Under CGST Act 2017 Merchant’s Exports

By | April 24, 2022

Under CGST Act 2017 Merchant’s Exports

Under the GST Act 2017 Merchant’s Exports- GST Series Part 36

  1. Meaning of Merchant’s Exports

Merchant Export means that activity by a trader who works to export or intends to export materials and goods. Only a merchant explorer can be the person engaged in trade activity and export or shall export merchandise. A trader who exports is principally engaged in the export of products and not services.

 1.1 The trader involved in exporting activity purchased merchandise from the manufacturer & exports the same outside India.

1.2 Within the case of exports by the manufacturer through trader exporting, the supply was that the manufacturer had to pay tax, and also the trader doing the exports was needed to assert the refund. This was stopping funds of exporters and exports were suffering.

  • Merchant Export Provision

            Provisions concerning tax on export of products are amended vide Notification Nos. 40/2017-CT (Rate), 41/2017-IT (Rate), and 40/2017 (rate) dated 23-10-2017. The revised provisions are given as follows.

2.1 The trader involved in exports ought to be registered under the GSTIN and Export Promotion Council or Commodity Board recognized by the Department of Commerce.

2.2 The exporting trader ought to place an order with the manufacturer and the copy for this order shall be provided to the territorial tax officer of that manufacturer.

 2.3 The registered provider shall offer the product to exporting traders at a concessional rate of 0.1% IGST (or CGST 0.05% + SGST 0.5%).

 2.4 Product ought to be sent directly from the place of the manufacturer to port, ICD, airport of Land customs station from wherever the product is to be exported.

 2.5 Product also can be sent to a registered warehouse from wherever product will be sent to the port, ICD, airport of Land customs station from wherever products are to be exported.

 2.6 The products will be mass at the registered warehouse and so sent to the port, ICD, airport of Land customs station from wherever the product is to be exported. In such a case, the trading exporter shall endorse receipt of products on the tax invoice and conjointly the acknowledgment of receipt of products within the registered warehouse. These ought to be provided to the manufacturer yet on the territorial tax officer of such manufacturer

 2.7 The exporting trader is needed to export the products within 90 days from the date of issue of the tax invoice.

2.8 As applicable, The trading exporter shall indicate the GSTIN of the provider and tax invoice variety of the manufacturer within the shipping bill or bill of export.

 2.9 When exporting, the trading exporter shall offer a replica of the shipping bill or bill of export containing details of the manufacturer’s GSTIN & his tax invoice with proof of filing of the export general manifest (EGM) or export report.


(a) Supply given by the manufacturer to a dealer for export is merchant Export & Not Zero Rated  (b) Such provide can’t be created underneath LUT /BOND (c) GST is owed at the concessional rate at the time of providing (d) Refund of Tax is claimed by the manufacturer under the  Inverted Duty Structure (e) A trading exporter will claim a refund of tax (concessional) paid to the manufacturer. (f) Exporter trading is principally engaged in the export of products and not services.


 (a)When an exporting trader exports the products, it’s a Zero Rated supply given.

(b) A trader exporting the products will export the products under the  LUT/Bond solely.

(c) He cannot export under the IGST payment route.

4. Statuary Provisions

Rule 96(10)On payment of 0.1% GST if the products were procured, It is not permissible to export on payment of IGST   The input tax credit is made available in the case, the IGST is still being paid on exporting products

Rule 96(10) of CGST Rules, inserted on 23-1-2018 but having retrospective effect from 23-10-2017

Rule 89(4B)If the benefit of merchant export is claimed by the manufacturer, and the zero-rated supplies are exported by the merchant   In such case merchant has a right to claim a refund of an input tax credit used in other input and input services


– Payment of 0.1%/0.05% tax by the manufacturer is conditional and not obligatory. The manufacturer will provide the product to businessperson bourgeois on full payment of tax at a traditional rate – CBI&C circular No. 37/11/2018-GST, dated 15-3-2018

 5.1 In such a case, the trader exporting will export product on payment of GST and claim the refund. Instead, he will export below bond/LUT and claim a refund of Input reduction of GST paid by the provider.

6. MERCHANT EXPORT – BILL TO SHIP TO TRANSACTION: A Merchant exporting will place the order to the manufacturer for delivering product on to the client outside India. this case may be explained with the assistance of the subsequent Illustration:


An order is placed by                             Mr. Y the manufacturer            Mr. Z (Customer ou of India)                                                                                                                                                                                                                                                                                                                              and guided Mr.Y to supply it                                                                   Directly to Merchant exporter Mr.X  to   
Mr. X                                  ←               Mr. X will be billed by Mr. Y and Shipped to    →         Mr. Z
In the hand of Mr. X the transaction will be exported. As a merchant exporter, he will file a shipping bill, generates an export invoice for export under LUT, and has a right to claim a refund of 0.1 % GST charged by Mr. Y (manufacturer).    
At a concessional rate of 0.1%, it will be a supply to merchant exporter in the hands of Mr. Y (manufacturer) who will be billing to Mr. X and claiming a refund under Inverted duty structure    

7. In CBI&C circular No. 94/13/2019-GST dated 28-3-2019/Circular No. 125/44/2019 dated 18-11-2019 the complete procedure to claim a refund is specified.

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