Exported products can be sold with an Import Export Code (IEC). Under the IEC Code, there is no need to submit a return. Once an IEC Code has been issued, no further action is required to keep it valid.
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The majority of businesses are expanding their services and products to the international market, which involves import and export activities. As international transactions fall under the category of commercial activities, government regulations must also be observed. The Importer-Exporter Code is one such requirement that must be met prior to initiating any online transaction.
As time passes, the number of businesses seeking to transcend local market boundaries and enter global markets continues to rise. However, conducting international business is not for everyone. There are certain laws and procedures that must be followed if you are a business owner who wishes to expand your operations into international waters. Importing and exporting necessitates licenses and registration as well.
Any business wishing to begin import or export operations in India must obtain an Import Export Code (IEC). The Director General of Foreign Trade issues the Import Export Code, which is a 10-digit code valid for the life of the business. Importers will not be permitted to import goods without an Import Export Code, and exporters will be unable to claim export benefits from the Director General of Foreign Trade without an Import Export Code.
As stated, it is the primary requirement for the import into and export from India of specified goods and services, which enables businesses to take advantage of global business opportunities. It expands the business’s global reach, thereby creating opportunities for growth
The Import—Export Code is accessible to both businesses and individuals. The required
documents for the Import Export Code Registration are listed below.
The Code is assigned based on the business organization’s Permanent Account Number. Consequently, registration is not required based on the location of the business; rather, a single business entity may only require a single registration. When an organization is dissolved, its registration is revoked or surrendered.
IEC aids in the eradication of illegal transportation and exports and imports. The centralized registration enables officials to supervise and administer cross-border business transactions more efficiently. The responsibility for illegal or restricted transactions is fairly distributed.
Registration with the IEC is permanent and valid for a lifetime. Therefore, updating, filing, and
renewing the IEC registration will not be a hassle. It remains in effect until the business ceases to exist or the registration is revoked or surrendered.
Importers and exporters alike benefit greatly from the IEC. The registered businesses would be eligible for subsidies or other benefits declared by Customs, the Export Promotion Council, and other authorities. After filing LUT under GST, exporters are exempt from paying taxes on exports. If exports are conducted with the payment of taxes, the exporter is eligible to receive tax refunds.
In contrast to other tax registrations, importers and exporters are exempt from specific compliance requirements such as Annual Filings and return filings. The code has no compliance requirements after registration.
The Import Export Code for International Traders, also known as the IEC registration, is the first and foremost legal requirement for all business units that wish to import or export goods, services, or both from India into the vast global markets.
Directorate General of Foreign Trade is the apex body designated to issue the IEC (DGFT). IEC functions as a passport for the exporter to import or export his goods. Today, we will examine the advantages of IEC for international traders. But first, we must determine when the exporter requires the IEC code.
When importers must clear their shipments through customs, customs authorities will request an Import Export Code from them.
When importers send funds abroad through a bank, the bank will request an Import Export Code.
When exporters must send their shipments, the customs port will request an Import Export Code from them.
When exporters are paid in foreign currency and the funds are deposited directly into their bank account, the exporter’s bank will request an Import Export Code.
No person or entity may import or export without a valid IEC Code Number, unless expressly exempted.
An IEC can be obtained by a person or a company wishing to conduct international business. Individuals can apply for IEC using either their company name or their own name.
The Registration-cum-Membership Certificate (RCMC) is a document issued by the Export Promotion Council of India. It is required for businesses that export restricted goods and those seeking Foreign Trade Policy concessions or benefits such as Duty Withdraw.
The assumption is that IEC only applies to the import or export of goods. However, it is required for both goods and services. The import or export of services is a form of international trade. Therefore, anyone providing services outside of India must submit an online IEC application.
According to recent changes made by DGFT via notification no. 58/2015-2020 dated 12th February,2021, all IEC holders are required to electronically renew/update their registration every year by June 30. If an IEC is not renewed within the allotted time, it will be deactivated.
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