Small and Medium Enterprises (SMEs) have grown significantly in India during the past few years. . SMEs in India are aware of the fact that, in order to keep on top of the industry, their businesses must go outside their own country’s borders. But before you plunge into the deep end of the ocean, there are a few tasks you need to do in order to develop your organization and turn it into a multinational company. Getting an Import-Export Code, or IEC Code License as it is commonly called is one of the mandatory tasks for the services you export.
What does the term “service exports” mean?
Services that are given outside of India and paid for in exchangeable overseas funds are often considered to be exported. Simply put, it means that a person or institution from one nation supplies services to people or businesses from another country. For example- Indian tax consultants offer guidance to international businesses. To know more about types of business in the EXIM sector, you can visit: Types of Import Export Business in India.
What is an IEC Code License?
IEC Code License is utilized by anyone wishing to start an import-export firm, whether they be individuals or businesses. It is issued by the Director-General of Foreign Trade (DGFT), and it is lifelong valid. The IEC Registration provides you with a unique 10-digit Import-Export Code and it is a mandatory requirement to fulfill before starting import-export business operations.
Complete guide to IEC Code License or IEC Code Registration is available at: Import export code (IEC) Meaning, Benefits, Requirement.
Is IEC Code License mandatory for Export of Services?
Yes, IEC Code License is mandatory for export of services. The exemption is given in only the following case:
- Services given by Central or State Ministries and Government Departments
- those who ship or transport goods for personal use that are unrelated to horticulture, trading, or composition.
- Transporting or selling goods from or to Nepal, Myanmar via the Indo-Myanmar and China areas, so long as the total amount remitted is no more than Rs. 25 000 every transfer.
- The unique synthetic materials, organic entities, materials, suppliers, and inventions indicated in Annex 3 of Annex 2 to the ITC HS are not eligible for the exemption from IEC Registration.
The IEC Code License is also necessary for the import or export of services of technology when the service provider is receiving benefits from the international trade policy or is working with specific services or technologies as defined by Section 7 of the Foreign Trade (Development & Regulation) Amendment Act, 2010.
You also need to have a GST Registration for export of services. Understand about GST for Export of Services in detail at: GST registration mandatory for export of services in India.
Benefits of getting IEC Code License for Service Exporters in India
Obtaining IEC has several benefits in the form of Export Incentives, one of which being the Service Exports from India Scheme (SEIS). According to this initiative, incentives under the SEIS policy will be given to service providers based in India for every qualifying service export. Duty Credit Scrip is one of the major benefits. The incentive rate ranges from 5% to 7% of the net amount of foreign currency acquired.
Eligibility Criteria for SEIS Scheme
The Service Exports from India Scheme is open to service providers that offer the specified services and are based in India. The service provider must have an IEC Code Registration when supplying the services for which incentives are wished under the SEIS scheme in order to be eligible to collect incentives.
How to get an IEC Code License?
- Draft an online application form which is in Aayaat Niryaat Form 2A format and submit it to the applicable DGFT.
- Submit all the required documents such as your PAN Card\Passport\Aadhaar Card, Company Incorporation Documents,etc.
- Submit the Bank Details.
- Next, sign the Application form using Digital Signature Certificate and submit it along with the application fee.
- After successful verification from DGFT, download the IEC Code License or IEC Code Registration Certificate from the official portal of DGFT.