triangular trade

[HEMANSHU SEHGAL]

Can you please advise the procedure and documentation for triangular trade for sales overseas?

if there are three parties involved and two are overseas and one is in India( actual supplier), then how it will work.

A gets orders from B and B pays A. A Asks C to supply the material. How will the documentation be done in case C has to supply material directly to B

[Spudarjunan S]

Dear Hemanshu Segal,

The transaction which you are referring is merchanting trade i.e. goods moving from outside India to a place outside India based upon a supplier in India.

Under GST, it is outside the purview of the same. Refer sl.no.7 of Schedule III of CGST Act.

However, for merchanting trade you have refer the RBI guidelines and FEMA for the repatriation, flow of fund and documents.

In case of documentation, in general, A would ask the transporter to supply to B from the place of business of C / the place where delivers to the control of A. If C is directly supplying to B, then there would be exposure to the margin of A to C. These decisions has to be taken by management based upon their strategies and law applicable in such foreign lands.

AI Summary

Merchanting Trade Involving Indian Supplier Exempt from GST Under CGST Act; Consult RBI and FEMA for Guidelines. A user inquired about the procedure and documentation for triangular trade involving three parties, with two overseas and one in India. The response clarified that this type of transaction is known as merchanting trade, where goods move between two foreign locations based on an Indian supplier. It falls outside the purview of GST, according to the CGST Act. The responder advised consulting RBI guidelines and FEMA for financial and documentation requirements. They noted that if the supplier directly delivers to the buyer, it may affect the intermediary's margin, and such decisions should align with management strategies and applicable foreign laws.