Table of Contents:
- What is The Import Export Code?
- When is the IEC Code required?
- When is the IEC Code not required?
- What is the validity of IEC Code?
- How to register for Import Export Code?
- Documents Required for Import Export Code registration
- Advantages of Import Export Code
- Benefits of Import Business
- Benefits of Export Business
- How to surrender the IEC Code
What is The Import Export Code?
Import Export Code (referred to as IEC Code) is issued by the Director General of Foreign Trade (DGFT). It is a unique 10 digit identification number. When someone is willing to start an Import or Export business in India, then the Import Export Code is needed to be obtained. Without this code it is impossible to start any type of business being dealt in Indian Territory. Department of Commerce sets all the rules and regulation through DGFT in order to acquire the IEC Code and all other necessary requirements.
Some set of rules and regulation should be adhered to before applying for the IEC Code. Only after fulfilling certain conditions, an IEC can be issued from DGFT. Basically, IEC Code is the PAN number of the applicant DGFT registered PAN number of the applicant is in the DGFT database. After the confirmation of the DGFT, the applicant can use the PAN no as the Import Export Code.
When is the IEC Code required?
- Custom authorities need it to clear shipments during imports.
- The bank needs it to transfer the money when imports are made.
- Similarly during export the shipments the IEC is required.
- When exporter is supposed to receive money in foreign currency, IEC code is required to transfer the money to his account directly.
When is the IEC Code not required?
- When any goods or products are imported or exported for personal use and not for reselling and commercial need, then the IEC Code is not required.
- The Import Export Code is not required when the goods or products are imported or exported by government of India or charitable institutions.
What is the validity of IEC Code?
Once the IEC Code is issued, it becomes valid for a lifetime and there is no requirement of any renewal.
How to register for Import Export Code?
Online Legal India has provided an online platform to apply for Import Export Code registration. IEC experts will file your IEC Code with the DGFT office on your behalf.
Steps to follow:
- Step 1: Fill the Form available on our webpage.
- Step 2: Get a call from IEC Expert.
- Step 3: Upload required documents.
- Step 4: Dedicated IEC Expert will apply for IEC License.
- Step 5: Your Import Export Code will be sent to you.
Documents Required for Import Export Code registration:
- Two color photographs of Promoters/Individuals/Company/Director
- Pan Card of each Shareholder and director
- Identity Proof (Voter ID/Driving License/Passport)
- Address Proof(Bank Statement/ Electricity, Mobile, Telephone Bill)
- Proof of Registered Office
- Latest utility Bill as proof must be Latest
Online Legal India web portal offers other different types of services. You can avail the facilities including:
GST Registration: According to the GST Act, any Importer or Exporter supplying goods or services inside or outside India should register for GST regardless of the turnover. The commerce ministry said that at the time of import or export, the traders would have to mention their GST identification number. All importers and exporters declare their IEC. But as GST is implemented, GSTIN would be used for credit flow of IGST on import and refund and rebate of IGST related to export. With GST implementation, it is said that PAN of an entity will be used for the Purpose of IEC.
FSSAI Registration: The Food Safety and Standards Act, 2006 has made it mandatory to issue an FSSAI Food License in order to run an Import Export business of food products. Food license confirms that the food products are safe and harmless for health. It will maintain the health decorum inside and outside the country. After obtaining the IEC Code, you can apply for FSSAI License.
Trademark Registration: Technically, a trademark is necessary for all business and company including Import and Export entities. It distinguishes the products/services from the other competitors and also it gives you exclusive right to take action against any infringement. It is advisable to have a trademark if you are more concerned about protection of your brand and goodwill.
Advantages of Import Export Code
- International Market Reach: Import Export Code helps you in order to take your business to the international market. Not only that, it will increase your revenue as well as growth.
- Life Time Validity: IEC Registration is a permanent documentation which is valid for lifetime. You don’t have to go through any procedure of updating, filing and renewal of IEC as would be not needed.
- No Annual Maintenance: once you obtain the IEC Code, there will be any necessity of annual maintenance fee. It does not require any maintenance fee in any financial year for filing or renewal of the code.
- Reduces the Risk of Illegal Transportation: IEC helps you to get rid of any illegal transportation or fraudulent imports and exports. IEC registration is a centralized registration which helps the officials to supervise and manage the transaction in a better manner which is undertaken as a part of cross border business.
- No Return Filing: You don’t need to file any return once you are done with registration for Import Export Code. After the allotment of the code, you don’t require to follow any process to ensure that the validity is sustained.
- Benefits of Schemes: IEC Code offers great benefit for Import Export business. An IEC registered business entity would be qualified to avail benefits or subsidies declared by the Customs, Export Promotion Council and other several authorities. After filing LUT under GST, the exporters are not required to pay taxes to make exports. If the exports are made by payment of taxes, the exporter can claim refunds of the paid tax amount.
- Export Incentive: The Government promotes the export of products and services because foreign currency will come and eventually boost up the economy. The Government has launched multiple schemes and also given a refund of tax or incentive to the exporter in order to promote the export business.
- Online registration process: The process of obtaining IEC Code is done online making it less time-consuming. Documents are uploaded online and registration is completed in a similar way.
Benefits of Import Business:
- Cheaper Stuff: We can purchase cheaper products locally if possible. But when something is imported from foreign market, it would be cheaper than what could be produced. When foreign government subsidizes products for us, you get paid by that government to buy cheaper materials. Cheaper stuffs help us to make each foreign currency go further in terms of consumption.
- Increased Specialization: Importing products or services allows a country to stop producing those certain stuffs and focus on other things they are good at producing. Some rare things are area specific. So without imports, we can avail those goods and services.
- Extend your profit margins: Companies from all across the world choose to import goods to extend the profit margin. High taxes, wages and material costs in certain countries make it more beneficial to import products from a country where fees, wages, and material costs are considerably lower. Particular products can cost 50% less to grow, manufacture or produce abroad.
- Better Quality: Sometimes you sell products which are not native or do not belong to your region. It is better to import goods from the source. Each country has particular strength regarding manufacturing or growing certain materials. It is wise to import the materials from the authentic place.
- Government-Assisted Trade: In order to minimize risks, the government provides added support and benefits to importers including reduced taxes and assistance with customs. In these cases, it is very advantageous for companies to develop relationships with foreign exporters.
Benefits of Export Business:
- Increasing sales: Exporting increases sales potential. Beyond the local market, you can earn great revenue from the market overseas. Increase of sales will result into profit growth.
- Extra Profits: Sometimes the demand of the international buyers is not fulfilled by their local market so they thrive upon foreign goods. Average orders from international customers are often larger than they are from domestic buyers. Some products are unique as they are only manufactured or grown in your country’s market. So, exporting products in abroad surely generates more profit.
- Reduces risk and balances growth: It is risky being bound to the domestic market only. Exporting goods in foreign market can reduce the risk of market fluctuation in the local market scenario that the company might face.
- Lower unit costs: What is more, since more products are being sold without increasing total costs, this has the effect of lowering your unit costs which represents a more productive operation overall. Lower unit costs make a product more competitive in the local as well as in foreign markets making the firm profit more from it.
- Minimizes Seasonal Fluctuation Effect: Some companies sell seasonal products. So, when the season ends they sell these products in other regions that have suitable seasonal condition. It results into sustainable sales pattern which becomes stable and potent to reduce risk of low profit.
How to surrender the IEC Code
Import Export Code can be surrendered at any point in time, if the business is closed or there is no need to IEC Code any further. You can submit the IEC Closure application through the official website of DGFT website. After receiving the application, the issuing authority cancels the IEC Code. The authority can further intimate to custom and regional authority about the cancellation of the Import Export Code.