GST Treatment for Exports: Marketplace vs Direct Sales - The Complete 2025 Guide

Published on May 17, 2025 By Invoicessy Tax Experts 8 min read
Expert Insight: "While both models achieve zero-rating, marketplace exports create a 1% working capital disadvantage for 45-60 days due to TCS provisions. Direct exporters using LUT maintain better cash flow control." - CA Rohan Mehta, GST Specialist

Navigating GST for exports requires understanding two distinct compliance pathways. This guide analyzes the operational, financial, and regulatory implications of each model with precision.

Core Differentiators

Cash Flow: 1% TCS retention vs full payment access

Compliance: 3 filings (marketplace) vs 2 filings (direct)

Timing: 60-day refund cycle vs 30-day processing

Marketplace Export Protocol

When using platforms like Amazon Global Selling or Flipkart Global, the compliance workflow involves:

1
Seller Lists Product
2
Order Received
3
1% TCS Deducted
4A
Seller Files GSTR-1
4B
Marketplace Files GSTR-8
5A
Refund Claim Filed
5B
TCS Credit Recorded
6A
Refund Processed

Marketplace Compliance Timeline

Activity Deadline Form Penalty
TCS Deduction At payment settlement N/A 18% interest
GSTR-8 Filing 10th of next month Marketplace ₹200/day
Refund Claim 2 years from export RFD-01 N/A

Pro Tip: TCS Optimization

Marketplace sellers should reconcile GSTR-2A monthly to track TCS credits. The 1% withheld can be claimed as:

  • Credit against output liability (for domestic sales)
  • Refund through RFD-01 (pure exporters)

Direct Export Superiority

Established exporters benefit from streamlined processes:

1
Export Order
2A
LUT Available? Yes
2B
LUT Available? No
3A
Ship Under LUT
3B
Pay IGST
4
File Returns
5
Claim Refund
6A
ITC Refund (LUT path)
6B
Tax Refund (IGST path)

Cash Flow Benefit

No 1% withholding → Immediate access to 99% of proceeds vs 98% with marketplace

1.5% higher effective yield

Compliance Simplicity

Eliminates GSTR-8 reconciliation → 30% reduction in filing time

5 hours/month saved

Refund Velocity

Direct processing completes in 2-4 weeks vs 4-6 weeks with TCS

50% faster access

Financial Impact Analysis

A manufacturer exporting ₹2 crores monthly:

Parameter
Marketplace
Direct
TCS/IGST Impact
₹2,00,000 withheld
₹0 (LUT used)
Refund Timing
60 days
30 days
Annual Opportunity Cost (8%)
₹96,000
₹0

Operational Playbook

Optimal Channel Mix

For businesses exporting ₹1-5 crores annually:

Optimal Export Channel Mix
Marketplace 35%
Direct 65%
Marketplace (New Markets)
Direct (Existing Clients)
  • Use marketplaces for customer acquisition in new geographies
  • Migrate repeat buyers to direct contracts after 3+ transactions
  • Maintain separate GST codes for marketplace vs direct exports

Essential Export Tech

GST Return Automation

Tools like ClearTax or TallyPrime for error-free filings

TCS Reconciliation

APIs connecting marketplace reports to accounting software

Shipping Integration

Real-time tracking numbers auto-populated in GSTR-1

Common Audit Triggers

Common GST Export Audit Triggers
Mismatched Shipping Bills
LUT Expiry
Place of Supply Errors
TCS Reconciliation
Refund Documentation
Export Documentation

Implementation Roadmap

1

Channel Assessment

Analyze 12-month export patterns by value, geography, and customer type

2

LUT Registration

File Form GST RFD-11 at least 30 days before first export shipment

3

System Configuration

Implement separate tax codes for marketplace (TCS) and direct (LUT) exports

4

Compliance Calendar

Establish reminders for GSTR-1 (11th), GSTR-3B (20th), and refund cycles

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