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Merchant exports under GST: Everything you need to know
Discover what merchant exports are, how they work, and why they matter, including key benefits, examples, and how businesses can trade globally without manufacturing.
India’s export ecosystem is expanding, and merchant exporting stands out as a powerful route for businesses to go global. Even without their own manufacturing setup or extensive regulatory expertise, companies can access international markets and grow beyond borders through this model. This blog provides a concise overview of how merchant exports work under GST, including its meaning, eligibility, key documents, benefits, and essential regulatory provisions, so businesses can confidently access international trade opportunities.
What are merchant exports?
The process of procuring goods locally and selling them internationally to customers is called merchant exports. This process plays an essential role in increasing the country’s exports.1
What are merchant exports under GST?
Merchant exports under GST involve a merchant exporter buying goods from Indian suppliers and selling them to foreign buyers, usually without any further processing. These transactions are treated as inter-state supplies under GST. The GST system helps track both the purchase and export, offers tax benefits, and simplifies compliance for exporters who do not manufacture goods themselves.2
Who is a merchant exporter?
A merchant exporter is a person or business that buys goods from local suppliers and exports them to foreign buyers. Unlike manufacturer exporters, they don’t run their own production units; they simply connect domestic manufacturers with international markets.3
Role of merchant exporters under GST
Under GST, merchant exporters bridge the gap between domestic suppliers and global buyers. They help:
● Facilitate large-scale procurement from Indian MSMEs and manufacturers.
● Drive foreign exchange inflow through overseas sales.
● Avail of concessional GST rates to improve cost competitiveness.
● Ensure compliance with export documentation and refund procedures.4
Merchant exports process under GST
The merchant export process under GST in India generally follows these steps:
Step 1: GST registration:
Obtain a GSTIN and register with an approved Export Promotion Council.
Step 2: Order placement:
Place orders with domestic manufacturers and provide a copy of the order to the tax officer assigned to the manufacturer.
Step 3: Procurement:
Secure goods from the manufacturer or supplier, ensuring all purchase documentation is in order.
Step 4: Documentation:
Maintain records such as supplier invoices, export order copies, and proof of compliance.
Step 5: Export logistics:
Ship goods directly from the supplier’s premises to the port/customs, or through a registered warehouse, adhering to the 90-day export deadline from invoice date.
Step 6: Invoice preparation:
Include both the supplier’s GSTIN and the manufacturer’s invoice number on all export documents.
Step 7: Submission of documents:
Submit shipping bills, invoice copies, and the Export General Manifest (EGM) for GST compliance and record-keeping purposes.5
How to become a merchant exporter?
Becoming a merchant exporter in India under GST involves a structured process. Here is an overview of the steps involved:
Step 1: Obtain PAN
Register your business entity and secure a Permanent Account Number (PAN) from the Income Tax Department.
Step 2: Choose a business type and name
Select the most suitable form for your export business (proprietorship, partnership, LLP, or company) and register its name as per government norms.
Step 3: Open a current account
After registration and PAN acquisition, open a dedicated current account with an Indian bank for all export transactions.
Step 4: Obtain an Importer Exporter Code (IEC)
Apply online at the official DGFT portal for an IEC. This code is mandatory for any export transaction and is generally issued within one day.
Step 5: Obtain a Registration-cum-Membership-Certificate (RCMC)
Register with an Export Promotion Council or Commodity Board approved by the Ministry of Commerce. This is required to avail of concessional GST rates.
Step 6: Plan your international logistics and customs
Develop a robust logistics structure, including shipment mode selection, packaging, insurance, and compliance with Indian customs regulations.6
Documents required for merchant exporter
Merchant exporters must prepare and maintain various documents for GST compliance and successful export transactions. These include:
● GST registration certificate
● Importer Exporter Code (IEC)
● Purchase order from an overseas buyer
● Tax invoice from the domestic supplier
● Shipping bill filed through ICEGATE
● Bank Realization Certificate (BRC)7
What are the benefits of being a merchant exporter?
Merchant exporters provide multiple advantages that help both manufacturers and the export ecosystem grow:
● Enable global reach for small producers: They help MSMEs, and small-scale manufacturers sell to international buyers without needing their own export infrastructure.
● Provide access to financing without collateral: Many merchant exporters arrange pre-shipment financing for suppliers without requiring security, easing cash flow and enabling timely deliveries.
● Handle end-to-end export: From logistics and compliance to documentation and payment collection, they manage the full export process so producers can focus solely on manufacturing.
● Simplify order acquisition: Merchant exporters secure overseas orders directly, saving producers the effort and cost of marketing to global customers.
● Handle multiple product categories: Without being tied to their own manufacturing units, they can export a wide variety of goods to meet diverse market demands.
● Enhance credibility: Strong performance can earn merchant exporters an Export House status, boosting their reputation and trust among international buyers.8
What are the provisions for merchant exports under GST?
The provisions for merchant exports under GST are designed to simplify the export process and provide financial relief to exporters. The core of these provisions is a concessional tax rate and a streamlined refund process. The conditions for merchant exports under GST are:
● A registered supplier must supply goods to a merchant exporter at a GST rate of 0.1% (or 0.05% CGST + 0.05% SGST for intrastate supplies).
● The merchant exporter must be registered with an Export Promotion Council or Commodity Board recognized by the Ministry of Commerce and Industry.
● The goods must be exported within 90 days from the date of the supplier’s tax invoice.
● The supplier’s GSTIN and invoice number must be mentioned on the shipping bill.
● The goods must be directly transported from the supplier’s premises to the port, Inland Container Depot (ICD), airport, or Land Customs Station for export.9
Eligibility criteria for concessional rate on GST under merchant exports
The eligibility criteria for concessional rates on GST under merchant exports is:
● Merchant exporter should be registered with GST and an Export Promotion Council.
● Purchase of goods intended solely for export must be confirmed via a purchase order copy to the supplier’s tax officer.
● The goods should be exported within 90 days of invoice issuance.
● Supplier references and invoice transparency are required on export documents.
● All statutory records need to be maintained for audit and compliance.10
Eligibility conditions for 0.1% concession on GST rates
The eligibility conditions are:
● A valid LUT is required.
● The tax invoice must clearly mention “Supply meant for export under Notification No. 40/2017–Central Tax (Rate).”
● Exports must be completed within the mandated 90-day period.
● Goods should not be diverted for domestic sale.11
Refund process under merchant exports
Below are some scenarios to claim refunds under merchant exports:
● Scenario 1: Exporting without payment of tax: A merchant exporter who procures goods at the concessional rate of 0.1% and exports them under an LUT can claim a refund of the unutilized ITC on other inputs or services, if any.
● Scenario 2: Exporting with payment of tax: In cases where the merchant exporter chooses to pay the full IGST on the export and then claim a refund, this option is also available. However, this is less common for merchant exporters who use the concessional rate scheme.
● Scenario 3: If an exporter pays the tax (IGST) as per the standard tax system, he/she can claim a refund of both unutilized ITC and IGST paid against zero-rated supply.12
Conclusion
Merchant exports under GST offer a structured framework for Indian traders to access concessional tax rates and streamline global sales. By meeting eligibility criteria, maintaining proper documentation, and following refund procedures, merchant exporters can significantly enhance their competitiveness in international markets.
Amazon Global Selling: Easy e-commerce exports and hassle-free shipping
If you are a business owner and you want to sell your products to the world, Amazon Global Selling enables you to list and sell ‘Made in India’ products on 18 Amazon global marketplaces. As an e-commerce export program, Amazon Global Selling provides support and guidance at every step of your export journey, connecting you to Amazon’s Service Provider Network for tailored compliance, payments, and logistics support.
Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for Fulfillment by Amazon (FBA) and outsource order fulfillment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for Fulfillment by Amazon (FBA) and outsource order fulfillment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Frequently Asked Questions
1. What is the difference between merchant export and deemed export?
Goods export refers to the movement of goods from India to a location outside India. Deemed exports are transactions in which products do not leave India, although they are ultimately intended to be exported.
2. What is the GST rate for merchant exports?
Merchant exporters have to pay a 0.1% GST when purchasing items from domestic suppliers for export.
3. What is the difference between manufacturer exporter and merchant exporter?
A manufacturer exporter is someone who makes goods and exports them from India. However, a merchant exporter refers to a person who exports products manufactured by another business or entity.
4. Can we export without GST?
No, GST is mandatory for exports.
5. What is a merchant exporter in DGFT?
In DGFT, a merchant exporter is someone who exports goods from India.
6. What is a merchant export invoice?
A merchant export invoice is a tax invoice issued by a registered merchant exporter to a domestic supplier or overseas buyer, specifying that the goods are meant for export and eligible for concessional GST under merchant export provisions.
Published on July 11, 2022.
Updated on December 12, 2025.
Sources:
1. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
2. https://cleartax.in/s/merchant-exports-gst#h0
3. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
4. https://www.shiprocket.in/blog/merchant-exports-under-gst/
5. https://www.shiprocket.in/blog/merchant-exports-under-gst/
6. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
7. https://www.setindiabiz.com/merchant-exporter-gst
8. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst (
9. https://www.shiprocket.in/blog/merchant-exports-under-gst/ ; https://gstvidhi.com/articles-gst-vidhi-act-detail.aspx?id=2268
10. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
11. https://www.vjmglobal.com/blog/all-you-need-to-know-about-merchant-export-under-gst ; https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
12. https://www.mygstrefund.com/blog/Merchant-Exports-Under-GST/
Updated on December 12, 2025.
Sources:
1. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
2. https://cleartax.in/s/merchant-exports-gst#h0
3. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
4. https://www.shiprocket.in/blog/merchant-exports-under-gst/
5. https://www.shiprocket.in/blog/merchant-exports-under-gst/
6. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
7. https://www.setindiabiz.com/merchant-exporter-gst
8. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst (
9. https://www.shiprocket.in/blog/merchant-exports-under-gst/ ; https://gstvidhi.com/articles-gst-vidhi-act-detail.aspx?id=2268
10. https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
11. https://www.vjmglobal.com/blog/all-you-need-to-know-about-merchant-export-under-gst ; https://www.credlix.com/blogs/merchant-exports-meaning-and-process-under-gst
12. https://www.mygstrefund.com/blog/Merchant-Exports-Under-GST/
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