Businesses that are extending their product and services to an international level through import and export, mandatorily required to obtain IEC code. Import and Export activities shall be performed under the various guidelines drafted by the Government. Under this blog, we shall explain the IEC code and what are IEC code benefits.
What is Import and Export Code?
Import and Export code is important for the businesses for import and export business. IEC is the first essential requirement before commencing the import and export business. Import and Export Code is a 10 digit unique code issued by Director General of Foreign Trade (DGFT), Ministry of Commerce. IEC is issued to the applicant, which shall be valid for all its factories/units or branches as per, mentioned in the IEC number.
What are the Benefits Import and Export code?
- Benefits gain by Director General of Foreign Trade (DGFT); Certain benefits can be obtained on import and export from DGFT on the basis of IEC. Also, it provides benefits from customs and Export promotions council.
- Validity; IEC code has a validity of lifetime. No renewal is required for IEC code.
- Individual Registration; Any proprietor can obtain IEC.
- Improve your working capital
- Unique Value Proposition
- Notification and Verification
- Inherently riskier, thus, more expensive
- Risk of Export Factoring
- Pros of Export Factoring
- Cons of Export Factoring
- Applicability of Export Factoring
Advantages of IEC code
Through Import and Export code, businesses receive great opportunities to unlock the international market and expand their products and services throughout the globe. Hence, IEC becomes the main requirement to expand the business on an international platform. It supports the growth and development of the business to a certain standard.
Following are the few benefits IEC code provides to the businesses involved in import and export;
1. Global Market Reach
As discussed above, Import and Export code unlocks various business opportunities across the globe. IEC code makes it easy to import and export the services and goods, which help the applicant to marks its presence on the international market. Hence, we can say that Import and Export code increases the global reach of business, which can open the door for growth and expansion.
2. Online Registration
The whole process of obtaining IEC is online, which can be done through its common portal. The online process makes the registration process hassle-free and more simplified. All the required documents to support the application can be uploaded at one place.
Read our article:How to Obtain IEC Code in India
3. Simple Document Requirement
Any applicant involved in the business of import and export can file an application for obtaining IEC.
- PAN Card
- Passport size photograph
- Cancelled Cheque
- Address proof of Business
PAN Based Registration
On the basis of the applicant’s PAN card, the code can be obtained. Further, the registration is not required to be based on the place of business; instead, business only required single registration. On the time when a business shuts down, registration also gets revoked.
Life Time Validity
IEC code registration does not require any renewal, as the registration is valid for a lifetime.
Benefits of Schemes
IEC code provides a huge benefit to importers and exporters. The registered business entities become liable to avail benefits that can be in the form of subsidies or otherwise declared by the Customs, Export Promotion Council or other authorities. After business entity files LUT under GST, the exporters can make exports without payment of taxes. In case the export is being carried after payment of taxes, the exporter becomes eligible to claim refunds of the paid amount in the form of taxes.
- No Compliance
As like other tax registrations, the importer and exporter are not required to fulfil any specific compliance. The only requirement is to file the annual filling or return filing. There are no further compliances after registration.
- No Annual Maintenance
Here no compliances are listed. Hence, there is no such requirement of maintaining fee after the registration. Even there is no requirement of filing or renewal of registration for each financial year.
- Legally Clean
IEC code makes the import and export business legal. It provides benefits to the exporter/importer to makes the transactions legal and easy.
- Reduces the risk of Illegal transportation
IEC code helps in abolishing the illegal export and import/export. Its centralised registration helps the official to keep a check over the illegal transactions carried out under export and import business.
Do’s and Don’ts for IEC Holders
- IEC code holder should not apply more than one IEC code against the same PAN card and business.
- Every applicant should provide authentic information to avoid any penal and legal actions for furnishing the wrong or incomplete information.
- On recieving IEC code, applicants are required to furnish their details on DGFT web portal. In case where any changes are being made, needed to update the on the web portal.
For commencing import and export business obtaining IEC code becomes mandatory. The online process of registration makes the process more simplified and hassle-free. One cannot neglect the necessity of import and Export code, as it is mandatory.
Read our article: Know about the IEC Exemption in India