Overview of Import and Export Code
In spite of the negative impact of the demonetization, do you know India grew its fastest in the export business in the year of 2016-2017 with an estimate to $274.65 billion? The world is coming closer every passing day, with back to back business innovations, reforms from the government’s end, and emerging e-commerce and other tactics chains.
The government has taken different steps to make the policies easier related to the exports in India and which in reality helped in minimizing the corruption and eased the process of doing business. Therefore, every entrepreneur, start-ups, and other companies should be aware of the legal policies and the procedure by which they can set their foot in the import-export business in India. However, without a valid IEC Registration, you would not be able to sow the seed of your import/ export business. So, let’s explore a few more about how to get your Import Export Code online in India.
Import Export Code (IEC) registration is necessary for cross-selling of goods and services from India to other countries. It is required and compulsory for all Importers/Exporters to mention their Import Export Code while Importing/Exporting goods and services from India.
What is IEC Registration?
IEC registration is issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce & Industries, Government of India to Indian Companies. IEC is a ten digit Code and Import Export License Certificate which regulates foreign trade in India and manages by the DGFT. It is responsible for the formulation of trading policies, regulatory framework and issuance of licenses.
IEC is mandatory for every commercial importer/exporter in India and in the absence of IEC no business can be undertaken in the import export category. Also, IEC is required for getting the benefits provided by the government to this sector. However, the Reserve Bank of India (RBI) has made it mandatory for all the traders to mention their Import Export Code while making any payment transfer/sending money abroad. Customs Department also seeks IEC before clearing the shipment from overseas.
Import Export Code (IEC) once issued can be used by the entity throughout its existence and does not require any renewal or filing. Once the company has obtained IEC, then the company can perform all their import export requirements without any issues.
Key Features of Import Export Code
- IEC acts as the primary proof that a firm is an importer/exporter.
- It is mandatory to obtain IEC for undertaking export/import business.
- A proprietor can also obtain IEC without registering his business.
- Once issued, an IEC exists for a lifetime. This means that it does not need any renewal.
- It is not compulsory for import or export of goods for personal or governmental purposes.
- Quoting an IEC is compulsory when importing or exporting goods.
- IEC is compulsory for making foreign bank transfers in relation to business.
- It is valid for all branches of importers or exporters business.
When IEC registration in India is required?
- It is necessary to get the Import Export License for the purpose of Importing and Exporting goods. It conveys the dealer code details with the port through which the products or services are being imported or exported. Illegal transport of goods is restricted, and hence IEC helps in reducing it because it is almost impossible to get import export code without giving the complete information of the items being imported or exported.
- The custom authorities approve or clear the shipments of an importer who has to clear his shipments from the customs if he has an IEC number.
- Organizations can avail of different advantages from DGFT, Customs, and Export Promotion Council on import & export through the IEC.
- Bank requires it when an importer sends money abroad through banks.
- It is needed at the custom port where an exporter has to send his shipments.
- It is required by the bank when an exporter receives money in foreign currency directly into his bank account.
- The government of the other country verifies the trader when he is having the IEC registration number.
Benefits of IEC registration
The Import Export Code is a ten-digit code, issued by the DGFT in India and in prevalence is known as the Import Export Code. IEC Registration is a mandatory prerequisite to import or export any product from India to any other country. The benefit of obtaining the IEC is that it unlocks the international market and new business opportunities for the registration holder. Other benefits of the IEC Registration in India are as follows:
- Growth of Business- IEC helps the business person to expand its business to the global market. By having an IEC code one can export its goods and products and create a brand in the international market.
- Availing Several Benefits- DGFT, Export Promotion Council and Customs etc. provide several benefits to companies engaged in import/export on the basis of their IEC registration.
- No Filling of Returns- IEC does not involve in the filing of any returns. Once IEC is allotted, there isn’t any requirement to follow any sort of processes for supporting its validity. Even for export transactions, DGFT does not mandate for filing any returns.
- Trouble-free Processing- Obtaining IEC from DGFT is fairly simple and same can be obtained within a period of 10-15 days after submitting the application. No proof of export or import is required after getting IEC Code.
- Free for lifetime- Once obtained IEC code is valid for the lifetime of an entity and requires no renewal. IEC can be used by an entity against all export and import transactions.
- Government authorizes proof- Import Export code also works as the government identity as one can show this identity number for clearance of the shipments. The various government benefits are also obtained by having an IEC registration.
Procedure of IEC registration
An application is made in the Aayaat Niryaat Form no 2A and it is filed with the respective Regional office of DGFT for IEC online.
ID Proof and Address proof alongwith bank details. All documents need to be submitted with ANF2A.
After completing application filing with DGFT via DSC (Digital Signature Certificate), the applicant is required to pay prescribed fees for the IEC Registration.
Once approved, the applicant would receive the IEC certificate/ number from the DGFT
Documents Required for IEC registration online
The documents required for the IEC registration online are as below:
- Personal or company’s current bank account statement
- Copy of cancelled cheque of the current account
- PAN card number of the individual or company
- Copy of the entity’s government ID (Driving license/Aadhar/Voter ID)
- Incorporation certificate/Partnership deed
- Address proof (Electricity bill/rent agreement/sale deed) of the office premises
Exemption of IEC
- The person undertaking import and export of goods for personal reasons and not connected with trade, agriculture and manufacture are exempted from obtaining IEC.
- Individuals who export/import goods to/from Nepal and Myanmar through Indo-Myanmar border areas and China with single consignment which does not exceed in Indian currency Rs.25,000 does not require IEC
- Exemption from obtaining IEC shall not be applicable for export of Special Chemicals, Organisms, Materials, Equipments and Technologies (SCOMET) as listed in Appendix - 3, Schedule 2 of ITC (HS)
Changes under IEC for Goods and Services Tax (GST)
After the implementation of Goods and Services Tax in GST regime, GSTIN would be used for credit flow of IGST paid on import of goods. However, the PAN is identifier at the entity level of the boundary whereas GSTIN would be used as identifier at the transaction level for every import and export. The UIN or PAN would be accepted as IEC. All importers required to quote GSTIN in their invoices in addition to IEC. The changes after GST is implemented as follows:
- After implementation of the Goods and Services Tax, the traders have to declare only their GST Identification Number at the time of import or export.
- With the implementation of the GST, GSTIN would be used for purposes of credit flow of IGST on import of goods and also for refund or rebate of IGST related to export of goods.
- According to the circular issued by the government, IEC will not be mandatory for all traders who are registered under GST.
- Export/ Import done by the Government of India Departments and Ministries, Notified Charitable Institutions need not require getting Import Export Code.
- Import Export Code (IEC) is not required to be taken in case the goods exported or imported is for personal purposes and isn’t used for any commercial purpose.
- To expand the business and avail the government benefits the importer and the exporter requires to obtain the GST number as well as Import Export Code.