It may be an opportune time to start exporting your products, going by how India’s exports in categories such as engineering products, jewellery and electronics goods, among others, are going up. However, though diving into the overseas market looks promising, becoming an officially licensed exporter has a lot of compliances and regulations that one should be aware of. One of the foremost things to start with would be getting an Import Export Code (IEC).
IEC is a mandatory unique 10-digit code for import and export from India. It is issued by the Director General of Foreign Trade (DGFT) and is valid for the lifetime of the entity.
According to Gaurav Shisodia, Country Manager (India) at Payoneer, a company that helps in facilitating cross-border financial services, in case of import or export of services or technology, the IEC would be required only when the service or technology provider is taking benefits under the foreign trade policy (FTP) or is dealing with specified services or technologies.
“The nature of the firm obtaining an IEC can be that of proprietorship, partnership, LLP, limited company, trust, HUF or a society. Upon introduction of GST, IEC number is the same as the PAN of the firm — PAN is not IEC by default, as the IEC would be separately issued by DGFT after applying for it,” he says.
You can obtain an IEC online. Vaibhav Chordia, Customer Onboarding Manager, Cogoport, explains that all one needs to do is register for an account on the DGFT website. “You can do that by choosing IEC Profile Management under the Services tab. To submit an IEC application, you need to log in after creating an account. Click the Submit and Generate IEC Certificate button to obtain the IEC code after the application form (ANF 2A format) has been completed, the necessary documents have been uploaded and payment has been made. The DGFT will generate the IEC code,” he says.
Shisodia says individuals can use either the name of their company or their name directly to apply for an IEC. “The IEC code application fee is Rs 500, which can be paid online through e-wallets, net banking, credit or debit cards. Both registered and unregistered organisations can apply for the IEC and receive the code within 10-15 working days. If you have a GST number, then you won’t need to worry about getting a different IEC code. At the exchange level, your GSTIN will be used as an identifier,” he says.
An identifier is a code that denotes what the IEC is. In this case, the IEC would be the same as the PAN of the firm.
Benefits and mistakes
Apart from being a mandatory licence, the IEC has several benefits. According to Chordia, it helps you take your services or product to the global market and grow your businesses.
“With an IEC, companies can get several benefits from the DGFT, Export Promotion Council, Customs, etc, while importing and exporting. The IEC does not require filing of any returns. Once allotted, there isn’t any requirement to follow any sort of process for sustaining its validity. Even for export transactions, there isn’t any requirement for filing any returns with DGFT,” he says.
Speaking on similar lines, Payoneer’s Shisodia says exporters can dispatch goods without paying taxes after registering a letter of undertaking, under GST rules. “If taxes are paid on the exports, the exporter is entitled to a reimbursement of the amount paid in taxes,” he says.
Once you apply for an IEC licence, no return filings are required. “Once you get your registration done, there isn’t any prerequisite to follow any kind of procedures for supporting its legitimacy. There isn’t any prerequisite for documenting any profits with DGFT also,” Shisodia adds.
At the same time, one must remember to avoid making certain mistakes when filling out the application for IEC.
Chordia points out some of the common mistakes such as using out-of-date or uncommon browsers. “The newest versions of Google Chrome, Mozilla Firefox, Microsoft IE or Edge, and Apple Safari all work well with the new portal,” he says.
It goes without saying that ensure that details are not incomplete or not filled out correctly. “Without fully identifying all your partners, directors, or trustees, the portal will not allow you to continue. If your company name and the name on the bank account do not match, the system will display an error. Ensure that all the white spaces have been eliminated, then attach a supporting document for your bank account,” he says.
Even though the information provided has not changed and the IEC code is valid for a lifetime, the IEC holder must do an electronic verification between April and June of every year to prevent it from being deactivated.