What is Letter of Undertaking (LTU) for Export under GST?

Meaning and importance of LTU for exports under GST

Under GST regime, there are only two ways possible to export goods or services from India. The two ways are as follows:

• Export without payment of GST
• Export with payment of GST.

If any taxpayer wants to export without payment of IGST then he shall need to file a bond or a letter of undertaking to the department. A letter of undertaking (LTU) is the documents format of which is being prescribed under form GST RFD 11 under rule 96A.

In simple words, LTU is the document by which the taxpayer declares that he shall fulfill all the requirement of the GST with regard to export.

Cases where letter of undertaking is filed in GST

In terms of notification no.16/2017, a registered person shall be eligible for submission of letter of undertaking in place of a bond if he has received the foreign inward remittance amounting to minimum of 10% of the export turnover and which should not be less than one crore in the proceeding financial year.

Is filing of LTU is mandatory?

Yes, if LTU is not filed, then you shall need to charge IGST on the export and the apply for the refund later on.

Is filing of LTU is mandatory even for export of services?

Yes, the filing of LTU is even mandatory for export of services, otherwise you need to charge IGST on export and later on apply for the refund.

Conclusion

In case you want to file the LTU or bond, please write to us at info@hubco.in.