Are you contemplating the establishment of your business involved in buying and selling goods across borders? It’s important to recognise that there are specific criteria and paperwork prerequisites that must be followed to guarantee the smooth functioning of your business. When it comes to these business activities, obtaining a particular 10-digit code is a fundamental necessity. This code is issued by the individual responsible for overseeing foreign trade. Those involved in buying and selling goods internationally cannot partake in these activities or access certain benefits without obtaining this code. In this blog, we will see the feasibility of import without IEC number and the circumstances under which it might be allowed.
Reasons To Register Under Import Export Code
Registering for an Import Export Code or IEC registration offers several compelling reasons, as given below:
1. Facilitating Market Expansion and Organisational Growth:
Enrolling for an IEC empowers a company to enter international markets strategically, contributing to the overall growth and development of the organisation.
2. Access to Subsidies and Advantages:
An IEC number offers the business entity the chance to utilise various subsidies provided by entities like the overseeing body for foreign trade, Customs, and Export Promotion Council. This enhances the overall competitiveness and profitability of the business.
3. Efficient and Quick Registration Process:
Acquiring an IEC number involves a streamlined and uncomplicated process. Applicants can obtain the IEC number within a few days, making it a time-efficient procedure. Moreover, once obtained, the IEC number has unlimited validity, eliminating the need for code renewal.
4. Legal Protection for Import-Export Activities:
Possession of an IEC number offers legal protection to the Partnership Firm engaged in import-export activities. This legal safeguard facilitates the smooth conduct of international trade without encountering unnecessary hindrances.
5. Minimal Compliance Requirements:
Unlike other registrations, IEC registration does not impose mandatory filings or post-compliance obligations to the Directorate General of Foreign Trade Department. This simplicity streamlines the process, reducing bureaucratic hurdles for businesses.
When Can You Import Without IEC Number?
Import without IEC number is normally restricted, but their is certain cases where the necessity of an IEC number is not needed for both import and export dealings. As per a directives released by the Indian government, businesses that are enlisted under the Goods and Services Tax are granted an exemption from the IEC prerequisite. Consequently, such companies have the liberty to engage in import transactions without the mandatory IEC number.
Cases of allowing import without IEC number
The instances of allowing to import without IEC number include:
1. IEC for Persons Registered Under GST:
According to the guideline of the government authority in India, businesses officially enlist under the Goods and Services Tax system are given the permission to utilise there assigned GST Identification Number for both import and export activities within the national borders. However, to maintain consistency and streamline regulatory procedures, the Directorate General of Foreign Trade stipulates that the unique Permanent Account Number should be used as the identifier for the Importer Exporter Code rather than the GST Identification Number.
2. IEC for Persons Not Registered Under GST:
Individuals or entities not registered under GST can use their PAN number as the IEC for import and export purposes. For new applicants not obliged to register under GST, an application must be submitted to the DGFT, and upon approval, the applicant’s PAN will be authorised as the IEC.
Further Exempted Categories to Import Without IEC Number
In addition to the previously mentioned categories, there are further exemptions that meet the criteria to import without the IEC number. The following details outline specific categories exempted from the requirement of obtaining an IEC, as per the Foreign Trade Policy of India:
1. Exemptions under Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993:
Importers falling under clause 3(1) (excluding sub-clauses (e) and (l)) as well as exporters who is falling under clause 3(2) (excluding sub-clauses (i) and (k)) have relieved from the compulsory obligation to obtain an IEC.
2. Exemption for Government Ministries, Notified Charitable Institutions, etc:
Ministries and Departments of the Central Government or State Government, as well as Notified Charitable Institutions, are permitted to import without the necessity of an IEC.
3. Personal Use Exemption:
Individuals importing or exporting goods for personal use unrelated to trading, manufacturing, commercial activities, or agriculture are exempted from the IEC requirement.
4. Border Area Exemption:
Individuals involved in importing or exporting goods to and from Nepal and Myanmar through specific border areas, namely Indo-Myanmar and China (via Namgaya Shipkila, Gunji, and Nathula ports), are exempt from IEC, provided the single consignment’s CIF value does not exceed Indian Rs. 25,000. For Nathula port, the ceiling value is set at Rs. 1,00,000.
5. Exclusion for Certain Exports:
Importing without the IEC number is not applicable for export of the Special Chemical, Organisms as is listed in Appendix – 3, Schedule 2 of ITC (HS). However, one exception is made for the exports falling under the category (ii) specified, including Special type Chemicals, Organisms, etc.
Final Thoughts
Although the Import Export Code is consider as obligatory for import and export activities, the Government of India has specified specific exemptions to import without IEC number. Businesses registered under the Goods and Services Tax have the option to utilise their GSTIN or PAN as the IEC, simplifying the process. Furthermore, specific categories such as government entities, charitable institutions, and those engaged in particular transaction types are excused to import without IEC number. These exemptions are designed to ease international trade for eligible entities, striking a balance between regulatory compliance and trade facilitation.
