An Import Export Code (IEC), also known as an IEC number, is a requirement for all business owners aiming to venture into the import or export business in India. The Director-General of Foreign Trade, an apex government institution, is responsible for granting the IEC registration or IEC licence to businesses in India.
The IEC is a 10-digit code that holds lifelong validity, enabling businesses to take part in import-export operations. The process of obtaining an IEC has undergone several alterations in recent years. One common question that entrepreneurs often have is why this authority requires a bank certificate for Import Export Code. In this article, we will address this specific question about bank certificate for Import Export Code.
What Is the IEC (Import Export Code)?
The Import Export Code is an essential government licence necessary for engaging in export and import business in India. The Directorate General of Foreign Trade is the sole government authority responsible for issuing this licence.
This ten-digit code eliminates the need for frequent renewals, as it maintains its validity as long as the business is in operation. Additionally, the Import Export Code grants export and import businesses access to various benefits provided by DGFT.
When Do Businesses Need an Import Export Code?
Import and export businesses in India often require an Import Export Code to facilitate their operations. This code is essential in various scenarios to ensure compliance with customs regulations and facilitate international transactions. Mentioned below are the situations in which possessing an IEC becomes mandatory:
1. Clearance of Shipments from the Port
When an importer aims to clear shipments through customs at the port, they must possess an Import Export Code. This code is a prerequisite for fulfilling customs norms, allowing goods to enter or leave the country legally.
2. International Payments via Banks or Financial Institutions
Importers intending to make payments to foreign clients through banks or financial institutions must have an IEC. This code enables a smooth and transparent financial transaction process, ensuring compliance with international payment regulations.
3. Export Shipment Clearance
Exporters are also required to hold an IEC when clearing their shipments through customs at the port. It is essential to obtain the code to comply with export regulations and ensure that goods are exported legally.
4. Receipt of Payments from Overseas Clients
Exporters who wish to receive payments directly from clients abroad into their bank accounts need an Import Export Code. This code simplifies the process of international transactions and ensures the legality of receiving funds from foreign clients.
5. Exemption for Valid GST Registration Holders
As per current government regulations, individuals or businesses with valid Goods and Services Tax registration are exempt from the requirement of obtaining an IEC. In such cases, GST-registered entities can utilise their PAN cards for importing or exporting shipments, eliminating the need for an additional Import Export Code.
6. Personal Use Shipments Exemption
Import Export Codes are not obligatory for goods intended for personal use. This exemption allows individuals to import or export items for their personal use without the need for an IEC.
7. Exemptions for Charitable Institutions and Government Departments
Notified charitable institutions and government departments or ministries are also exempt from the requirement of obtaining an IEC registration. This exemption is provided by the Government of India, recognising the distinct nature of their operations.
So, an Import Export Code is a crucial requirement for most import and export businesses in India, ensuring compliance with customs regulations and facilitating international trade. However, exemptions are available for GST-registered entities, personal use shipments, charitable institutions, and government departments, as specified by the Indian government.
Bank Certificate for Import Export Code: Why It’s Necessary
The Directorate General of Foreign Trade mandates the submission of a Bank Certificate for Import Export Code registration if a cancelled cheque is unavailable. The Bank Certificate for Import Export Code serves as an alternative document to validate the applicant’s bank details, ensuring the smooth processing of IEC registration. The reasons why its necessary are:
1. DGFT Requirement
The DGFT, which oversees foreign trade in India, has established the requirement for a Bank Certificate for Import Export Code registration when an applicant lacks a cancelled cheque. This mandate ensures that accurate and verifiable bank information is provided during the IEC registration process.
2. Alternative to Cancelled Cheque
In cases where an applicant is unable to provide a cancelled cheque, the Bank Certificate for Import Export Code registration offers a suitable alternative. It allows individuals or businesses to demonstrate their bank details and financial credentials, enabling the IEC registration process to proceed without hindrance.
3. Format Availability
Applicants can conveniently access the required format of the Bank Certificate for Import Export Code, denoted as ANF2(l), on the DGFT’s official website. This format can be downloaded from the following link: http://dgftcom.nic.in/exim/2000/iec_anf/app4.pdf.
It provides clear guidelines for how the bank certificate for Import Export Code should be structured and what information it should contain.
4. Ensures Compliance
The Bank Certificate for Import Export Code helps ensure compliance with regulatory requirements and validates the authenticity of the applicant’s bank details. This verification is crucial in the context of international trade, where financial transactions and banking information must be accurate and reliable.
So, the Bank Certificate for Import Export Code registration is a necessary document when applying for IEC registration, especially in cases where a cancelled cheque is unavailable. This Bank Certificate for Import Export Code fulfils DGFT requirements, offers an alternative to the cancelled cheque, and helps guarantee the accuracy and legitimacy of the applicant’s bank details, facilitating a smooth and compliant IEC registration process.
Documents Required for Import Export Code Registration
The application process for IEC registration with DGFT is conducted entirely online. During the online application submission, applicants are required to upload specific supporting documents in standard file formats (GIF and PDF). In addition to the Bank Certificate for Import Export Code, the following documents are necessary for IEC registration:
1. Proof of Identity:
- Aadhaar Card
- Passport
- Voter ID
2. Firm’s Address Proof (Any One):
- Rent Agreement
- Property Registration
- Electricity Bill for the place of business
3. NOC (No Objection Certificate):
This document is needed in case the applicant does not have any of the aforesaid address proofs. It is typically obtained from the premises’ owner.
4. Photographs:
Passport-sized photographs of the applicant.
5. Pan Cards:
A copy of the Permanent Account Number (PAN) card.
The following formats are applicable for uploading the mentioned documents:
- Photographs, Passports, and PAN Cards: GIF format.
- MOUs (Memorandum of Understanding), Sale Deeds, and Other Important Documents: PDF format.
- Driving Licence, Voter ID, and Aadhaar Card: Can be uploaded either as PDF or GIF.
Additional Documents for Import Export Code Registration:
6. Digital Signature Certificate (DSC):
This is used for electronic authentication of documents and transactions.
Note: As of the latest regulations, there is no requirement to send physical applications to the DGFT Regional Authority if applicants opt to authorise the application via a Digital Certificate.
Online Procedure for Import Export Code Registration
Obtaining an Import Export Code in India has been simplified with the online application process through the DGFT. Mentioned below is the guide for IEC registration:
Step 1: Visit the DGFT Website
Go to the official DGFT website at https://dgft.gov.in/CP/.
Step 2: Access the IEC Application
On the homepage, click on the “Apply for IEC” button.
Step 3: Register as a User
Fill in the following details:
- First Name & Last Name
- Mobile No.
- Email id.
- District name
- PIN Code
- State name
- City name
Step 4: Request OTP (One Time Password)
After submitting the above information, click on “Send OTP.” The system will send a One Time Password to your registered contact details. Return to the homepage and click “Apply IEC” again, then log in to the portal using the OTP.
Step 5: Complete IEC Registration Form
After logging in, accurately fill out the IEC registration form with the required information.
Step 6: Choose Your Designation
Select the appropriate option among Director, Partner, Karta, Proprietor, or Managing Trustee of the Entity.
Step 7: Provide Bank Details
Enter the following bank details:
- Account Holder Name
- Branch Name
- Account Number
- IFSC Code
Step 8: Upload Required Documents
Upload either the Bank Certificate or a Cancelled Cheque as required, then click on the “Save and Next” button.
Step 9: Specify Preferred Sectors of Operations
Choose the preferred sectors of operations, and then accept the Undertaking/Declaration. Click on the “Save and Next” button.
Step 10: Sign the Application
Click on the “Sign” button at the bottom of the page to digitally sign the application.
Step 11: Make the Online Payment
Complete the online payment for the IEC application. The payment process may involve fees related to the IEC registration.
Final Thoughts
The online procedure for IEC registration through the DGFT website has simplified and expedited the process for individuals and businesses engaged in import and export activities. In this process, a Bank Certificate for Import Export Code is a necessary option for entities to use as an alternative for cancelled cheque as discussed above. The introduction of the online application system simplifies the IEC registration process, reducing paperwork and administrative hassles.
This transition to a more user-friendly and efficient process reflects the Indian government’s commitment to facilitating international trade and promoting ease of doing business. With these simplified steps, applicants can swiftly acquire their IEC, enabling them to engage in cross-border trade with confidence and in adherence to legal mandates.
