With the advancement of globalization, we can see that businesses are moving to international markets, i.e., the market outside or beyond the geographical boundaries of the company. For this, these companies must comply with specific procedures. And in Indi, a according to the law laid down with regard to the same, the entrepreneurs are required to take the IEC certification or license,e which is nothing but the import-export code. This is one of the prerequisites laid down by the law for enabling entrepreneurs to conduct, export, or import their products or services into the international market.
IEC is a ten-digit unique identification number issued to the exporter or the importer, as applicable, by the DGFT or the Directorate General of Foreign Trade. One of the significant questions entrepreneurs address is whether they can use a single IEC for two businesses or should obtain a separate IEC for each company. This article discusses this issue in detail
The benefit of obtaining IEC Registration
Expansion of business
As IEC registration facilitates the business owner’s expansion beyond the domestic market or into the international market, we can say that IEC registration is again providing the entrepreneur with the scope for expanding his business. This marks the growth of a company, its market, and the consumer base to which it is gaining access. It will also help increase the profit margin and the total revenue earned by the entity.
Availing of other benefits
The Government of India, along with its various departments like the DGFT, the Customs department, and the Export Promotion Council, comes up with different schemes and benefits that would prove to be beneficial for the importers and exporters of the country. With IEC registration, the exporter, the importer, or the entrepreneur, for that matter, would become eligible to avail of such benefits offered by the government of the country, India, through its various departments as stipulated before. Without the registration of the IEC, the entrepreneur will not become eligible for any of the benefits or schemes that make this mandatory.
No filing compliance required
Unlike other registrations, when the entrepreneur registers under IEC, he is not required to file returns on a monthly, quarterly, or yearly basis as part of compliance. The DGFT or the government, through any law, does not require the entrepreneur to file a return stating the export transactions he conducted during the year or any period, for that matter.
Simple and easy processing
An entrepreneur who wants to obtain an IEC registration can apply for it through simple steps on the DGFT online portal. He Will Receive the IEC registration within 10 to 15 days after submitting the application, along with any required documents as stipulated. The entrepreneur shall not be required to provide any proof regarding the import or export activities or transactions he conducted to obtain the IEC code.
No Expiry
Once the Entrepreneur avails of IEC registration, the same shall not have any predetermined expiry date. However, DGFT mandated through the notification that every entrepreneur should update the IEC certificate once every year, which is to be made from April to June. And the non-updating of the same shall result in the deactivation of the IEC certificate, which will make the export-import transactions or activities incompetent for the business owner.
Using the IEC Code for Two Businesses
As stipulated, in the case of entrepreneurs who want to start exporting or importing the product they are dealing with, an IEC registration must be obtained. The DGFT shall issue the IEC registration, which is one of the major prerequisites for starting the export-import activity. Often, the exporter or the importer may have multiple business outlets. Due to this, the question of obtaining more than 1 IEC arises now and then. It is to be understood that when an entrepreneur or the user makes an application for IEC, the unique registration number, which is a ten-digit number issued by the DGFT, shall be connected or shall be linked with the user’s PAN card, the details of which are provided to the DGFT during the application process.
In the case of an entrepreneur who owns a proprietorship, the entity would want to start a new entity or branch and is registered with the IEC for the previous entity, then he shall not obtain a second registration under IEC when the new entity is set up and starts its activity. This is because his first IEC registration is already linked with the PAN card of the proprietorship firm or proprietor, which is why the second registration is not valid. In case a person has applied for multiple or over 1 IEC with the same PAN, then he shall cancel the second registration, ass only one registration will be held valid. And it is mandated by the law that only 1 IEC code can be issued against one single PAN, and in case of multiple issues of IECs against a single PAN, it shall be automatically deactivated.
From this, we can also understand that when an entrepreneur is starting a new export or import business that is registered with another PAN, then he shall obtain another IEC code or a new IEC code for this business. This is because the PAN here is different from the old company or the previous business held or owned. In such a case, the entrepreneur shall take more than 1 IEC, and the only determining factor here would be the holding of a separate PAN.
Thus, we can now conclude that business entities can use a single IEC registration for multiple businesses provided the two businesses hold the same PAN. In case the businesses hold separate PANs, the entrepreneur is liable to take more than one IEC registration for each business.
Exports are one of the major backbones of the Indian economy. It provides for the growth of this developing economy, due to which the Government of India, along with its different departments like DGFT, Export Promotion Council, Customs Department, etc., are putting in several efforts to bring in new schemes and benefits to promote the export business in the country. With this, they are expecting more business entrepreneurs to come into the export industry and avail themselves of the benefits that are made available to them.
