GST Export Compliance: LUT Witness Affidavit & Invoice Setup

Understanding GST Zero-Rated Exports

Under the Indian GST framework, export of services is treated as a "Zero-Rated Supply" under Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017. This allows exporters, agency owners, and freelancers to supply services to overseas clients without paying any tax. However, to enjoy this tax-free status, you must comply with strict registration and invoicing rules.

The most common and cost-effective pathway to export services is the LUT (Letter of Undertaking) Route. By submitting Form GST RFD-11 at the start of each fiscal year, you can export services at 0% GST and avoid locking up 18% of your revenue in tax refunds.

Failure to file the LUT prior to generating invoices triggers a mandatory 18% IGST liability, forcing the exporter into a lengthy refund claim cycle.

The Witness Requirement for LUT (Form RFD-11)

When you file a Letter of Undertaking on the GST portal, you are executing a legal contract with the Government of India. The GST portal requires you to enter the details of two independent witnesses. If your GST filings are ever selected for a scrutiny audit, the GST officer may request a physical copy of the witness declarations or affidavits confirming their signature and identity.

Below is a downloadable compliance template for the LUT Witness Declaration. You should fill this out, have both witnesses sign it, and keep a scanned copy in your compliance records.

DECLARATION OF WITNESS FOR LETTER OF UNDERTAKING (LUT)
(Under Rule 96A of CGST Rules, 2017)

SUBJECT: Declaration by Witness for LUT submitted by [Your Business Name]
We, the undersigned, hereby declare and confirm that:
1. We are independent witnesses and taxpayers resident in India.
2. We are signing as witnesses to the Letter of Undertaking (LUT) executed by [Proprietor Name] having GSTIN [Enter GSTIN] in Form GST RFD-11.
3. The LUT has been signed by the authorized signatory in our presence.

WITNESS 1 DETAILS:
Name: _______________________ PAN: ____________________
Address: _____________________________________________
Signature: __________________ Date: ___________________
  

GST & FEMA-Compliant Export Invoicing

To satisfy bank compliance officers and ensure that your foreign inward remittance is correctly reported to the RBI under the correct purpose code, your invoices must contain specific legal declarations.

A standard domestic invoice will fail bank audits. A service export invoice must include:

• Your GSTIN and LUT ARN number (Letter of Undertaking ARN).
• The mandatory legal declaration under Rule 46 of the CGST Rules: "Supply of services for export without payment of integrated tax under LUT."
• The correct FEMA Purpose Code (e.g. P0802 for software consultancy).
• Clear details of the billing currency (USD/EUR) and equivalent INR.

Ensure that you perform an active FiscLane transaction check to verify all mandatory fields prior to client delivery.

Statutory Compliance & GST Export Framework

Under Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017, export transactions are categorized as Zero-Rated Supplies. This legal position allows exporters to conduct business operations without tax liability. However, to maintain this tax-exempt status, businesses must adhere strictly to the rules laid down in Rule 96A of the CGST Rules, 2017. Under this rule, you must either export under a Letter of Undertaking (LUT) in Form GST RFD-11 or pay the applicable integrated tax (IGST) upfront and later claim a refund of the paid tax. Read more on filing and invoicing in our LUT Witness & Invoice Setup Guide.

Filing the Letter of Undertaking (LUT) is a mandatory step that must be completed prior to the commencement of export operations for each financial year. Exporters often make the mistake of issuing invoices with zero tax before filing the LUT. This omission is flagged during tax audits, resulting in demand notices from the department. The LUT is valid only for a single financial year (from April 1 to March 31), and a fresh application must be submitted online on the official GST Portal (gst.gov.in) at the start of every new fiscal period to prevent compliance disruptions.

Additionally, the place of supply for cross-border services must be determined in accordance with Section 13 of the IGST Act. In most cases involving remote consultancy, software development, and digital marketing, the Place of Supply is the location of the recipient outside India. However, if the services are classified as intermediary services (where the exporter merely facilitates a supply between two parties), the Place of Supply shifts to India, making the transaction subject to 18% IGST. Understanding this distinction is vital for digital agencies to avoid audit assessments, as discussed in our analysis of the GST Place of Supply rules.

Step-by-Step GST Portal Navigation for RFD-11

To file the Letter of Undertaking on the GST portal, follow this precise navigation pathway:

1. Log into the GST Portal using your registered tax credentials.
2. Navigate to the top menu and select Services > User Services > File LUT (RFD-11).
3. Select the correct Financial Year for which you are submitting the LUT from the drop-down menu.
4. If you have previously filed an LUT for the prior financial year, upload the previous LUT ARN receipt as supporting evidence.
5. Fill in the declaration check-boxes confirming that you will realize export proceeds within the mandated timeline.
6. Enter the details (Name, Address, PAN, and signatures) of two independent witnesses. Ensure their details match their official tax records. You can download the template from our LUT Witness affidavit guide.
7. Sign the application using your Digital Signature Certificate (DSC) or through Electronic Verification Code (EVC) OTP, then click submit.

Once submitted, the portal will generate an Application Reference Number (ARN) receipt. You must print this ARN number on all your commercial export invoices to satisfy customs and bank compliance officers during audits.

FEMA & RBI Regulatory Inward Remittance Guidelines

The Foreign Exchange Management Act (FEMA) regulates all cross-border transactions in India. The Reserve Bank of India (RBI) mandates that all export proceeds, including earnings from software development, SaaS sales, and consulting services, must be repatriated to India within a strict timeline (currently nine months for goods and services). Failing to bring foreign currency into your local bank account inside this window constitutes a severe foreign exchange violation, subject to significant penalties from the RBI. Read the details in our FEMA 2026 consolidation guidelines.

When foreign exchange is received in India, the Authorized Dealer Category-I (AD Cat-I) bank is responsible for reporting the transaction to the RBI. This reporting relies on selecting the correct FEMA Purpose Code. The purpose code classifies the nature of the transaction (e.g., P0802 for software implementation services, P0807 for data hosting, and P1006 for general business support services). Mismatches between your invoice description and the selected banking purpose code will cause transaction holds or trigger scrutiny during tax reviews. Check the correct codes in our Freelance Purpose Codes Guide.

Furthermore, payment aggregators like Stripe, Wise, and PayPal process transactions through partner banks in India, which generate electronic Foreign Inward Remittance Advices (e-FIRAs). Exporters must actively download these advices to prove the source of funds during GST audits. FiscLane provides automated reconciliation dashboards to match banking remittance details with commercial invoices, making it easy to spot errors before they result in compliance failures. Learn more in our Wise & Stripe e-FIRA download walkthrough.

FEMA Compliance Checklist for Service Exporters

To ensure full compliance with FEMA and RBI regulations, service exporters should follow this verification checklist:

• Verify Purpose Codes: Confirm that the banking remittance profile uses the correct purpose code corresponding to the services detailed in client agreements.
• Realization Timeline: Track payment collection dates to ensure all foreign invoices are settled within the nine-month FEMA window.
• Download e-FIRAs: Download the electronic FIRA/FIRC documents from your payment processor within 15 days of settlement.
• EEFC Account Utilization: Open an Exchange Earners Foreign Currency (EEFC) account to hold foreign currency and avoid daily conversion losses.
• FDI Reporting: Ensure any foreign equity investments are reported on the official RBI FIRMS Portal (firms.rbi.org.in) within 30 days of share allotment.

Frequently Asked Questions (FAQs)