Indirect Tax Laws · Import and Export Under GST

Export under Bond or Letter of Undertaking (Rule 96A)

Updated 5 October 2026 · Fact-checked

Under Rule 96A of the CGST Rules, a registered exporter supplies without paying IGST by furnishing a Letter of Undertaking (LUT) in FORM GST RFD-11. A person prosecuted for an offence involving tax evaded above ₹250 lakh also furnishes a bond with a bank guarantee. Missing the 3-month (goods) or 1-year (services) limit makes IGST plus interest payable.

Understand Export under Bond or Letter of Undertaking (Rule 96A)

Exports are zero-rated under the IGST Act. The exporter has two options. Option one: pay IGST on the export and claim a refund. Option two: export without paying IGST and claim a refund of unutilised input tax credit. Rule 96A governs option two.

The government does not want tax to vanish if the goods never leave India or the foreign currency never arrives. So the exporter gives an undertaking before the export. It binds the exporter to pay the IGST with interest if the export is not completed in time.

The undertaking is a Letter of Undertaking (LUT) in FORM GST RFD-11, given to the jurisdictional Commissioner. The LUT facility is available to a registered person, except one who has been prosecuted for an offence where the tax evaded exceeds ₹250 lakh and the prosecution has been launched. That person furnishes a bond, in FORM GST RFD-11, accompanied by a bank guarantee of an appropriate amount. The same FORM GST RFD-11 covers both the LUT and the bond. The same facility covers supplies to an SEZ developer or SEZ unit.

There are two time limits. For goods, the test is whether they are exported out of India within 3 months from the date of the export invoice. For services, the test is whether the payment is received in convertible foreign exchange (or in Indian rupees where RBI permits) within 1 year from the date of the invoice. The Commissioner may allow a longer period.

If the limit is missed, the exporter must pay the IGST along with interest under section 50(1) within 15 days after the limit expires. Interest runs from the date of the invoice. If the exporter does not pay, the amount is recovered under section 79 of the CGST Act.

Key rules to remember

Instrument for export without IGST: LUT in FORM GST RFD-11 | Bond in FORM GST RFD-11 with a bank guarantee of an appropriate amount (if prosecuted, tax evaded > ₹250 lakh); Furnished before export to the jurisdictional Commissioner. The same FORM GST RFD-11 covers both the LUT and the bond. It is filed online on the common portal.
Who must furnish a bond with bank guarantee: Prosecuted for an offence where tax evaded exceeds ₹250 lakh and prosecution has been launched; Such a person furnishes a bond accompanied by a bank guarantee of an appropriate amount. The condition is prosecution launched, not merely a notice.
Time limit for goods: Export within 3 months from the invoice date; pay within 15 days after that period expires; Extendable by the Commissioner.
Time limit for services: Convertible foreign exchange received within 1 year from the invoice date; pay within 15 days after that period expires; Rupees are also accepted where RBI permits.
Amount recoverable on default: IGST on the export + interest under section 50(1) from the invoice date to the date of payment; Interest is at the rate notified for section 50(1), which is 18% per annum for this purpose. Unpaid amounts are recovered under section 79.

How to solve Export under Bond or Letter of Undertaking (Rule 96A) questions

Use the same order for every case question on Rule 96A. Write the provision, apply the facts, then give the conclusion.

1Identify the supply: goods or services, and whether it is an export or a supply to an SEZ. This decides which time limit applies.
2Check the instrument. Ask whether the exporter has been prosecuted for an offence where the tax evaded exceeds ₹250 lakh and the prosecution has been launched. If yes, a bond with bank guarantee is needed. If no, an LUT is enough.
3Check timing of the undertaking. It must be furnished before the export, in FORM GST RFD-11.
4Fix the start date: the date of the export invoice, not the date of the shipping bill or the order.
5Compute the deadline: 3 months for goods, or 1 year for services. Then add 15 days for payment. Allow for any extension by the Commissioner.
6If the deadline is missed, compute the IGST payable and the interest at 18% per annum from the invoice date to the date of payment.
7State the consequence: if the exporter does not pay, recovery is under section 79. Conclude clearly.

Quickest way: Three-line check: Who, When, How much

When to use it: Use it for MCQs and for short-answer case scenarios when time is tight.

Who: LUT unless prosecution has been launched for tax evaded exceeding ₹250 lakh. Then a bond with bank guarantee.
When: goods 3 months, services 1 year, both from the invoice date. Payment is due 15 days after expiry.
How much: IGST plus 18% interest per annum from the invoice date. Interest = IGST × 18% × days ÷ 365.

Common mistakes in Export under Bond or Letter of Undertaking (Rule 96A)

Counting the 3 months or 1 year from the shipping bill date or the date of the contract.
Students mix up the customs documents with the GST rule.
Fix: Rule 96A counts from the date of issue of the export invoice. Start the clock there.
Applying the 1-year limit to goods or the 3-month limit to services.
The two limits are learnt together and get swapped.
Fix: Goods: physical export within 3 months. Services: receipt of foreign exchange within 1 year.
Saying interest runs only from the end of the time limit.
Students assume interest starts when the default starts.
Fix: Under Rule 96A, interest under section 50(1) is paid from the date of the invoice.
Forgetting the extra 15 days for payment.
The payment deadline is treated as the same date as the export deadline.
Fix: Tax and interest are payable within 15 days after the 3-month or 1-year period expires.
Saying every exporter needs a bank guarantee, or that no one does.
Students remember only one side of the eligibility rule.
Fix: Most exporters give an LUT. Only a person prosecuted for an offence where tax evaded exceeds ₹250 lakh, with prosecution launched, furnishes a bond with bank guarantee.
Treating the Commissioner's extension as unavailable.
Students memorise the fixed periods only.
Fix: State that the periods can be extended by the Commissioner. Compute default only after any extension.

Worked examples

Example 1

Sunrise Exports Ltd, a registered person with no prosecution history, issues an export invoice for goods on 10 January 2027. IGST on the supply would have been ₹1,80,000. It exports under LUT, but the goods are not exported out of India. Compute the amount payable if it pays on the last permitted date.

Show the solution

Eligibility: no prosecution, so an LUT in FORM GST RFD-11 was valid.
Time limit: goods must be exported within 3 months from the invoice date, i.e. by 10 April 2027.
Payment date: the tax is payable within 15 days after that period expires, i.e. by 25 April 2027.
Interest period: from the invoice date, 10 January 2027, to 25 April 2027. Days = 21 (January) + 28 (February) + 31 (March) + 25 (April) = 105 days.
Rate: Rule 96A refers to interest under section 50(1) at the notified rate, which is 18% per annum for this purpose.
Interest = ₹1,80,000 × 18% × 105 ÷ 365 = ₹9,320.55, about ₹9,321.
Total = ₹1,80,000 + ₹9,321 = ₹1,89,321.

Answer: Sunrise must pay IGST of ₹1,80,000 plus interest of about ₹9,321, a total of about ₹1,89,321, by 25 April 2027. If it does not, the amount is recovered under section 79.

Example 2

Delta Software Pvt Ltd, a registered person with no prosecution history, exports software services to a US client and issues the invoice on 15 June 2026 under an LUT. The foreign exchange is received only after 18 months, and the Commissioner has not extended the period. Advise on the consequence.

Show the solution

Instrument: Delta has not been prosecuted, so an LUT in FORM GST RFD-11 furnished before the export was valid.
Time limit: for services, convertible foreign exchange must be received within 1 year from the invoice date, i.e. by 15 June 2027, unless the Commissioner extends. The same counting convention is used as in the goods example, where 3 months from 10 January ended on 10 April.
Payment date: tax and interest are payable within 15 days after that period expires, i.e. by 30 June 2027.
Since the receipt came after 18 months and no extension was allowed, Delta must pay the IGST with interest under section 50(1) from 15 June 2026 until payment.
If Delta does not pay, the amount is recovered under section 79.

Answer: The 1-year limit ended on 15 June 2027 without receipt of the foreign exchange. Delta must pay the IGST with interest from the invoice date, 15 June 2026, within 15 days after that, i.e. by 30 June 2027, failing which it is recovered under section 79.

Exam tips

Write the rule in provision-facts-conclusion form. Name Rule 96A, state the facts, then give the amount and dates.
Show the date working line by line: invoice date, deadline, payment date. Examiners give marks for each.
In interest sums, state the rate (18% per annum) and the day count. Round to the nearest rupee at the end.
For case MCQs, check first whether the supply is goods or services. Most wrong answers come from using the wrong time limit.
Link the topic to refund. Export without IGST leads to refund of unutilised ITC, while export with IGST leads to refund of IGST paid.

Practice questions from Import and Export Under GST

Export under Bond or Letter of Undertaking (Rule 96A): frequently asked questions

What is the difference between a bond and an LUT under Rule 96A?

Both are undertakings to pay IGST with interest if the export is not completed, and both are covered by FORM GST RFD-11. Registered exporters can generally give an LUT. A person prosecuted for an offence where the tax evaded exceeds ₹250 lakh, with the prosecution launched, furnishes a bond accompanied by a bank guarantee of an appropriate amount.

What is the time limit for export under Rule 96A?

For goods, export must happen within 3 months from the date of the export invoice. For services, payment in convertible foreign exchange must be received within 1 year from the invoice date. The Commissioner can allow more time.

How is interest calculated if goods are not exported?

Interest is charged under section 50(1) at the notified rate, which is 18% per annum for this purpose, on the IGST. It runs from the date of the invoice until the date of payment. Payment is due within 15 days after the 3-month or 1-year period ends.

How often must I file an LUT?

An LUT is generally furnished for a financial year and filed online on the GST portal before the export. Check that it is in force before issuing the first export invoice of the year.