Why is a Bank Certificate Required to Get an IEC Code?

While an IEC number is mandatory to carry out import and export operations by a company, a number of other documents are in turn required to obtain the IEC itself. A bank certificate is one such document that needs to be submitted to the DGFT while making an application for the IEC number.

There has been cut-throat competition in every kind of business in India with the boom in globalization. The import-export sector is not an exception to this fact. Further, to obtain ( Get an IEC Code ) sustainable growth within the industry, most businesses aim to spread across borders and expand their operations to other countries. To carry out the imports and exports certain legal procedures have to be adhered to mandatorily.

Obtaining an Import and Export Code (IEC) is mandatory in India to carry out imports and exports. It is a ten-digit unique code given by the Director General of Foreign Trade (DGFT) to the individual or the company that carries out the import-export operations. The code is valid for the entire time the business remains operational and enables the company to send and receive products from foreign countries.

The prerequisites for obtaining an IEC have been varying in recent years. It is now mandated that those intending to acquire the IEC have to furnish a bank certificate mandatorily. Apart from the bank certificate, there are also other documents that are required to be furnished. A detailed study on the same could help one understand the procedure for obtaining the IEC.

Importance of IEC:

The Import Export Code (IEC) is one of the most necessary licenses or registrations that an import or export business should possess in India. Issued by the DGFT, this code enables businesses in India to send products to and receive goods from foreign nations. It is a unique ten-digit code that has lifetime validity, making the process of application and usage easy and straightforward. The IEC code also enables export and import businesses to avail themselves of various benefits offered by the DGFT.

Role of IEC in Import-Export Business:

The most obvious motive to acquire an IEC license is to facilitate the import and export transactions between India and other foreign countries.

•   The IEC essentially aids in shipment and customs clearance at the borders. It is mandatory that the IEC be shown to the authorities before carrying the goods to and from other countries
•   The IEC must also be produced while making and receiving payments for the goods.

Circumstances Wherein IEC Is Not Mandatory:

As per the government’s latest order, the IEC code is no longer mandatory for traders who have a Goods and Service Tax registration. In such cases, they may use their PAN (Permanent Account Number) card for import and export purposes. Additionally, the IEC Code is not mandatory when the goods are exported or imported for personal purposes and are not intended for sale.  IEC Registration is also not mandatory for any exporting or importing done by the departments or ministries of the Indian government or by notified charitable institutions. 

Process of Getting IEC Registration:

1. Firstly, business owners must prepare an application in the specified format. This form which is used to obtain the IEC code is called the Aayaat Niryaat Form Number 2A (ANF2A) and it must be filed at the respective DGFT Regional office
2. Next, the applicant must prepare and obtain all the required documents which serve as proof of identity, address, and business registration. These documents have to be furnished along with ANF2A
3. It might be prudent for the applicant to hold a Digital Signature Certificate, as it will be necessary to file the application with the DGFT
4. The next step would be to pay the stipulated fee for processing the IEC registration
5. Lastly, the executives in the DGFT office will verify the application and documents submitted by the applicant, and if there should be no discrepancies, the import-export code (IEC) will be awarded to the applicant.

Documents Required for IEC Registration:

The applicant must upload scanned copies of the supporting documents to the DGFT’s official portal. It is mandated that the documents thus attached should belong either to the GIF (Graphic Interchange Format) or the PDF (Portable Document Format) formats only.

The following documents are to be attached mandatorily while making an application for the IEC:

• Bank Certificate or Pre-printed canceled cheque from the bank
• Aadhar card / Passport / Voter ID9
• Address proof of the business: Rental Agreement or Electricity Bill or Property Registration document of the place of business
• If the address proof is not in the name of the company, a NOC from the owner of the premises is to be furnished.

While photographs, PAN cards, and passports may be uploaded as GIFs, sale deeds, MoUs (Memorandum of Understanding), bank certificates, and registration certificates must be uploaded in PDF format only. Whereas, the Aadhaar card, driving license, canceled cheque, and voter ID may upload either as a GIF or as a PDF.

The following documents are now not mandatory with respect to IEC registration:

1. Digital Signature Certificate 
2. Copy of PAN Card 
3. Photograph.

While a DSC may not be mandatory, if an application is authorized using a Digital Certificate, the applicant does not have to send a physical application to the DGFT Regional Authority.

Benefits of IEC Registration:

1. Business Expansion: An IEC registration: https://www.dgft.gov.in/CP/ enables the business to grow and expand into foreign markets effortlessly
2. Government Benefits: Allows the businesses to avail the benefits offered by the Customs authorities, DGFT, and the Export Promotion Council
3. Returns: Unlike other registrations, IEC Registration is a simple process that does not require businesses to file any returns. Neither does it mandate complex compliance measures that have to be adhered to
4. Processing: The government has made the process of IEC registration quick and simple. The entire process takes only ten to fifteen days, and almost all of it occurs online
5. Perpetual: One of the best things about the IEC is that it remains effective for the lifetime of an entity. Hence, it requires no renewal and no further processing or paperwork
6. Legal Transactions: The presence of IEC minimizes illegal transactions that could possibly happen between the borders.

Format of Bank Certificate Required for Obtaining the IEC:

Here’s a quick look at a sample request letter for a bank certificate for IEC registration. The bank certificate for IEC registration must be on a formal letterhead of the bank and must be issued by the Bank Manager. The bank certificate must be mandatorily attached if a copy of the Cancelled Cheque is not furnished along with the application.

The following criteria must be taken into account when submitting a bank certificate for processing the IEC:

1.     It must be printed on an official Letter Head of the Bank
2.     It should follow the format mentioned below. Applicants must not change the format and the language used
3.     The photograph affixed must be stamped and signed by the applicant
4.     The Bank Certificate must contain the IFSC Code of the Bank
5.     The certificate must be made in favor of the Regional DGFT Authority. 

Sample Format of the Bank Certificate:

 Reference Number: _ _ _ _ _ _ _

 To

_ _ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _ _

(Issuing authority’s Full name and address)

Respected Sir/ Madam

_ _ _ _ _ _ _ _ (Name of the bank and the bank branch) certifies that Mr/Ms _ _ _ _ _ _ _ _ _ _ _ (Account Holder’s full name and address) is / or are maintaining a Savings / or Current Bank Account (tick the applicable option) No: _ _ _ _ _ _   with us, since _ _ _ _ _ (Date of opening account).

Attach a recent, passport size photograph of the account holder

 

             (Issuing Authority/Bank Manager rank or above Signature)

Name _ _ _ _ _ _

Designation _ _ _ _ _ _

Bank’s IFSC Code: _ _ _ _ _ _

 Date: _ _ _ _ _

 Place: _ _ _ _ _

(Banks’ official Stamp)

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