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 outside GST: cross-border supplier arrangements require RBI/FEMA compliance and careful documentation of supplies.
Merchanting trade where goods move between foreign locations on the basis of an Indian supplier is outside GST; compliance with RBI/FEMA on repatriation and fund flows is required. Documentation should show delivery from the supplier's premises or to a location placing goods under the intermediary's control. Direct shipment by the supplier to the buyer raises exposure to the intermediary's margin and should be managed contractually and by corporate strategy, considering applicable foreign laws.