With the passage of time, the number of businesses that want to break the barriers of local markets and venture into global markets is only increasing. However, carrying out a global business is not everyone’s cup of tea. In case you are a business owner who wishes to take your business into international waters, there are certain laws that must be adhered to and certain procedures that must be followed. Licensing and registration must also be done to carry out importing and exporting.
Any business that wishes to commence its import or export business in India will require an Import Export Code (IEC). The Director General of Foreign Trade issues the Import Export Code, and it is essentially a 10-digit code that is valid for the lifetime of the business. Importers will not be allowed to import commodities if they do not have the Import Export Code, and exporters will not be able to claim export benefits from the Director General of Foreign Trade unless they have an Import Export Code.
The Need for Import Export Code
The following are the situations in which importers and exporters will require the Import Export Code:
- When importers have to clear their shipments from customs, the customs authorities will ask the importers for an Import Export Code.
- When importers send funds overseas via banks, the bank will ask the importer for an Import Export Code.
- When exporters have to send their shipments, the customs port will ask the exporter for an Import Export Code.
- When exporters are paid in foreign currency and the money is transferred directly into the exporter’s bank account, the bank will ask the exporter for an Import Export Code.
How to Apply for Import Export Code/IEC Registration
The following is the procedure to apply for Import Export Code:
- Create an application form in the Aayaat Niryaat form no. 2A format.
- File the application with the concerned Regional Office of the Director General of Foreign Trade.
- Gather your documents, such as address proof, identity proof, etc. along with bank details and the certificate with regard to Aayaat Niryaat form no. 2A.
- After completing the application, attach the documents and file the form with the Director General of Foreign Trade using Digital Signature Certificate.
- Pay the applicable fee for Import Export Code registration.
- The government will send the Import Export Code in a soft copy after your application has been approved.
Documents Required for Import Export Code Registration
The following are the documents you will require for Import Export Code Registration:
- A copy of the company’s or firm’s or proprietor’s PAN card.
- A copy of the passport or Aadhaar card or Voter’s ID of the individual.
- A copy of a cancelled cheque of the current bank account of the firm or company or proprietor.
- A copy of the premise’s electricity bill or rent agreement.
Benefits of Import Export Code Registration
The following are the benefits of registering for Import Export Code:
- Business expansion: Registering for Import Export Code will help you in expanding your business and reaching out to a larger market on a global scale, thereby helping your business to grow by leaps and bounds.
- No return filing: Registering for Import Export Code will mean that you need not file any returns. Once the code has been allotted to you, you will not be required to follow some kind of process to ensure that its validity is sustained. Even with regard to export transactions, you will not be required to file your returns with the Director General of Foreign Trade.
- No requirement for renewal: The validity of an Import Export Code lasts until the entity exists. As such, those who hold this code will not have to ever worry about renewing it.
- Simple processing: Obtaining an Import Export Code from the Director General of Foreign Trade is fairly simple. Applications are usually processed within 10 to 15 days once submitted.
- Other benefits: Companies that register for Import Export Code could make the most of several other benefits offered by customs, the Export Promotion Council, and the Director General of Foreign Trade.
When is it not compulsory to have an Import Export Code?
The Government of India recently issued a circular according to which an Import Export Code is not compulsory for traders with GST (Goods and Services Tax) registration. If a trader is registered under GST, his/her PAN will be used as his/her new Import Export Code for import and export purposes. An Import Export Code will not be required if the goods that are being imported or exported are not done for commercial reasons, but for personal purposes. Imports or exports carried out by ministries and departments of the Indian Government, or notified charitable institutions, will not need an Import Export Code.
Business owners who wish to expand their businesses into global markets can register for Import Export Code and gain access to a larger audience.