To be able to export without the payment of IGST, an exporter requires Letter of Undertaking, which acts as a guarantee given by the bank of the importer to the bank of the exporter. It showcases international transactions that are made by banks in various countries1.
As per Central Goods and Service Act 2017, if an exporter wants to export products, then it is mandatory to submit LUT. This, in turn, allows them to claim a GST refund. Once filed, Letter of Undertaking is valid for that particular financial year. Hence, unlike refund process, an exporter does not need to go through the procedural requirements every time an export consignment is carried out.