Using IEC Code for Two Business in India
With the advancement of globalization, we can see that businesses are moving to international markets i.e., the market out of or beyond the geographical boundaries of the company. For this, there are certain procedures that are to be complied with by these companies. And in India according to the law laid down with regard to the same, the entrepreneurs are required to take the IEC certification or license which is nothing but the import-export code. This is one of the prerequisites which are 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 digits unique identification number that is issued to the exporter or the importer as applicable by the DGFT or the Directorate General of Foreign Trade. One of the major questions which are addressed by the entrepreneurs is whether they can use a single IEC for two businesses or they should obtain a separate IEC for 2 businesses. And this is the major point of discussion under this article.
The benefit of Obtaining IEC Registration
Expansion of business
As IEC registration is facilitating the business owner to take his business 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 is marking the growth of a business and its market and the consumer base that it is getting access to. It will also help in increasing 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 or the Customs department or the Export Promotion Council, etc., come up with various schemes and benefits which would prove to be beneficial for the importers and exporters of the country. With IEC registration the exporter or the importer or the entrepreneur for that matter would become eligible for availing such benefits which are offered by the government of the country, India through its various departments as stipulated before. Without Availing the registration of IEC, the entrepreneur will not become eligible for any of such benefits or schemes due to which this becomes mandatory.
No filing compliance required
Unlike any other registrations, when the entrepreneur takes registration under IEC, he shall not be required to file any returns on a monthly, quarterly, or yearly basis as a part of any compliance. The DGFT or the government through any law does not require the entrepreneur to file a return stating the transactions of the export conducted by him during the year or any period for that matter.
Simple and easy processing
An entrepreneur who would want to take an IEC registration can apply for the same through simple steps by online portal of DGFT. And he would receive the IEC registration within a time period of 10 to 15 days after the submission of the application along with any required documents as stipulated. The entrepreneur shall not be required to give any proof regarding the import or export activities or transactions conducted by him for the matter of obtaining the IEC code.
Once the Entrepreneur avails of IEC registration, the same shall not have any predetermined expiry date. But it is mandated through the notification provided by DGFT 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 IEC Code for Two Businesses
As stipulated, in the case of entrepreneurs who want to start the export or import of the product he is dealing with, it is mandatory that an IEC registration is obtained. The IEC registration shall be issued by the DGFT and 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 which the question of obtaining more than 1 IEC arises every now and then. It is to be understood that when an application for IEC is made by an entrepreneur or the user 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 with the DGFT during the application process.
In the case of an entrepreneur who is owning 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 setup and starts its activity. This is because his first IEC registration is already linked with the PAN card of the proprietorship firm or proprietor, due to which the second registration does not become valid. In case a person has applied for multiple or over 1 IEC with the same pan, then he shall cancel the second registration as 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 Suo moto 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 here, the PAN is different from the old business or the previous business held or owned by him. 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 single IEC registration for multiple businesses provided the two businesses are holding the same PAN. In case the businesses are holding separate PAN the entrepreneur is liable to take more than one IEC registration for each business.
Export is one of the major backbones of the Indian economy and 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 for bringing in new schemes and benefits promote the export business in the country. With this, they are expecting more business entrepreneurs to come into the export industry and avail the benefits that are made available to them.