent or third-party customers, filing an LUT (typically valid for a financial year and renewed annually) avoids the cash-flow drag of paying GST upfront on every export invoice and then waiting for a refund cycle. It's a routine annual filing, but missing the renewal deadline means reverting to the pay-then-refund route until a fresh LUT is filed.

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