28 Feb Guidelines for Acquiring Import-Export Code Registration for Small Enterprises in India
In the current competitive landscape, numerous businesses aspire to expand globally, transcending national boundaries. However, venturing into the international market entails various considerations, including obtaining Import-Export Code (IEC) Registration and License, which is imperative for commencing import-export operations in India, particularly for small-scale enterprises.
Understanding Import-Export Code (IEC):
The Importer-Exporter Code is a unique 10-digit identifier essential for business identification during customs clearance for imports or exports. Post the implementation of Goods and Services Tax (GST) in India, the IEC serves a role similar to the Permanent Account Number (PAN) for firms, making it a mandatory requirement for small businesses looking to expand globally. While service providers engaging in cross-border services may not always require an IEC, certain situations may necessitate its acquisition, particularly if it entails advantages under Foreign Trade Policy (FTP).
Issuing Authority for Import-Export Code:
The Import-Export Code is issued by the office of the Director General of Foreign Trade (DGFT), a division of the Ministry of Commerce, responsible for regulating import-export activities in India.
Benefits of Import-Export Code Registration:
Acquiring an IEC offers several advantages for businesses, including facilitating international business expansion and enabling access to benefits from regulatory bodies such as the Director General of Foreign Trade, Custom Authorities, and Export Merchandising Council. Moreover, IEC holders are exempted from filing returns, and the code remains valid for the entity’s lifetime without the need for renewal.
Applicability of Import-Export Code:
The requirement for an Import-Export Code extends to various business entities, including partnerships, proprietorships, limited liability partnerships, limited companies, trusts, Hindu Undivided Families (HUFs), and societies. Mandatory situations for IEC include customs clearance during shipment, foreign transactions via banks, shipping consignments, and receiving foreign currency payments.
Online Application for Import-Export Code:
The application process for an IEC can be completed online or offline by submitting the necessary documentation to the DGFT. The code, issued against the PAN number, remains valid for all branches of an enterprise, with only one IEC allotted per PAN number.
Import-Export Code for Small-Scale Businesses:
For small-scale businesses aiming to expand internationally, obtaining an IEC is essential for engaging in export activities. The IEC facilitates registration as an international trader, streamlining customs clearance processes and enhancing market presence.
Steps for Import-Export Code Registration:
The registration process involves filing an application in the prescribed format (Aayaat Niryaat Form ANF-2A) with the respective Regional office of DGFT, accompanied by necessary documents, digital signature certificate (DSC), and payment of the requisite fee. Upon approval, the IEC code is issued electronically to the applicant.
Documents Required for Import-Export Code Registration:
Essential documents for IEC registration include the company’s certificate of incorporation or firm registration certificate, PAN card, Aadhar card or passport copy, bank details, lease agreement or electricity bill, and address proof for delivery of the IEC certificate.
Exceptions for Import-Export Code Requirement:
Certain exemptions from obtaining an IEC include traders already registered under GST, where the PAN serves as the new IEC code. Additionally, personal effects imported or exported without commercial purposes, as well as transactions involving government departments/ministries or charitable institutions, may not necessitate an IEC.
Procedure for Duplicate Copy and Surrender of Import-Export Code:
In cases of a lost or misplaced IEC number, applicants can request a duplicate copy accompanied by an affidavit. Moreover, if an IEC holder decides to discontinue operations, the code can be surrendered by informing the issuing authority, leading to its deactivation.
Conclusion:
Obtaining an Import-Export Code is crucial for small businesses seeking to overcome trade barriers and expand globally. It not only facilitates international trade but also unlocks opportunities for business growth and market expansion, enabling enterprises to establish a significant presence in the global marketplace.
- It contained information on both external and internal assets generated or acquired during the relevant financial year under various tax categories such as CGST, SGST & IGST, and HSN codes.
- It aggregated all monthly/quarterly annual returns (GSTR-1, GSTR-2A, and GSTR-3B) filed for that year. Despite its complexity, this reimbursement contributed to comprehensive and transparent data recovery.
Who had to file GSTR-9, the annual return?
All taxpayers registered under GST had to submit their GSTR 9. However, the following were exempt from filing GSTR 9:
- Taxpayers opting for the composition scheme (Required to file GSTR-9A)
- Taxable Persons
- Input service distributors
- Non-resident taxpayers
- Persons subject to TDS under section 51 of the CGST Act.
What details were required to complete GSTR-9?
The GSTR-9 form was divided into 6 parts and 19 sections. Each section requested information readily available on pre-installed returns and account books.
- Generally, the form requested disclosure of annual sales, differentiating between tax-free and non-tax-free debts.
- On the purchase side, it presented the annual value of internal assets and the available Input Tax Credit (ITC).
- These purchases needed to be categorized as inputs, input services, and capital goods. Details of ITCs to be deferred due to non-compliance were included.
Annual Return under GST Law if filed late:
Return filing was mandatory under GST. Even if no transactions were conducted, the return had to be filed. It was noted that:
- Refunds couldn't be claimed if previous/quarterly returns were not filed.
- Consequently, late filing of GST refunds would result in severe fines and penalties.
- The late payment fee for GSTR-1 was included in the GSTR-3B and had to be completed as soon as possible after such a delay.
Interest and Penalties as late fees:
Interest was charged at 18% per annum, calculated by the taxpayer on the remaining tax due. Late payment penalties were Rs. 100 per day per Act under CGST and SGST, totaling Rs. 200/day, with a maximum cap of Rs. 5,000. No separate late payments were specified under the IGST Act. However, for GSTR-1 and GSTR-3B, the late payment amount was reduced to Rs. 50/day (Rs. 20/day for Nil filing).
Types of Annual Return under GST Law:
Filing the annual GST return was categorized into three types based on the form to be filed:
- GSTR 9 Form: Mandatory for businesses with profits exceeding Rs. 2 crore annually.
- GSTR-9A Form: Required for registered taxpayers opting for the GST Composition scheme.
- GSTR-9C Form: Meant for filing a taxpayer reconciliation statement for a specific financial year. This form reconciled the Annual Returns on GSTR-9 with the figures in the audited financial statements of taxpayers.
What was the deadline for filing GSTR9?
According to the 37th GST Council Meeting, GSTR-9 for the 2018-2019 financial year had to be filed by November 30, 2019. The deadline for submission was no later than December 31 of the following year. For instance, if filing GSTR-9 for 2019, it had to be filed by December 31, 2020.
Legal provisions for filing GST Annual Return:
Legal provisions concerning filing the annual return, known as GSTR-9, were governed by section 35 (5) and section 44 (1) of the CGST Act. It was required that:
- Every registered person file the annual return for each financial year electronically through Form GSTR9 by the 31st of December after the end of that financial year.
- Those with turnover beyond the prescribed limit (Rs. 2 crore) were required to have their accounts audited by a chartered or cost accountant and submit a reconciliation statement (GSTR-9C) along with other documents.
Conclusion:
In conclusion, GSTR-9C applied to taxpayers necessitating an annual GST audit of their accounts, to be prepared and confirmed by a Chartered or Cost Accountant. Taxpayers with profits exceeding ₹ 5 crores had to submit a reconciliation statement in the form of GSTR-9C. However, a notice from the Central Board of Indirect Taxes and Customs (CBIC) amended the rules, allowing taxpayers with profits exceeding ₹ 5 crores to provide a self-certified reconciliation statement and annual return, instead of a certified statement from a CA.
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