LUT Compliance for Exporters

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Why It Matters

Rule 96A permits eligible exporters to supply goods or services without payment of integrated tax against LUT, subject to export and realisation conditions.

Where goods are not exported or service consideration is not realised within the prescribed or extended period, tax and interest can become payable until the condition is cured.

LUT is generally filed for each financial year and should be available before invoices are issued under the no-tax route.

Control Framework

Action Checklist

1. File LUT at year start.
2. Update invoice templates.
3. Maintain export register.
4. Track shipping and realisation.
5. Seek extension where available.
6. Reconcile LUT supplies to returns.

Practical Example

Evidence to Keep

• LUT acknowledgement.
• Board or authorisation record.
• Export invoices.
• Shipping or service evidence.
• FIRC/BRC.
• Realisation ageing and extension.

Warning Signs

Detailed Review

GST control should connect five records: commercial contract, tax invoice, movement or service evidence, accounting entry and portal return. A filing that cannot be traced back to all five records is difficult to defend.

Every reconciliation should have a clear opening balance, current-period additions, corrections, reversals, payments and closing balance. Avoid unexplained plugs that make the total match but do not identify the invoice or legal reason.

Portal data is important but not conclusive by itself. GSTR-2B, e-invoice, e-way bill and ledger data should be read with the statute, rules, notifications, contracts and actual supply evidence.

Keep original source files and final filed versions. Screenshots help explain a portal event but should not replace downloaded returns, JSON, signed invoices, acknowledgements or bank records.

For material exposure, prepare a written position memo stating facts, issue, law, alternatives, conclusion, amount and approval. The memo should record uncertainty rather than hide it.

Export and refund files should link invoice, shipping or service evidence, foreign-currency realisation, returns, ledger and claim statement. One unmatched identifier can delay the entire claim.

Age unrealised export invoices and unresolved refund queries separately so tax exposure and cash-flow exposure are visible.

Escalation Route

Start with the GST portal record, responsible business owner and tax working. Where the issue is operational, correct the source system and retain the acknowledgement. Where it is legal or disputed, obtain a reasoned professional position before payment, reply, refund or appeal.

Track the statutory or portal deadline separately from internal approval. Preserve helpdesk tickets, ARN, hearing requests, orders and payment records so a later reviewer can reproduce the entire path.

Transaction Test

Before filing or replying, prepare a one-page issue sheet showing GSTIN, tax period, transaction type, amount, applicable provision, portal form, evidence owner and due date. This prevents different teams from solving different versions of the same problem.

Reconcile tax by CGST, SGST, IGST and cess rather than only by total. A total can match even when the wrong tax head, state or period has been used, which can still create interest, cash-flow and customer-credit consequences.

Build an exception register with five statuses: identified, evidence pending, vendor or customer action, tax treatment approved and closed. Every exception should retain its original amount even after correction so the audit trail remains visible.

Test the position against the counterparty’s records. Customer ITC, vendor GSTR-1, transporter data, marketplace statements and bank receipts can expose differences that are invisible in the taxpayer’s own ledger.

The final approval should record who reviewed the legal position and who approved the return, reply, payment, refund or appeal. Material GST decisions should not remain buried in informal email chains.

Prepare an invoice-level claim statement that ties export or inverted-duty data to GSTR-1, GSTR-3B, shipping or service evidence and electronic ledgers.

Track rejected, withheld and sanctioned amounts separately. A partial sanction should not be recorded as full closure if the balance remains disputed.