What is the Purpose of an Import-Export Code Registration License?
For import and export from India, an obligatory, individual 10-digit code called the IEC is used. It is issued by the Director General of Foreign Trade (DGFT) and is valid for the lifetime of the entity.
The IEC is a criterion which does help in growing up your business to a level. The IEC, once issued can be used by the business entity throughout the existence of the entity and there is no renewal or filing issue. All the importers who import goods into India require IEC registration. Likewise, all exporters who export goods out of the country require IEC as well. Including all this, banks too, require IEC if you wish to send money abroad.
Importance of import-export code in international trade
Import and export business is undoubtedly a great option for the people who are new to the business and willing to unlock the corridors of the international market with their product or service. IEC is a key requirement for such people, which not only increases the growth and development of your business but also induces a certain level of standard for the business entity.
The following characteristics highlight how crucial IEC is:
1. Unlocking the international market
Since the IEC is a requirement for import and export business, it does allow people to each to the international market. This enhances quality of the business and takes it forward.
2. Establishing business standard and global reach
Import and export businesses have certain factors in common. IEC maintains a healthy business relationship between two clients. Along with promoting the global reach, it also establishes the business standards of your entity.
3. Lifetime validity
One of the key features of the IEC is that it has a validity of “lifetime,” i.e., a business entity may enjoy its benefits for as long as it exists. The unique 10-digit code does not even require any kind of renewal.
4. Reduces illegal goods transportation
As per the instructions and requirements for getting the IEC, you need to give your authentic information. No one can get the IEC without giving full authentic information. This restricts the transportation of illegal goods.
5. Companies may entertain certain benefits
There are many benefits if you have obtained an IEC for your business. A company may receive benefits on import and export from DGFT customs, the Export Promotion Council, etc. One can also claim the refund of taxes paid during exporting the goods.
Eligibility criteria and business entities eligible for import-export code registration
Every IEC licensee must conform to the following eligibility requirements before applying for the IEC license registration:
- You either import or export goods.
- You must be a business entity in India.
IEC may be applied on behalf of a firm, which may be a proprietorship, partnership, limited liability partnership, limited company, trust, Hindu undivided family (HUF), or society. Firm must have a permanent account number (PAN), bank account in the name of the firm and a valid address before applying. The address may be physically verified by the DGFT on issuance of the IEC.
Documents required for import-export code registration
The list of scanned documents required for IEC registration is listed as follows:
- Proof of establishment, incorporation, or registration: The following types of firms need to submit the establishment, incorporation, or registration certificate:
- Registered Society
- Proof of address: Proof of address can be any one of the following documents:
- Sale deed
- Rent agreement
- Lease deed
- Electricity bill
- Telephone landline bill
- Mobile, post-paid bill
- Memorandum of Understanding
- Partnership deed
- Other acceptable documents (for proprietorship only):
- Aadhaar card
- Voter id
- Proof of firm’s bank account
- Canceled cheque leaf
- Bank certificate
- The user should have an active digital signature certificate (DSC) or Aadhaar of the firm’s member for submission.
- Active firm’s bank accounts for entering its details in the application and making online payment of the application fee.
Procedures for import-export code registration
The procedure to get the IEC certificate is explained in detail below:
Visit the official DGFT website. Click on the “Services” tab on the homepage, and select the “IEC Profile Management” option from the drop-down list.
Importer exporter code—DGFT homepage
A new page will open. Click on the “Apply for IEC” option on the page.
Importer exporter code—Apply for IEC
DGFT user registration
- Click “Register” in the drop-down menu. Enter the required details and click on the “Send OTP” button.
- Enter the OTP and click on the “Register” button.
Importer exporter code—DGFT registration
- Upon successfully validating the OTP, the user will receive a notification containing the temporary password, which can be changed after logging into the DGFT website.
- After registering on the DGFT website, log in to the website by entering the user name and password.
Importer exporter code—DGFT login
Apply for IEC
- Post-login, click on “Apply for IEC” on the dashboard. Click on the “Start Fresh Application” button or the “Proceed with Existing Application” button if the user has already saved a draft application.
- Fill out the application form (ANF-2A format) and enter the details in the General Information Section:
- Select nature of concern/firm
- Enter firm’s name
- PAN details
- Select preferred activities
- Enter corporate entity number (CIN)
- Enter GSTIN number of concern/firm
- Enter firm’s mobile number
- Firm’s mail ID
- Enter firm’s address
- Attach address proof of the firm
- Enter the details in the “Details of Proprietor/Partner/Director/Karta/Managing Trustee” section
- Enter the details in the “Bank Account Details” section
- Enter the details in the “Other Details (Exports Sectors preferred)” section
- Under the declaration, accept the terms and conditions by clicking on the check box.
- Check the application summary and click on the “Sign” button to sign the application using a DSC or Aadhaar.
- Confirm and proceed to make the payment against the application.
- The page will redirect to the DGFT website after a successful payment has been made, where the receipt will be shown and the user can download the ticket.
Timeline for import-export code registration
It is fairly easy to obtain an IEC from the DGFT within a period of 10–15 days after submitting the application. There isn’t any need to provide proof of any export or import to get an IEC.
Fees for import-export code registration
The user must pay Rs. 500 as the application fee to get the IEC certificate.
Importance of import-export code in international trade
An IEC guarantees the following:
- Facilitation in clearance of goods at ports and airports
- Facilitation in availing various benefits and schemes
- Assistance with letter of credit opening
Obligations and responsibilities of import-export code holders
The following are the obligations and responsibilities of IEC holders:
- Compliance with FTP is an important obligation for any IEC holder.
- Renewal and amendment of IEC: According to the most recent regulations and standards, starting on February 12, 2021, every IEC holder business must renew its IEC online in accordance with Chapters 1 and 2 of the FTP. Your IEC certificate could be suspended and revoked if you don’t accomplish this. Therefore, each business owner is required to renew their IEC license annually.
- To put it simply, in order to conduct business with the fewest obstacles and government intervention, the business owner should renew their IEC every 12 months. According to Notification 58, which was released in February 2021, the IEC must be updated between April and May. According to the regulations, renewal is required even if there are no adjustments to be made.
The following list provides an easy-to-understand explanation of the five actions a businessperson must do to renew their IEC online:
- Step 1: The first step is to register on the DGFT website. You can select “Apply for IEC” there; select either “Importer,” “Exporter,” or “Both” as your profession.
- Step 2: You can now log into your DGFT account following a successful registration. The next step is to connect this account with your IEC certificate. You must authenticate for this using either your Aadhaar or a DSC.
- Step 3: After linking and authentication are complete, you can proceed to edit any outdated information on your IEC. Select the “Update or Modify IEC” option to update. Even the pre-filled form from the website can be updated here.
- Step 4: After completing the first three stages, it’s time to go through your changes one more time. Similar to Step 2, you will then sign it using your DSC or Aadhaar.
- Step 5: You can now print your IEC certificate after it has been updated and reissued. You can print by choosing the “Print IEC” option.
Documents mandatory to renew import-export code online
The DGFT-framed guidelines provide that only one IEC may be issued in relation to a single PAN number. Any business owner who has more than one IEC must surrender them to the regional office for cancellation if they have more than one IEC or if more than one IEC has been assigned to the proprietor. The agency may levy fines and order the cancellation of the code if the business dealer fails to follow the rules.
Fine and penalties for non-compliance of import-export code
Any person who exports or imports in violation of the Customs Act, any rules or orders made thereunder, or the export and import policy shall be subject to a fine of not more than one thousand rupees or five times the value of the goods in question, whichever is greater, if they help or attempt to help in the violation.
Prosecution and imprisonment for non-compliance of import-export code
Non-compliance in this regard will be treated as a non-bailable or cognizable offence and lead to imprisonment for a term that may extend to seven years and a fine.
Benefits of import-export code
The following are the benefits of registering for an IEC:
- Business expansion: Registering for IEC will help you expand your business and reach out to a larger market on a global scale, thereby helping your business grow by leaps and bounds.
- No return filing: Registering for IEC will mean that you do not need to 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 DGFT.
- No requirement for renewal: The validity of an IEC lasts until the entity exists. As such, those who hold this code will never have to worry about renewing it.
- Simple processing: Obtaining an IEC from the DGFT is fairly simple. Applications are usually processed within 10 to 15 days once submitted.
- Other benefits: Companies that register for the IEC could make the most of several other benefits offered by customs, the Export Promotion Council, and the DGFT.
The role of a professional consultant in import-export code registration and compliance
You may choose any professional consultant of your choice regarding IEC registration and compliance. All of them, by default, will offer the following services in this regard:
- Document drafting
- Application filing
- Processing the application
- Completing the IEC registration
IEC is a primary document for the individuals who deal or are willing to start in the business of Import and export. Section 7 of the Foreign Trade (Development and Regulation) Act, 1992, speaks about the IEC. The IEC is the document that is proof of your business’s expansion internationally. With the growth and development of new industries, this is certainly a hot topic in this millennium. The IEC has numerous benefits for your business’s growth.
Based on our discussion so far, we hope that this blog might interest all of those curious readers who wish to understand the basics of IEC registration.