Most companies are expanding their product and services by bringing them to the global market, which includes importing and exporting. Since overseas transactions are considered a business activity, the government’s requirements must also be obeyed. Importer–Exporter Code is one very important prerequisite that must be obtained before beginning any online transaction. In this article, we will explain the IEC Code and discuss the benefits of obtaining one.
What is IEC?
IEC stands for Importer and Exporter Code, which is received by a corporate entity as part of a commercial transaction to import into or export from India. The code is registered within CHAPTER III of the Foreign Trade (Development and Regulation) Act of 1992. The Directorate General of Foreign Trade (DGFT) issues and assigns it as a 10-digit unique identification number.
The IEC Registration Certificate is regarded as the primary document for the imports and exports industry. Importer–Exporter Code renewal is not required because IEC are assigned and issued with life-time validity, i.e. until the business ceases to exist.
IEC Specifications
When Does IEC Become Necessary?
- The customs officials require this code whenever the importer will have to clear the items from the customs authorities.
- The bank needs this code when the importer transfers money outside of India.
- When the exporter has to transport products, the customs port requires this code.
- The bank requires this code when the exporter receives payments in foreign currency.
When Does IEC Not Apply (exclusions)?
- Only if the service provider receives privileges under the Foreign Trade Policy, the IEC Code is not necessary.
- It is not required for GST-registered merchants. In such circumstances, their PAN will be treated as the IEC number for international trading reasons.
- Exporting or importing commodities from or to Nepal if the total cost of a single shipment does not exceed $25,000.
- Exporting or importing items to or from Myanmar via the Indo-Myanmar border if the overall cost of a single shipment does not exceed $25,000.
- IEC is not required if goods exported or imported are for personal requirements and not for any commercial purpose.
The code exemption will not be allowed for the export of Prescribed Organisms, Special Substances, Materials, Machinery, and Technologies.
What you should know prior to registering for IEC?
- You must pay Rs. 500 registration processing fee online.
- The application can be made on behalf of a sole ownership, partnership, limited liability partnership (LLP), Pvt Ltd company or limited company, Hindu Undivided Family (HUF), trust, Cooperative society, or other legal entity. All IEC will be issued in accordance with the applicant’s category.
- When applying, the entity should have a PAN, a bank account, and a registered address in its name.
- IEC will be granted against the proprietor’s PAN for proprietorship enterprises. Others would be granted against the application entity’s (firm/ company’s) PAN.
- To obtain IEC through the DGFT site, an online form ANF 2A type must be submitted.
- IEC may only be used for business reasons and not for personal gain.
Required documents for IEC registration
The following documents are required for IEC registration:
- A copy of the individual’s PAN card
- A copy of the applicant’s voter ID, Aadhaar, or passport
- A copy of the applicant’s cancelled cheques from his or her bank account.
- A copy of the applicant’s rent agreement or the premise’s electricity bill.
- Details of the applicant’s address for registered postal delivery of the importer-exporter code certificate.
Steps to Register for IEC
- Go to the DGFT portal.
- On the webpage, click the ‘Services’ tab.
- Choose ‘IEC Profile Management’ from the drop-down menu.
- A fresh page will be displayed. On this page, select the ‘Apply for IEC’ option.
- Select the ‘Register’ button. Enter the relevant information and press the ‘Sent OTP’ button.
- Enter your OTP and press the ‘Register’ button.
- When the OTP is successfully validated, you will receive a notice with the temporary password, that you can reset after login into the DGFT website.
- After enrolling on the DGFT site, log in using your username and password.
- On the DGFT website, select the ‘Apply for IEC’ option.
- Fill out the online application (ANF 2A format), attach the necessary papers, pay the fees, and then click the ‘Submit and Generate IEC Certificate’ button.
- The DGFT will generate the IEC code. Once an IEC code has been created, you can print your certificate.
Benefits of IEC Registration
The IEC code is the primary criteria for entering an international market, as it enables the expansion and development of a company to a special standard. The following are the advantages or benefits of IEC certification for businesses.
Global Market Capacity
It is the essential need for products and specified services imported into and exported from India, allowing firms to unlock global potential in the international commercial sector. It broadens the company’s global reach, allowing for further growth and expansion.
Online registration
It has now transformed into a completely online process. The online IEC registration application reduces complications by including a streamlined document list to verify the application.
Requirement of simple documents
Any business entity can receive the Import – Export Code by submitting the simple documentation listed above.
Registration using a PAN
The code is issued based on the business organisation’s Permanent Account Number. As a result, registration is not necessary depending on the place of business; instead, a single business organisation may only require one registration. When a company is dissolved, its registration is cancelled or surrendered.
Validity for life
IEC registration is a permanent registration that is good for lifetime. As a result, updating, filing, and renewing the IEC registration will be simple. It is valid as long as the business continues to operate or the licence is not cancelled or surrendered.
Scheme advantages
Registered business firms would be able to benefit from subsidies or other benefits proclaimed by Customs, the Export Promotion Council, or other authorities. Traders can make exports without paying taxes after registering LUT under GST.
No compliance
In contrast to other tax filings, the importer or exporter is not required to meet any particular compliance requirements, such as yearly filings or return filings.
No regular maintenance
Since there is no compliance specified, there is no need to pay annual maintenance costs after getting this code.
Legally Clean
Obtaining the code is the business authorisation for importing and exporting products and services. It is a primary legal authorisation that facilitates and legalises cross-border transactions.
Reduces unlawful transportation
IEC contributes to the abolition of illicit transportation as well as unlawful exports and imports. The centralised registration allows officials to better control and regulate cross-border transactions. The accountability for forbidden or prohibited transactions is well distributed.