The Vijayawada graphic designer and the GST LUT she did not know she needed

She has been running the studio for seven years, since she left a junior designer position at a Hyderabad advertising firm. Her first five years were all Indian clients — small tech startups, boutique fashion brands, a few local newspapers. The margins were tight. A ₹8,000 logo design, marked up to ₹12,000, required three revisions and a week of inbox chasing. In 2023, a Bangalore SaaS founder she had worked with referred her to a Singapore venture-backed software company looking for design refresh on their dashboard and documentation. Sridevi sent a proposal. They accepted. The rate was in USD.

By 2024, she had three foreign clients: the Singapore SaaS company (paying approximately $2,000 to $3,000 per month in ongoing design work), a US e-commerce brand (approximately $1,500 per month in packaging and web design), and a small London digital agency that occasionally outsourced illustration work to her (approximately $800 per month, sporadic). The money arrived via bank transfer. Sometimes it was in USD. Sometimes in GBP. Sometimes the amounts converted at unfavourable rates because the bank processed the transfer through an intermediary. She did not think too hard about it. The total was roughly ₹4,00,000 per year in foreign earnings, which was significant.

Then, in October 2025, her Indian client base remained flat, and the foreign work scaled slightly. By November, her annual run rate had crossed ₹20,00,000 — the GST registration threshold in India.

She crossed the threshold on October 15, a Wednesday morning, when she woke up to a bank notification that the Singapore company had made a $3,200 payment for a completed design system. She did not register for GST that day. She did not register on November 1, when the threshold became academic. She registered on December 20, when her accountant — a man named Ramakrishnan who manages accounts for about sixty designers and freelancers across Andhra Pradesh — told her, calmly, that she had been tax-non-compliant since October 15 and that the first quarterly return was due in January.

The problem arrived three days after registration, when she sent her first GST invoice to the Singapore company.

🗓️ The foreign client problem

GST in India is straightforward for domestic sales: 5%, 12%, 18%, or 28% depending on the product or service classification. For a designer, graphic design services are classified as "Professional Services" under HSN 9988, and the standard rate is 18%. When you invoice a domestic client for ₹1,00,000 of design work, you add 18% GST and charge ₹1,18,000 total.

When you invoice a foreign client for the same work, the GST rule is different. Services exported outside India are, under GST law, treated as zero-rated exports. The invoice should carry 0% IGST. The designer (the exporter of services) files no GST on the exported amount. The foreign client is not charged any Indian tax.

This is not new law. It has been part of GST since 2017.

Sridevi's understanding was that since her foreign clients were outside India, she should be invoicing them at zero GST. Her accountant had confirmed this once, very briefly, saying "Foreign clients, zero GST, just invoice them with 0% IGST." She had taken this to mean: simply put 0% on the invoice and proceed.

When she sent the first GST invoice to the Singapore company at 0% IGST, the company's finance team accepted it. When she sent the next one, they queried it: "Why is there an invoice? We thought this was an export. You should not be sending invoices to us with GST rates, even zero. Just send us a regular invoice." She was confused. She sent it without any GST mention. They said: "This doesn't look like a proper Indian export invoice. Our auditors need to see documentation that this is a legitimate zero-rated export from India." She did not know what documentation they meant.

The US e-commerce brand was simpler and worse. When she sent them a GST invoice with 0% IGST, they responded immediately: "We're not paying any invoice that has 'GST' or 'tax' written on it, even if the rate is 0%. We need a regular commercial invoice. If you want to add GST on top, we'll discuss, but we prefer clean invoicing. For now, keep GST out of your invoices to us." She asked her accountant what to do. Ramakrishnan said: "Technically they are right to object, because the zero-rated export requires documentation on your end, not on theirs. But practically, you cannot force them to accept a format they do not want. For now, just send them regular commercial invoices without GST."

This was in January 2026. By February, Sridevi was invoicing the Singapore and US clients with regular, non-GST invoices, depositing the payments into her account, and reporting them not in GSTR-1 (the outward supply GST return) but somewhere else in the quarterly return form, because she did not know where they belonged. She was also accumulating a GST liability on her domestic work — invoiced at 18% — that she was paying on time, even though she had a growing sense that something was wrong with how she was handling the foreign invoices.

In March, Ramakrishnan told her that the Foreign Trade Policy and CBIC notifications required exporters of services to file an undertaking, called a Letter of Undertaking (LUT), with the GST department, and that without this undertaking, invoicing at zero IGST was technically non-compliant, even though in practice, enforcement was limited to companies with large volumes. "In your case," he said, "nobody is going to come after you. But if you get audited, or if you scale up later and the GST department reviews you, they will catch it."

She asked him to file the LUT. He said it had to come from her, not from him, and it had to be filed on the GST Portal by March 31, before the end of the financial year, because if she filed it after March 31, she could not claim the zero-rating retroactively.

It was March 28.

1. 💸

   October 15, 2025 — First foreign payment crosses ₹20-lakh threshold

   Singapore SaaS company pays $3,200. Sridevi's annual income now exceeds ₹20 lakh. She does not yet know this triggers GST registration.

2. 📋

   December 20, 2025 — Accountant forces GST registration

   Ramakrishnan tells Sridevi she has been non-compliant since October 15. She registers on GST Portal. First quarterly return due January 31.

3. ⚠️

   January-February 2026 — Zero-rated invoicing without LUT

   Sridevi invokes foreign clients at 0% IGST, then at no GST mention at all, because clients object. No LUT filed. No documentation for the zero-rating.

4. ⏰

   March 28, 2026 — Ramakrishnan raises the LUT issue

   Only three days left in the financial year. Filing an LUT after March 31 means losing the zero-rating retroactively for FY 2025-26.

"LUT ani enni saarlu annaaru, kani emantaaru ani telidhu."

— Sridevi, on the Letter of Undertaking (Telugu: They told me what LUT is, but I did not understand what to do with it.)

⚠️ The filing window

The Letter of Undertaking is a formal declaration filed on the GST Portal. It is a one-page document that states: the person filing it is a service exporter, they are committing to exporting services under zero IGST without claiming input tax credit on the purchases used to fulfill those exports, and they understand the penalty for mis-declaration. Once filed, the LUT is valid for four financial years. During those four years, the exporter can issue invoices at 0% IGST to foreign clients without having to submit Advance Authorisation or a Letter of Credit.

For exporters with foreign inflows, the GST law also requires that the corresponding payments be documented with a FIRC — a Foreign Inward Remittance Certificate — issued by the bank when foreign currency is converted to INR. The FIRC links the foreign invoice to the bank deposit, creating a documentary trail that the GST department can audit.

Sridevi's accountant had explained the LUT in one sentence. She had not understood it. She had not asked for clarification. She had filed her quarterly GST returns in January and February on her own, using the GST Portal's form-filling interface, reporting the foreign income as she understood it, which was incorrectly. Ramakrishnan had filed her domestic GST. He had not filed the LUT because, in his view, the LUT was Sridevi's responsibility, not his.

By March 28, she had three days to file.

The GST Portal is not an unfriendly place if you know what you are looking for. But if you have never filed an LUT before, and the Portal assumes you have, and there is no obvious "File LUT" button on the homepage, the Portal becomes a maze. Sridevi spent the evening of March 28 clicking through various sections of the GST Portal, looking for a form titled "Letter of Undertaking" or "LUT" or "Export of Services". She found nothing clearly labeled. She found a section on "Services" under the Returns tab. She found notifications and FAQs, but these were written in English, dense with regulatory language, and assumed she understood the terminology already.

She texted Ramakrishnan at 11 PM, saying she could not find where to file the LUT. Ramakrishnan replied at 6 AM the next morning, saying he had sent her a WhatsApp message with a detailed document link. She checked: there was a message from March 10, which she had not read, with a link to an MSME advisory that mentioned LUT filing in Appendix B, with a screenshot of the correct menu path on the GST Portal.

She followed the path. She found the form. She filled it in: declared herself a service exporter, declared that she would not claim input tax credit on the foreign export portion of her work, and filed it on March 29 at 2 PM. The GST system sent her an acknowledgement with a reference number, marking the LUT as filed and valid from April 1, 2026.

🌗 What changed after that

"మీ GST పోర్టల్‌లో LUT దాఖలు చేయడానికి మీకు మూడు రోజులు మాత్రమే మిగిలాయి — మార్చి 31 గడువు. LUT లేకుండా మీరు జనవరి నుండి ఫిబ్రవరి వరకు జారీ చేసిన ₹8,40,000 విదేశీ ఇన్వాయిస్‌లు సున్నా-రేటెడ్ ఎగుమతులుగా పరిగణించబడవు. GST పోర్టల్‌లో Services → Refunds → Furnish Letter of Undertaking అని వెళ్ళండి — ఆ ఫారమ్ RFD-11."

(You have three days left to file the LUT on the GST Portal — the March 31 deadline. Without an LUT, your foreign invoices from January through February totalling ₹8,40,000 will not qualify as zero-rated exports. On the GST Portal, navigate to Services → Refunds → Furnish Letter of Undertaking — that form is RFD-11.)

On March 30, Sridevi forwarded the LUT acknowledgement to all three foreign clients, along with a note explaining that she had now filed the required Indian documentation for zero-rated service exports, and that going forward, her invoices would carry 0% IGST, which was the correct and compliant format. The Singapore company accepted this immediately. The US e-commerce brand asked for a one-line confirmation that this was legal and that their purchasing department would not have a problem with it. Sridevi forwarded them the GST notification number from CBIC, and they accepted.

The bigger problem was retroactive.

From October 2025 to March 2026, Sridevi had invoiced the foreign clients without an LUT in place. By GST law, once an LUT is filed, it covers only new invoices issued after the filing date. The six months of invoices issued before the LUT was filed are technically not zero-rated exports; they are exports without the required documentation, which is a different category with different compliance consequences.

She asked Ramakrishnan if she needed to re-file the old invoices or file an amended return for the months in question. He said: "Technically, yes, you should have an audit certificate from a Chartered Accountant stating that these six months of invoices were indeed exports of services and were properly documented with FIRCs, and you should file that along with your annual return as supporting evidence. But in practice, if the quantum is small, and you have the FIRCs from the bank, and you now have the LUT filed, the GST department will not have reason to ask."

This was not a reassuring answer. But it was the answer.

She asked the bank for FIRCs for all the foreign currency deposits from October through March. The bank sent her copies of the remittance certificates for each inflow — six FIRC documents in total, one for each payment from the Singapore company, one combined for the US brand's monthly transfers, one for the London agency's quarterly lumps. She filed these with Ramakrishnan along with her annual return (Form GSTR-9) in April, attached as supporting documentation for the claim that the foreign invoices were legitimate exports of services, documented with FIRCs, and now covered retroactively by the filing of the LUT on March 29.

The GST department received the annual return. As of mid-May, no clarification notice has been issued.

What it does

• 🔍Reads the GST Portal's LUT filing requirements, locates the correct form, and translates the declaration statement into plain Telugu.
• 🗂️Identifies that an LUT is required, the three-day window before March 31, and which FIRC documents the bank needs to provide.
• 📋Surfaces the regulation (CBIC Notification 12/2017-Central Tax, Rule 5(1)) and explains that the LUT covers invoices from the filing date onward.

What it does not do

• 🔒Never files the LUT form on Sridevi's behalf — she enters her PAN, her bank details, and her declaration into the GST Portal herself.
• ⚖️Never advises on whether her six months of pre-LUT invoices need an audit certificate — it surfaces the requirement, Ramakrishnan makes the call.
• ✅Never decides to postpone filing or delay the March 31 deadline — it alerts to the deadline and the consequence of missing it.

🧭 Why this problem exists at scale

India has approximately 2.5 million registered GST taxpayers. Of these, an estimated 200,000 to 300,000 are freelancers, independent contractors, or one-person service providers — designers, writers, software developers, translators, illustrators, consultants — operating in sectors that have seen significant export growth since GST's implementation in 2017.

The Letter of Undertaking was designed for large exporters of goods and services — textile companies, software firms, contract manufacturers. For these firms, hiring a CA to file the LUT and manage the export compliance is a line-item cost. For a one-person graphic designer earning ₹25 lakh a year, the cost of CA assistance for a once-every-four-years filing is not justifiable against the annual margin.

The GST Portal's design does not acknowledge this difference. It assumes that anyone filing an LUT is already familiar with the Portal, understands the menu structure, and knows that "Services" is the right category to click. For Sridevi, these assumptions were all false.

The consequence is predictable: a one-person service exporter, upon reaching the GST threshold, faces a two-month window where they are invoicing foreign clients at 0% IGST without the required LUT, and they often do not know this is non-compliant until an accountant mentions it in passing. If the accountant themselves treats the LUT as the exporter's responsibility (not the CA's), the exporter may miss the March 31 deadline in the same financial year they cross the threshold, creating a retroactive compliance issue that lingers.

Sridevi's case is not unique. The tax authority's expectations and the small-exporter's bandwidth are misaligned.

"Vaallaki ardham navvu, ee designer lu problems."

— Ramakrishnan, the accountant (Telugu: They don't understand what designers go through.)

🌱 What Sridevi hopes for

Sridevi's LUT is now filed and valid through 2030. Her annual GST compliance has shifted: the Singapore and US clients are invoiced at 0% IGST, the FIRCs are maintained, and the annual return reports the foreign income correctly. She has not heard back from the GST department on her annual return, which Ramakrishnan says means the filing was accepted and the matter is closed.

What bothers her is the retroactivity. Six months of invoices from October 2025 to March 2026 were issued without the LUT in place. She has the FIRCs that document these exports. She has the LUT that proves she is a legitimate exporter. But technically, those six months exist in a grey zone. If the GST department ever audits her, they will see that gap and will have a question. She will have an answer: the FIRCs, the LUT, and the note from Ramakrishnan saying that while the documentation was slightly out of sequence, the substance of the export was present and documented.

She does not lose sleep over it. But when she was filling in the LUT form in March, at 1 PM on March 29, she thought: "Four years, and now I have to remember this again in 2030. What if I forget? What if I am in some other city by then, and I do not have an accountant I trust?"

This is what small-business owners think when they remember, at the last moment, that a four-year compliance clock has started ticking. It is not a dramatic thought. It is just the thought of a person who has no infrastructure to absorb the small regulatory rhythms that larger firms absorb as a matter of course.

If you run a design studio, a freelance consultancy, a software shop, or any export-based service business in India, and you have crossed the GST threshold with foreign clients, you will need to file an LUT before your foreign invoices are compliant. The deadline is March 31 of the financial year in which you cross the threshold, or the first financial year of your registration — whichever comes first. The agent at gabforge.in will read your GST Portal registration date, note when you have the first foreign invoice, and remind you, in your language, three weeks before March 31, that the LUT window is open and why it matters.

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