Import and export business is a prevalent practice in the world of trade and commerce. This business format helps you reach the global market and flourish the business prospects. Trading through imports and export also encourages the economic infrastructure and increases GDP. This form of business requires a registration number for smooth and hassle-free trading. It is called Import Export Code or IEC, which is a crucial identification number. Obtaining this registration number is mandatory while exporting or importing any goods.
Import Export Code
Import Export Code or IEC is a mandatory registration for any individual dealing in international trade from India. It is a unique code of 10 digits issued by DGFT or the Directorate General of Foreign Trade. It is a criterion vital if you want to take your exim business to a certain level. The validity of this registration is throughout business life. It does not have any filing issues or require renewal. Besides an export-import business entity, a bank also requires this registration. This is necessary in case the bank sends money overseas. However, for trading with some exempted goods, IEC is not required. Also, for exporting any services from India, IEC is not mandatory.
The forms of business concerns that are eligible for obtaining IEC are many. They are a partnership, sole proprietorship, limited company, LLP, trust, HUF, society, etc. After the introduction of GST, the issue of IEC is similar to the PAN of the business firm. Although if required, you can make an application to the DGFT and have IEC separately.
Importance of IEC or Import Export Code
Expanding business from the domestic to international market opens many opportunities. Import and export let any newly emerged business unlock specific global corridors for their goods and services. To ensure this opportunity, the registration of the Import Export Code is mandatory. This registration gives the entity a different identity and allows growth and prospect. The importance of this registration is as follows:
- The Import Export Code helps in unlocking the international market. Because of being a mandatory document, it allows the Exim businesses to explore several foreign markets. Therefore this document is essential for flourishing the company that aims to have a foreign market base.
- The import and export business relationships grow up on certain factors. The document of import-export code helps to strengthen this relationship. Therefore with this document, you can establish the business-standard. Along with the business standards, IEC also encourages global reach.
- Another importance of this document is its lifetime validity. The advantages and benefits obtained from this document are enjoyable throughout the business. This code of 10 digits also does not call for renewal.
- The IEC is issuable after submitting various authentic information. You can never issue the IEC without supporting documents and verification. Therefore this document checks for any illegal goods exchange and corruption.
- Different exim companies may also entertain a wide range of benefits through the IEC. Obtaining this document comes with a number of benefits. A company can avail of benefits like exporting goods from DGFT customs, export promotion council, etc. Not only this, a company can even ask for a refund of taxes paid while exporting goods.
Situations in which IEC is Mandatory
- When an importing company has cleared a consignment, they would require the IEC at customs. At customs, the concerned authorities will have to work with the registration.
- IEC is needed if an importer makes any payment to the seller abroad. If the payment is made through the bank, then the bank would require the IEC.
- When an exporter exports any goods or services overseas, IEC is needed. At the customs port, presenting this document is mandatory.
- When an exporter receives payment in foreign currency from the buyer, IEC is mandatory. The payment, in general, is received at the bank. In this case, the bank would require the document of IEC.
How IEC is Advantageous for an Exim Company
Any export-import business requires access to the international market for goods and services. The primary requirement of the export-import company is the import-export code. This registration document bears several advantages for a business entity for growth and expansion. Some of these advantages are as follows:
- Reaching the Global Market: As discussed earlier, IEC is the essential Import Export Documentation. It is required to trade goods specified under the government’s acts. IEC allows a business entity can export from or import in India without any barrier. Hence it helps expand the marketing boundaries and opens a gateway for growth and expansion.
- Registration is done Online: obtaining import export code is not a complex job at all. It, instead, is very simple and is an entirely online process. The process is completed through the common portal of DGFT. The process comes with the advantage of being completely hassle-free. You have to attach all the supporting documents along with the application.
- Documents Required: Any individual or business entity can obtain the import-export code. A few of the mandatory documents for obtaining IEC are as follows.
- PAN card of the individual who is applying
- A photograph of the passport size of the applicant
- Canceled cheque of the concerned bank account
- Document of address proof of the applicant’s business
- Registration based on PAN: The Import Export Code provided by the DGFT office is based on PAN. The PAN concerned is the business that is applying. The benefit of depending on PAN is that the company’s place is not essential. Therefore one single registration acts for every purpose. The validity of this registration is valid up to the life of the business. It dissolves with the dissolving of the company.
- Benefits Available in this Scheme: The Importer Exporter Code brings many benefits to the business. The business entities that possess this registration can access all the help. These benefits include subsidies or similar items by the export promotion council, customs, or authorities. The exporters have to file LUT under GST. With this, the exporters can make exports without making any tax payments. In case of any of such fees, the exporter can claim it back.
- No Compliance: The import-export code does not require annual compliance once the registration is done. At the same time, other tax registrations need return or yearly filings.
- No need for Annual Maintenance: The import-export code requires any compliance. Therefore obtaining the registration once does not require any annual maintenance. There is no need for renewal or filing the import-export code every financial year.
- Clean Legal wise: The import-export code is the license that permits the import and export of goods. It is the principal document required to cross a national border. Therefore, the advantage of this registration is that it legalizes exporting and importing any good. It makes the transaction legal and accessible.
- Risk Reduction: Import Export Code eradicates the risk of illegal transportation. The import-export code is a centralized registration. You can this registration can be used all over the country. Therefore this registration has the benefit of monitoring the exchange of the international goods uniformly. It helps to check the illegal movement of any prohibited goods.
The import-export code is one of the primary documents in an export-import business. The document of IEC presents proof of your business’s international expansion. Every industry at present is engaged in flourishing and development. The documentation of the import-export code provides the scope and opportunity for growth along with several benefits.
Is Digital Signature Certificate mandatory for applying for IEC?
The digital signature certificate is not mandatory if an individual applies for IEC. You can make the application for IEC can be signed through Adhaar authentication. The digital signature certificate’s invention strengthens the IEC issuance and modification process.
Should I have to update the IEC profile annually?
Updating the IEC profile is mandatory. It has to be updated every year. Non-updating might result in the profile deactivation, which you can duly activate after updating.
Can every individual acquire IEC?
Any individual who acts as proprietor of a business can undoubtedly acquire IEC. While applying for the IEC, you can use the business’s name or the proprietor’s name.
How long does it take to receive the IEC code?
Import-export code is auto-generated after all the formalities are done. The formalities include the requisite documents and the appropriate fees. After the DGFT sends intimation about the allotment of IEC, notifications will be sent to you. This notification will be available through SMS and email along with a hyperlink. The IEC can be downloaded and printed from the hyperlink.
Is IEC a mandatory document?
The import-export code is an essential document in the import-export business. It is, in fact, the primary document without which no international transaction can take place. The exporter and importer must present their IEC at customs in India to clear the shipment.
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