The framework of Import legalities in India
Establishing and flourishing a business calls for an extended effort. This effort can be made in the form of an overseas establishment. In India, businesses continually expand their ventures by selling goods and services across borders. However, the businesses looking to establish a trading company or begin trading from India need to understand the stages, get informed about the documents, stakeholders, and the regulatory framework.
For instance, starting an international code will require certain essentials like the IEC in the first place. The list is longer for these documents. So, today we are here with a valuable piece of information that can help you get started!
Some underlying authorities and guidelines enable the trade flow in a particular direction. The Foreign Trade (Development and Regulation) Act, 1992, empowers the federal government to make provisions for foreign trade development and governs India’s import-export.
First of all, we will take you through the guide for imports:
Procedure for Import of goods: at a glance
Typically, the procedure entails ensuring licensing and compliance. It must be done before the step of shipping goods. Meanwhile, one must also arrange transportation of goods and the warehouse facility. After that, when the goods are unloaded, there is a need to obtain customs clearance and pay the relevant taxes.
The detailed steps involved in importing goods are outlined below.
1. Obtain the IEC
As previously stated, before importing goods from India, every company must obtain an Import Export number from the regional DGFT. Getting this number again calls for a list of other formalities and documentation. The IEC registration procedure takes about 10-15 days. However, the IEC is a PAN-based registration. It entitled the seeking traders with a lifetime validity of this code. This code is required at multiple stages of the trade process. Majorly, it is necessary for customs clearance, shipments, and sending or receiving money in foreign currency.
2. Ensure legal compliance with various trade laws
This step is as crucial as getting the documents on your table! To trade without any complexities, you must ensure that you have met the relevant legalities. The legalities can be in the form of product restrictions, business size, or any other governmental obligation.
But it is ensured that the businesses with an IEC may import goods that comply with the following regulations:
The Foreign Trade Act (1992),
Section 11 of the Customs Act (1962),
Foreign Trade Policy, 2015-20.
Certain items require additional permits and licenses from the DGFT and the federal government because they are restricted and notified by the government.
3. Obtain import licenses
To obtain the import license, an importer must first classify the item. This must be done by identifying the goods in Indian Trading Clarification which is again based on a Harmonized System of Coding. The International Trade Classification (ITC) is India’s primary method of classifying items for trade and import-export operations.
It is essential to determine whether a license is required to import a specific commercial product or service. Many people confuse this code with IEC. But these two codes are entirely different. The DGFT’s ITC-HS code is an 8-digit alphanumeric code that represents a specific class or category of goods and allows the importer to comply with the regulations that apply to those goods.
A general license or a specific license may be used to import goods. A general permit allows goods to be imported from any country, whereas one particular or individual license only allows imports from specific countries.
4. Look for the Bill of entry and other documents:
To complete customs clearance formalities, file a Bill of Entry. A Bill of Entry provides information precisely, including the quantity and the value of goods.
After obtaining import licenses, importers must provide the import declaration and a Business Identification Number (BIN). These regularities are according to Section 46 of the Customs Act (1962).
However,
If the goods are cleared using the Electronic Data Interchange system, there is no need to file a formal Bill of Entry. However, after prescribing the particulars, the importer must file a cargo declaration.
In the other case, If the BOE is not filed using the EDI, the importer must submit supporting documents such as:
● commercial invoice,
● certificate of inspection,
● bill of exchange
● certificate of origin,
● IEC,
● and a packing list.
Customs officials examine and assess the information provided in the Bill of entry and match it with the imported items once the goods have been shipped. If there are no irregularities, a ‘pass out an order,’ allowing the imported goods to be replaced from customs.
How many different products can one import-export number export?
Before beginning the trade settlements, it is crucial to keep note of the two most important questions:
● whether a company can import and export without a registration code, and,
● how many different types of products can be imported in a single code.
The answer to these questions is that Import Export Code is a legal requirement for every company. The IEC registration code also proves that the company is credible and trustworthy in its business operations.
Furthermore, the individuals must also open a bank account during the IEC registration period. It is part of the process! A bank account is required because all funds related to the trade operations must be received in this account.
The answer to the other question is that one can deal with multiple products with a single code. However, the user needs to check the EPC to see if the category of products is included or not. In conclusion, the different types of products can be exported under one IEC, but they must adhere to EPC guidelines.
The bottom line:
The trade scenario in India is establishing at a faster pace in India. A trading company can begin importing or exporting from India, but they must understand the stages and stakeholders involved. This will also keep the traders from future discrepancies. Alongside, the regulatory framework and documentation required must also be ensured.
There are aids and support from the Indian government for better clarity. The Indian Customs Compliance Information Portal is an exemplary aid that carries the details related to customs procedures and regulatory compliances for import-export trade. India’s customs authorities launched it. This informative guide provides a brief overview of relevant import procedures in India and the essential considerations related to the IEC process.
