Tuesday, 21 February 2017

All you need to know about IEC number and related compliances !

Transacting in global market may appear to be a fascinating task but adhere to with its complexities might not so. If you wish to remit or transfer any money outside India via Banking channel, RBI has intervened for its safe and transparent transfer and issued few instructions to all the banks for not entertaining requests for transferring money abroad if customer doesn’t have 15CA CB certificate duly signed by a Chartere Accountant. While furnishing such certificate, a Chartered Accountant certifies that payer has deducted tax at source (if applicable) before making such remittance abroad. For expansion of your business, product or services must be marketed globally by way of Import-Export of such goods or services. And this will attract a need to register for Import-Export Code (IEC) issued by Directorate General of Foreign Trade (DGFT) operating under Ministry of Commerce and Industry, without which global expansion remains a mere aspiration. One of the most advantageous parts being that registration of Import Export Code is a One-time registration process and wherein no renewal or any return filing is required at any point of time. Such single IE code can be used till lifetime of such business entity. It is prudent for every business entity, engaged in transacting or expanding its business globally, to obtain Import Export Code irrespective of the necessity at the moment. And subsequent to obtaining such IEC number, it becomes nearly necessary for such entity/person to get the requisite CA certificate in 15CA/15CB before making any foreign payments on account of purchase/import of goods and/or services.

Customs clearance and sending shipments requires quoting of the IE Code. Therefore, to import/export goods into/from India and while making/receiving payments to/from abroad, IE Code must be required by the Importers/Exporters and banks respectively.

Form 15CA is basically a declaration given by remitter for gathering information w.r.t. payments made to a non-resident. Form 15CB, on the other hand, is a certificate that has to be obtained from a Chartered Accountant certifying nature of remittance and whether tax has been deducted on such remittance. Irrespective of its chargeability to tax in the hands of such non-resident, it has to be mandatorily e-filed with Income Tax Department. However, e-filing of such forms are not required if such a non-taxable remittance has been made by an ‘individual’ outside India.

It is not mandatory to incorporate a business entity for acquiring IEC number. It can also be obtained by the individuals who are sole proprietors of their respective businesses. However, it is absolutely mandatory to obtain 15CA-CB Certificate for money transfer abroad.

Do not miss our next update on Latest Amendments.

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Have a great day ahead!

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