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Changes in IEC with the introduction of GST

Circular No.ES/70/2017-18                                                                                    June 14, 2017

To : Members of the Council

Sub: Changes in IEC with the introduction of GST

Dear Member,

We wish to inform our members that DGFT has issued Trade Notice No.09 dated 12th June, 2017 announcing changes in the IEC with the introduction of GST.

As you are aware, as per the Foreign Trade (Development & Regulation) Act, 1992 no person shall make any import or export without an Importer Exporter Code (IEC) number, granted by the Director General of Foreign Trade or the officer authorized by the Director General in this behalf.

Facts of IEC

  • Para 2.05 of the FTP, 2015-20 states that IEC is a 10 digit number which is mandatory for undertaking any import export activities,
  • Para 2.08 of the HBP (2015-20) states the procedure to be followed for obtaining an IEC, which is PAN based. As on date PAN has one to one correlation with IEC.
  • Currently, all exporters and importers declare their IEC (import-export code). 

Implementation of GST

  • After the implementation of the Goods and Services Tax (GST), traders would have to declare only their GST Identification Number at the time of import or export.
  • With the implementation of the GST, it said GSTIN would be used for purposes of –
  • credit flow of IGST on import of goods;
  • refund or rebate of IGST related to export of goods. 

[Note : Integrated Goods and Service Tax (IGST) shall be on Inter State supplies of goods or services in India levied and collected by the Centre]. 

Information on GSTIN 

  • The Registration number under GST is called GSTIN.
  • What is GSTIN
  • 1

    5

    -

    D

    I

    G

    I

    T

     

    N

    U

    M

    B

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  • GSTIN is a 15-digit alpha numeric number code
  • With PAN is prefixed by state code
  • It is suffixed by 3 digit details of business verticals of the PAN holder.

Is obtaining GSTIN compulsory  

  • Since obtaining GSTIN is not compulsory for all importers/exporters below a threshold limit of turnover.
  • All exporters/importers may not register with GSTIN [barring compulsory registration in certain cases as provided in section 24 of the Central Goods and Services Tax Act, 2017 (12 of 2017) or in cases where either credit is claimed of IGSTI, therefore, GSTIN cannot become universal, as IEC is for import/export business.
  • Further, DGFT recognizes only the corporate entity (single identity) and not individual transactions.

Ease of Doing Business 

  • It has been decided that importer/exporter would need to declare only GSTIN at the time of import and export of goods.
  • Henceforth (with the implementation of GST), PAN of an entity will be used for the purpose of IEC, i.e. IEC will be issued by DGFT with the difference that it will be alpha numeric (instead of 10 digit numeric at present) and will be same as PAN of an entity.
  • For new applicants, w.e.f. the notified date, application for IEC will be made to DGFT and applicant’s PAN will be authorized as IEC.
  • For residuary categories under Para 2.07 of HBP 2015-20, the IEC will be either UIN issued by GSTN and authorized by DGFT or any common number to be notified by DGFT.

For the existing IEC holders 

  • For the existing IEC holders, necessary changes in the system are being carried out by DGFT so that their PAN becomes their IEC.
  • DGFT system will undertake this migration and the existing IEC holders are not required to undertake any additional exercise in this regard.
  • IEC holders are required to quote their PAN (in place of existing IEC) in all their future documentation, w.e.f. the notified date.
  • The legacy data which is based on IEC would be converted into PAN based in due course of time.

Members are required to make a note of this important Trade Notice and do as requested.

Thanking you,

V.ANIL KUMAR
EXECUTIVE DIRECTOR

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