I'd assume that he somehow got buried since he helped save the group. I don't recall Daryl bringing anything to the field where Walker Merle was at, like a shovel or a vehicle big enough to take him back to the prison.

 

Hm! Hadn't thought of it!
I think Daryl said something about how Merle never did anything like that for him before, to which Carol said he gave them a chance.
I don't know if he buried him or not, they might have gone back for him, but I don't think Daryl would have been able to carry Merle to the prison from the silos. It would be cool if we got to see some hint, like Daryl visiting a spot he found to be Merle's grave or, like you said, a funeral pyre, or even what they did for Otis (I'm not sure what that's called).

I like it when they add little details like that, I'll be keeping an eye out for it in S4!

 

Season 4 episode 3 is titled Weekend at Merels. I don't know what that means but it sounds like a party.

 

The car Merle used was still there, Daryl could've scrounged some gas and used that to bring Merle's body back for burial.

 

They had a service for Lori; so they better have one for Merle >_>.

 

I don't think anyone who dies off sight will be brought back for burial. They'll may put up some kind of memorial for him and Andrea though.

 

Rick brought Andrea's body back to the prison.

Under the blanket, bottom right corner.

 

I am sure that he did not leave his brother to rot or to be eaten on by other walkers. He either buried him or hid him till he could return.

 

I beleive that Daryl would have found a way to take Merles body back to the prison and had a buriel for him and Andrea.
Everyone else that was part of the group had a grave at the prison, even if they did not have a body. When they thought
Carol was dead they still had a cross for her.

 

merle was already a walker when daryl finished him. so his corpse wouldn't be eaten by walkers as they don't eat other walkers.