Many businesses have been expanding their market internationally over the last few years to stay on top of the game in the competitive market. For this, the exporters from India must undergo certain government compliance and documents to ease the export and customs clearance process. One such crucial requirement is Import Export Code (IEC) code. In this post, we will discuss what import export code is and what the benefits are associated with the export business in India.
What is Import Export Code?
The IEC code is a ten-digit code issued by the Directorate General of Foreign Trade (DGFT) and is valid for a lifetime. It is a unique identification code that is mandatory for the importers and exporters to seamless deal in the international trade of products. Irrespective of the business size, an IEC code is necessary, and no business can import or export the products without the IEC code. Generally, it is used for clearing products from the customs authority.
What is the need for an IEC code?
IEC code is required for numerous purposes. Following is some of the key reasons mentioned below: –
For Import and Export
No importer or exporter can import/export the products internationally without the need for an IEC code. In simpler words, IEC code is a prerequisite for import and export.
Clearance of Shipment
One needs to display their unique IEC code in order to succeed in the clearance of shipment.
The customs department is the sole authority for the clearance of customs. They verify the products that are exported from the country. The person who is buying the products has to furnish an IEC code for successful custom clearance.
Export or Import Payments
Exporters need to present the IEC code while receiving the payments. On the other hand, the importers need to present the IEC code while clearing the payments.
Benefits of IEC Code for Businesses
Getting the IEC code is the greatest way to attain a foothold in the competitive and international market of business. Below are some of the advantages of import export code mentioned: –
Create the Easy Business Registration Process
Organizations that are both registered and unregistered can apply for the IEC code online on the DGFT website. If all the documents submitted are verified successfully, you will get your IEC code within 10 working days. If your business is registered with GST, then you won’t need to worry about the IEC code. Your GSTIN will be used in place of the IEC code as a unique identifier.
Access to the Benefits of Government Schemes
Various export incentive schemes declared by Export Promotion Councils, Customs or other agencies can be availed by the exporters who have obtained an IEC code for their business. Exporters can make exports without paying taxes after registering a Letter of Undertaking (LUT) under GST.
Exploring the Global Markets
The most crucial benefit of obtaining an IEC code for businesses is it enables them to reach out to a wider range of customer base and expand the global reach of the market. Thus, it will significantly accelerate growth and widens the opportunities for the company.
Legal Global Transactions
Once you obtain the IEC code, you can make cross-border international payments legally and easily. Additionally, having this code mark as the verified importer or exporter thus reduces the illegal transportation of products across borders.
Document Checklist for Import Export Code
Here are the important documents required in registration for Import Export Code
- Copy of the company’s or induvial PAN card.
- The business proof is required, either the GST certificate or the incorporation certificate.
- A cancelled cheque from the current bank account of the company or firm.
- Digital Signature Certificate (DSC)
Step-by-Step Registration Process for IEC Code
#1 The foremost step for registration of the IEC code is to log on to the DGFT website. Select the services from the navigation bar given and click on IEC from the drop-down list
#2 Then, click on ‘Online IEC application’ and enter your PAN number. After entering the PAN number, enter your mobile number and email id. Then, enter the correct CAPTCHA and generate the token.
#3 Enter the OTP received on the mobile number and on the email id. After this, input the required details as asked in the application form that follows.
#4 Next, upload the essential documents, including address proof and bank certificate or cancelled cheque. Also, upload the documents in the prescribed format, such as PDF or GIF. After this, the payment form will pop up on your screen. On entering the required amount and clicking the submit button, you will get several payment portals. Choose the appropriate one and make the payment.
#5 After completing all the steps, you can preview the application form and print it as a record for official purposes. In case you want to make any changes, you can go back and make the necessary changes.
IEC code will be generated after the submission of the application form and verified by the DGFT.
FAQs on IEC
- I have an Import and export business in India, so do I need a separate IEC code for that?
No, you do not need any separate IEC codes for import and export business. There is only a single IEC code is required for carrying out both activities.
- Is it necessary to acquire an IEC code for personal imports and exports?
No, the IEC code is only required for commercial import and export purposes.
- Is there any tax levied based on the IEC code?
The IEC code is not a tax registration. Well, certain custom duties can be levied depending on the product.
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