Merchant Exporter Under GST
Obtain Status & GST Compliance

A merchant exporter is a registered person under GST who engages in trading activities and exports goods or intends to export goods. Merchant exporters procure goods from a manufacturer and export them; they do not manufacture the goods themselves. To get the concessional rate of 0.1% GST on the export purchase, the merchant exporter should register with an Export Promotion Council or a commodity board of the Ministry of Commerce.

The main difference between an exporter and a merchant exporter is their involvement in the production process. A manufacturer exporter makes the goods and exports them, while a merchant exporter buys products from manufacturers and handles the exporting. In short, the manufacturer exporter creates and sells, while the merchant exporter focuses on trading and moving goods to other markets.

Merchant exports are all about selling goods through intermediaries, allowing businesses to enjoy a low GST rate of just 0.1% on purchases for export. To take advantage of this, the supplier must issue a tax invoice, and the merchant exporter should export the goods within 90 days, while being registered with an Export Promotion Council. On the other hand, deemed exports refer to goods produced in India that stay within the country but still qualify for certain export-like benefits. Although these supplies are subject to taxes, suppliers or recipients can claim refunds. Categories that fall under deemed exports include items supplied against Advance Authorisation, Export Promotion Capital Goods Authorisation, and sales to Export Oriented Units and specific gold supplies from banks or public sector undertakings. In short, while merchant exports focus on using third parties for exports, deemed exports deal with particular supplies within India that benefit from export recognition.

In India, exports of goods and services are known as zero-rated supplies, meaning they are not subject to GST and allow exporters to claim Input Tax Credit (ITC). You have the option to export goods or provide services to an overseas recipient under a bond, also known as a letter of undertaking (LUT), without paying any GST. Alternatively, you can pay the IGST upfront at the time of export and later seek a refund. Therefore, though GST is applicable to exports, the rate of GST is NIL.

Yes, exports are zero-rated supply under the GST, Provided all other conditions are satisfied.

To become a merchant exporter, you must first be registered under GST. A registered supplier can supply goods to a merchant exporter at a low rate of GST (0.1%) if the following conditions are fulfilled: the registered recipient is registered with an Export Promotion Council, the goods are supplied on a tax invoice, the goods are exported within 90 days from the date of the invoice, and the GSTIN of the registered supplier and the tax invoice number are indicated on the shipping bill or bill of export. The registered supplier must also move the goods directly to the port or a registered warehouse.

Under GST Law the exporter can be divided into three categories:

• Manufacturer Exporter: This refers to a person who exports goods manufactured by them or intends to export such goods.
• Merchant Exporter: This refers to a person engaged in trading activity and exporting or intending to export goods. Merchant exporters can obtain goods from a manufacturer at a concessional GST rate of 0.1% for export.
• Deemed Exporter: This refers to a person who supplies goods that do not leave India but are notified as deemed exports under section 147 of the CGST Act. These goods are manufactured in India and payment for them is received either in Indian rupees or in convertible foreign exchange.

The GST rate for a registered supplier supplying goods to a merchant exporter is 0.1%; the concessional rate is available to suppliers who meet certain conditions

The RCMC (Registration-cum-Membership Certificate) of any export promotion council or recognition of any commodity board is mandatory for merchant exporters to avail themselves of the benefit of a concessional rate of GST @0.1% on export purchases.

Yes, merchant exporters enjoy several benefits under the GST regime. These benefits stem from the zero-rated nature of exports and specific provisions designed to facilitate merchant export activities:

• Concessional GST Rate of 0.1%
• Simplified Refund Process
• Zero-Rated Exports.

To access the above-listed benefits, merchant exporters must be registered under GST and meet certain conditions, including registration with an Export Promotion Council.