What are Merchant Exports?
Merchant Exports are goods that an exporter does not manufacture but purchases from a local supplier for export to a buyer. These exports primarily involve goods rather than services.
Who is a Merchant Exporter?
A merchant exporter is an individual or a company that procures mass-produced goods from suppliers, identifies buyers, and exports these products to them.
How do Merchant Exporters Work?
Merchant exporters function similarly to manufacturer exporters but do not produce the goods themselves. Here's how they operate:
Supplier Network: They establish connections with manufacturers or suppliers who produce the goods.
Marketing: They use various marketing strategies like email campaigns, social media, an informative website, and pay-per-click advertising to find buyers.
Order Fulfillment: Once an order is secured, the merchant exporter coordinates with the supplier to get the goods, which are then shipped to the buyer under the exporter's name.
Merchant Exporters in India
India has numerous merchant exporters contributing significantly to the national export figures. The government supports this sector with various schemes and incentives. To leverage these, a merchant exporter must be registered on the GST portal.
Merchant Exports under GST
The introduction of the Goods and Services Tax (GST) has simplified the process of merchant exports:
Elimination of Pre-GST Requirements: Previously, exporters needed to secure a C.T. 1 bond and fill out an ARE-1 form. These requirements have been abolished under GST, making the process more streamlined with self-certification and self-sealing of goods for export.
Refund Process: The shipping bill filed at customs now serves as an application for refund of the Integrated Goods and Services Tax (IGST). Earlier, exporters had to submit an Export General Manifest (EGM) and a valid GSTR-3B return, but this is no longer necessary, simplifying the refund claiming process.
Payment of IGST: Similar to manufacturer exporters, merchant exporters can choose to export goods with or without paying IGST upfront. Registration on the GST portal is mandatory for all exporters.
Additional 2024 Considerations:
The introduction of the Goods and Services Tax (GST) has simplified the process of merchant exports:
Digital Documentation: There's an increasing push towards digital documentation and automation in export procedures, making it easier for exporters to comply with regulations and manage shipments.
GST Updates: Keep an eye on any new GST council meetings or notifications that might affect export procedures or incentives.
Sustainability: There's a growing emphasis on sustainable practices in exports. Merchant exporters might find benefits in showcasing sustainable sourcing or eco-friendly packaging to attract international buyers.
Under GST, a merchant exporter can export goods with or without paying IGST, as is the case with a manufacturer exporter. The exporter has to only register on the GST portal.
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