GST and LUT on Export Orders: What International Buyers Should Know

Under India's GST law (Section 16 of the IGST Act, 2017), export of goods is treated as a "zero-rated supply." This means the export itself is not taxed under GST — it's a distinct legal category from a domestic sale that's simply exempt, and it exists specifically to keep Indian exports price-competitive by not embedding domestic tax into an export price.

• Export under a Letter of Undertaking (LUT) — the exporter ships without charging or paying IGST on the export, and separately claims a refund of the input tax credit (ITC) accumulated on inputs used to produce or procure the exported goods. This is the more commonly used route for regular exporters.
• Export on payment of IGST — the exporter pays IGST on the export and then claims a refund of that IGST paid, once shipment is confirmed. Less common for routine export volume, since it ties up cash in the tax-then-refund cycle.

An LUT is filed through the GST portal (Form GST RFD-11) and is generally valid for the financial year in which it's furnished, renewed annually.

Your commercial invoice from an Indian exporter under LUT will show no GST component — the invoice value is the actual product and agreed Incoterm cost, not a GST-inclusive figure with tax stripped out. This is standard, expected treatment for a properly structured export invoice, not a sign of irregular invoicing.

GST and LUT are purely Indian domestic tax mechanisms governing how the export is treated on the seller's side — they have no bearing on import duties, VAT, GST, or other taxes your own country applies on arrival, which remain entirely your responsibility as importer under the agreed Incoterm. Don't read "no GST on the invoice" as any signal about your own import cost — budget for your destination-country duties and taxes separately, as you would regardless of how the exporter structures their own GST filing.