Import Export Code after GST is required by a person for exporting or importing goods. As of now, PAN have adirect link with IEC as it is a PAN based 10 digit code. It is issued by the Directorate General of Foreign Trade (DGFT), under The Foreign Trade (Development & Regulation) Act, 1992.
What is Import Export Code (IEC)?
Import Export Code (IEC) is an identification number of 10 digits which is issued by the Director General of Foreign Trade (DGFT), Department of Commerce, Government of India.
To start a business of import and export in the Indian Territory, it is mandatory for businesses to obtain IEC. It is also pertinent to note that IEC has a lifetime validity.
When is IEC required? Or What is the use of IEC?
Following are the situations where IEC is required-
- Custom authorities at the time of Import – Clearing of shipments by an importer from the customs, then IEC is required by the custom authorities.
- Custom authorities at the time of Export – At the time of sending shipments by exporter, then IEC is needed by the customs port.
- Bank at the time of sending money abroad – When an importer sends money abroad through banks then it’s needed by the bank.
- Bank at the time of receiving money from abroad – When an exporter receives money in foreign currency directly into his bank account then it is required by the bank.
What are the changes in IEC after the implementation of GST?
Implementation of GST has changed the pattern of Tax credit on Import and Export and following notable changes were made:-
- Flow of IGST Credit on import of goods.
- IGST related refund or rebate to the export of goods.
Flow of IGST Credit on import of goods
Under the GST Regime, GSTIN would be used for the Flow of IGST credit on Imports of goods. DGFT in its trade notice, has stated that PAN would be the IEC. As the PAN is Identifier at the Entity Level but the GSTIN would be used as Identifier at the transaction level for every Import & Export. Therefore GSTIN shall be the key Identifier.
IGST related refund or rebate to the export of goods.
Exporters can claim the refund or rebate of IGST paid at the time of export of goods. The GST refund process in case of goods for exports begins with taking reference to a primary document known as shipping bill. The shipping bill and other export-related documents shall be filed on the Indian Customs Electronic Commerce Gateway (ICEGATE).
GSTIN is the registration number under the GST. It is a 15 digit alphanumeric code, with PAN prefixed by State Code and suffixed by 3 digit details of the PAN holder. Therefore, it is decided that the importer or exporter of Goods or Services shall have to declare only GSTIN (where so ever registered with GSTN) at the time of import and export of goods or services. The aggregation of data shall automatically happen in the system on PAN level.
Is it compulsory to have GSTIN?
GST will only apply when the Turnover of businesses dealing in Goods exceeds Rs. 40 lakh (for North Eastern states the limit is of Rs. 20 lakh ) & in case of Services Rs. 20 Lakh (for North Eastern states the limit is of Rs. 20 lakh).
Although, As per Section 24 of CGST Act, 2017 following are the categories where GST registration is compulsory irrespective of the threshold limit-
- Interstate taxable supply.
- Persons covered under Reverse Charge Mechanism (RCM).
- Non Resident taxable persons
- Persons who are required to deduct tax under Section 51.
- Persons who supply taxable goods or services or both on behalf of other registered taxable persons, whether as an agent or otherwise.
- Input service distributor (ISD)
- Persons who supply goods or services or both through an electronic commerce operator
- Assessee notified by the Central Government or a State Government on the recommendations of the Council.
The declaration of GSTIN is mandatory in import/export documents for the importers and exporters w.e.f. 15 February 2020.
Central Board of Indirect Taxes and Customs (CBIC) in a circular said that in certain cases the importer or exporter did not declare their GSTIN in the Bill of Entry or Shipping Bill despite being registered with GSTN. Importers and exporters now have to compulsorily declare the GSTIN in documents as the revenue department moves to eliminate the evaders of GST and block the revenue leakage of GST.
How the PAN is used by DGFT after the implementation of GST?
“DGFT Allowed only Corporate Entity (single identity) and not individual transactions”.
As a measure of simplicity of doing business it was decided that the identity of an entity should be uniform across the Departments/Ministries. Therefore,after the implementation of GST, PAN of an organization will be used for the purpose of IEC,DGFT will issue IEC with the idea that it will be Alphanumeric (instead of 10 digit numeric which was earlier), and will be same as the PAN of an organization.
How new applicant’s will apply for IEC?
New applicant’s w.e.f. 01-07-2017, IEC applications will be made to DGFT and PAN of an applicant will be authorized as IEC. For exempted IEC number categories under Para 2.07 of HBP (Handbook of Procedure) 2015-20, the IEC will be either UIN (Unique Identification Number) issued by GSTIN and authorized by DGFTor any common number i.e. notified by DGFT.
How existing IEC holders will Migrate?
DGFT had carried out necessary changes in the system for the existing IEC holders so that their PAN becomes their IEC. Existing holders are not required to undertake any additional exercise. All the process will be undertaken by DGFT system. IEC holders are required to quote their PAN in place of existing IEC in all their future documentation w.e.f. 1st July 2017.
Note- The data previously based on IEC will convert into PAN based in due course of time.
What are the documents required for IEC Registration?
Following documents are required for IEC Registration-
- PAN Card & Aadhar of the Directors/owners
- PAN of the Business
- GST Certificate
- Passport size Photograph
- Copy of cancel cheque of Current bank Account
- Copy of Rent Agreement or Electricity bill of premises.
- Certificate of Incorporation
What is the Registration Process for IEC?
After Collecting all the documents, following steps are associated with the IEC application procedure-
- Visit the DGFT website (dgft.gov.in)
- Then Register on the DGFT website by going to the login option at the right top Corner.
- By filling all the mandatory details, login for the further registration process. Username & Password will be shared to the registered mail ID.
- Then the First Tab for General Information will open. Which includes-
- Basic Detail
- Firm Detail
- Enter the details of Proprietor / Partners / Directors in the Second Tab.
- Prepare the mandatory documents with respect to the Identity & legal entity and address proof with your bank details.
- Once the application is completed, confirm the details by viewing Application Summary.
- Submit the file with DGFT via DSC (Digital Signature Certificate) or by Aadhar Number and pay the requisite amount of fee for the IEC Registration.
- After the application is approved by DGFT, then IEC will be received in a soft copy through the Mail.
What are the benefits of IEC Registration?
Following are the benefits of IEC registration-
- Business Expansion- IEC helps in taking services or product to the global market and helps to expand the business.
- Availing various benefits– Several benefits can be availed by companies of imports/exports from the DGFT, Export promotional Council, Customs, etc. on the basis of IEC registration.
- No filing of returns- No filing of returns are required for IEC. There is no requirement to follow any sort of process for sustaining its validity.
- Renewal is not required- IEC is valid for lifetime of an entity and no renewal is required.
- Easy process- it is easy process to obtain IEC from the DGFT within a day after the application is submitted.
When IEC is not mandatory?
IEC is not mandatory in following cases-
- Registered under GST- Traders who are registered under GST, does not requires IEC. In such case PAN of the trader is shall be constructed as new IEC for the purpose of Import or Export.
- Import or Export for Personal purpose- Cases where goods or services are imported or exported for personal purpose instead of using for commercial purpose.
- Import or Export by Government of India- Import or Export done by Government of India Ministries & Departments, notified Charitable Institutions does not requires IEC.