Background Cut out

 

Start with a colour image and and leave the background as white. The background colour will be what shows through behind the cutout when complete. Create a two new layers by clicking the new layer button twice:

 

With the top most layer selected (Layer 2 as in pic above), select the Epical marquee tool and draw a nice oval on the image. The select Edit -> Stroke. Select a stroke size on one and select Centre. Don't forget to reset your colours to black and white by clicking the little black/white selector under the main colour selector. This step is optional, but I find it helps to have a outline to do the cutout around. Then do Ctrl+D to remove the selection. This layer gets deleted later.

 

Now click and hold the mouse on the lasso tool, a side menu pops up, select the polygon lasso as below:

Select Layer 1 (just click on it), and now draw a nice jagged outline around the ellipse you have already on the image:

Now click on the Select menu and select Inverse (or Ctrl+Shift+I). Click on the foreground colour picker and choose a colour, for this example I'm using a light blue. Click on the Bucket Full, set the fill options to a tolerance of 255. Fill the area outside of the cutout.

        

Now lets get rid of the ellipse that was drawn earlier. Click on layer two and drag it to the rubbish bin icon below. Then we want to create a duplicate of the cutout layer for the shadow, so drag the remaining layer to the new layer icon:

Select the layer above the background by clicking on it (Layer 1), then use Ctrl+L to adjust the levels:

Now hold down the Control key and while keeping this key down click and hold the right mouse button to move the black cutout layer. Just move it a little to the right and perhaps down a bit. Just enough to create the look we want. Then select Filter -> Blur and choose Gaussian blur. Select a value about 2.

To put stuff under the cut out just place it on the background layer. If needed, use the Ctrl+Mouse click to move the black layer again to adjust how it looks: