What are the recent changes in IEC Code regulations?

The Import Export Code (IEC) is an essential 10-digit identification number issued by the Directorate General of Foreign Trade (DGFT) in India, required by any entity involved in international trade. Over the past few years, the DGFT has introduced several updates to streamline the IEC Registration process and ensure better compliance. These changes have had a significant impact on businesses, particularly for those structured as Limited Liability Partnerships (LLPs). This article outlines the recent updates in Import Export Code regulations, focusing on how they simplify and regulate the import-export framework.

Digital Transformation of IEC Code Registration

One of the most notable recent changes in IEC regulations is the full digitalization of the IEC coderegistration process. The move towards digital transformation has simplified the procedure and made it more efficient.

Online-Only Registration: The entire Import Export Code Registration process is now conducted online through the official DGFT portal. Previously, physical paperwork and in-person submissions were a requirement, but now everything from registration to updates is fully digitized.

• Mandatory Digital Signature: Applicants must use a Digital Signature Certificate (DSC) or Aadhaar-based e-signature to complete the IEC code registration process. This ensures authenticity and adds a layer of security to the digital application.

Annual IEC Update Requirement

Another significant change in the regulations is the introduction of a mandatory annualIEC update.

• Regular Updates: All IEC holders are now required to update their IEC details between April and June each year, regardless of whether there are any changes. Even if your information remains unchanged, you must confirm the details on the DGFT portal. This annual requirement ensures that the DGFT maintains an accurate database of all import-export businesses.
• Consequences of Non-Compliance: Failure to comply with this update requirement will result in the automatic deactivation of your IEC. A deactivated IEC cannot be used for any import or export transactions until it is reactivated, which requires updating the necessary details on the portal.

Integration with PAN and GSTIN

To increase transparency and streamline compliance, the IEC has been integrated with the PAN (Permanent Account Number) and GSTIN (Goods and Services Tax Identification Number).

• Unified Identification: The IEC is now directly linked to the applicant’s PAN, and businesses must ensure that their PAN and GSTIN details are consistent. This integration simplifies the process and helps eliminate discrepancies in records across different government departments.
• GST Compliance: Businesses registered under GST must link their GSTIN with the IEC to ensure smooth transactions. This linkage facilitates data exchange between the DGFT and tax authorities, reducing the risk of tax evasion and ensuring that all import-export activities are compliant.

Simplified Compliance for LLPs

For businesses operating as Limited Liability Partnerships (LLPs), the recent updates in IEC regulations have brought some simplification and clarity.

• LLP Registration and IEC: LLPs can now seamlessly complete their IEC code registration through the DGFT’s online portal. The process is similar to that for other business structures, requiring documents like the LLP agreement, the PAN card of the LLP, and details of the designated partners.
• Ease of Doing Business: The integration of IEC, PAN, and GSTIN has simplified compliance for LLPs, ensuring that their records are synchronized across various government platforms. This reduces the administrative burden and makes it easier for LLPs to manage their import-export obligations.

Improved Data Security and User Experience

With the digitization of the IEC registration process, the DGFT has implemented several measures to enhance data security and user experience.

• Secure Login and Verification: The DGFT portal now requires secure login credentials and two-factor authentication to access and update IEC details. This protects sensitive business information from unauthorized access.
• User-Friendly Interface: The DGFT portal has been upgraded to be more user-friendly, with simplified navigation and step-by-step guides for completing the IEC registration or updating details. This change has made it easier for businesses to comply with regulations without requiring extensive support.

Deactivation and Reactivation Policies

To ensure that only active and compliant businesses retain their IEC, the DGFT has enforced stricter policies around deactivation and reactivation.

• Automatic Deactivation: If an IEC holder fails to update their details during the annual update window, their IEC will be automatically deactivated. This measure encourages businesses to maintain up-to-date information.
• Reactivation Process: Businesses with deactivated IECs can reactivate them by updating the required details on the DGFT portal. The reactivation process may involve penalties or fees, depending on the duration of non-compliance.

Benefits of Recent Changes for Businesses

The recent updates to IEC regulations offer several advantages for businesses, especially those involved in international trade.

• Increased Efficiency: The online-only registration and update process have significantly reduced paperwork and streamlined operations.
• Enhanced Compliance: By linking IEC with PAN and GSTIN, the DGFT has made it easier for businesses to remain compliant with tax and trade regulations.
• Risk Mitigation: The requirement for annual updates helps businesses mitigate risks associated with outdated information, ensuring smoother operations and fewer regulatory hurdles.

Conclusion

The recent changes in IEC Code regulations mark a significant step towards simplifying and modernizing India’s import-export framework. By digitizing the IEC Registration process, introducing mandatory annual updates, and integrating IEC with PAN and GSTIN, the DGFT has made it easier for businesses, including LLP, to manage their import-export compliance. These updates not only reduce administrative burdens but also improve data transparency and security. Businesses must stay updated on these changes to ensure they remain compliant and can take full advantage of the opportunities in global trade.