Merchant Exporter Under GST: The 0.1% Scheme and Documents You Need
A merchant exporter buys goods and exports them without manufacturing. The supplier can charge just 0.1% GST if strict conditions are met. How it works and the paperwork that keeps it valid.
A merchant exporter buys goods from a domestic supplier and exports them in its own name, without manufacturing them. Under GST, the supplier can charge a concessional 0.1% instead of the normal rate, if the goods are exported within 90 days of the supplier's invoice and the paperwork links the purchase to the export. Miss a condition and the supplier owes the full tax, plus interest.
Trading exporters, sourcing agents and many first-time exporters work this way. The 0.1% scheme saves blocking working capital in GST you'd otherwise pay and claim back as a refund later. But it runs on documents moving between three parties, so it's where details get lost.
Merchant exporter vs manufacturer exporter
| Manufacturer exporter | Merchant exporter | |
|---|---|---|
| Makes the goods? | Yes | No, buys them |
| GST on purchase | Normal rates on inputs | Normal rate, or 0.1% under the scheme |
| Export invoice | Zero-rated under LUT or with IGST paid | Same |
| Extra paperwork | None specific | Purchase order, 90-day tracking, shipping bill copy to supplier |
Conditions for the 0.1% rate
- Both supplier and merchant exporter are GST-registered, and the supply is made on a tax invoice.
- The merchant exporter is registered with an Export Promotion Council or commodity board (holds an RCMC).
- The merchant exporter places a purchase order on the supplier, and a copy goes to the supplier's jurisdictional tax officer.
- Goods move directly from the supplier to the port, ICD, airport or land customs station, or to a registered warehouse for onward export.
- Goods are exported within 90 days of the supplier's tax invoice date.
- The shipping bill carries the supplier's GSTIN and tax invoice number.
- After export, the merchant exporter sends the supplier, and the supplier's jurisdictional officer, a copy of the shipping bill and the EGM or export report.
If goods go through a registered warehouse, the merchant exporter also endorses receipt on the tax invoice and gets the warehouse operator's acknowledgement, and both go to the supplier and their tax officer.
Documents checklist
From the supplier: tax invoice at 0.1% GST, e-way bill to the port or warehouse.
From the merchant exporter: purchase order, RCMC, LUT if exporting without IGST, commercial invoice and packing list for the buyer, and the GST export invoice (format here).
At customs: shipping bill with the supplier's GSTIN and invoice number. Give your CHA both up front; here's the full list a CHA needs.
After export: shipping bill copy and EGM confirmation to the supplier and the supplier's officer. The shipping bill after filing explains where to find the EGM status.
Mistakes that cancel the concession
- Missing the 90-day window because the buyer delayed the shipment.
- The CHA not entering the supplier's GSTIN and invoice number on the shipping bill.
- Goods routed through the merchant exporter's own godown instead of going directly to the port or a registered warehouse.
- The shipping bill copy never reaching the supplier, leaving them unable to prove the concession.
- Quantities or descriptions on the supplier invoice that don't match the export documents, making the link hard to prove.
Can the merchant exporter claim refunds and incentives?
The 0.1% GST paid is input tax credit. If the export is under LUT, the unused credit can be claimed as a refund. Merchant exporters can also claim export incentives such as RoDTEP where the goods are eligible, since benefits follow the exporter on the shipping bill.
Frequently Asked Questions
Who is a merchant exporter?
A business that buys goods from another supplier and exports them in its own name, without manufacturing them.
What is the GST rate for supplies to a merchant exporter?
0.1% (0.05% CGST + 0.05% SGST, or 0.1% IGST), if all the conditions of the scheme are met.
What happens if the goods aren't exported within 90 days?
The concession is lost and the supplier becomes liable for the difference between the normal rate and 0.1%, with interest.
Is the 0.1% scheme mandatory?
No. A merchant exporter can buy at the normal rate and claim a refund of the input tax credit after export instead.
Bilexor ties each export invoice and packing list to the shipment, so purchase quantities, descriptions and dates line up with what you export. Get early access. Informational only, not tax advice; confirm conditions with your CA or the current CBIC notifications.
Informational only — not legal, banking, tax, or customs advice. Always verify document and LC requirements with your bank, CHA / customs broker, and buyer before presentation.