IEC TO BE ABOLISHED, GSTIN TO BE USED IN FUTURE

Import–export code or commonly referred to as IEC is required by a person for importing or exporting goods. It is a PAN number based, 10-digit code which is issued by the Directorate General of Foreign Trade (DGFT), under the Foreign Trade Act,1992. IEC is mandatory for undertaking any import export activities i.e. any firm involved in any import and export shall be required to obtain an IEC number. However, with GST coming into effect, a new number GST Identification Number (GSTIN) shall be issued which will condone the need for IEC. GSTIN is a 15-digit identification number which will be based on PAN number. It is an alpha numeric code that will be used for purposes of

(i) credit flow of IGST on import of goods, and

(ii) refund or rebate of IGST related to export of goods.

GSTIN is a different entity from IEC and has various differences. GSTIN requires several filings of return every month whereas IEC did not require any filing what so ever. Once the code is obtained nothing is required to maintain the validity of the code. Also IEC code does not require any renewal for the rest of the life so once obtained, it can be used for all transactions without any hassle.GST will apply when business turnover of the business will exceed 20 lakhs (also the limit is 10 lakhs for north eastern states). As GSTIN is not required below any business below 20 lakhs thus it is not required for all businesses to obtain GSTIN and thus all importers or exporters might not need this code. However,according to section 24 of CGST Act, there are several categories of businesses that will require this code irrespective of the turnover. Those categories are as follows,

i) Persons making interstate supply

ii) People required to pay tax under reverse change

iii) Casual taxable persons

iv) Nonresident taxable persons

v) People who supply goods or services on behalf of other registered taxable people

vi) Every electronic operator

vii) Input service distributor

viii) Business which supplies services under his brand name or trade name

ix) Other persons or classes pf persons that may be notified by the State government or Central governments on the advice of GST council.

Thus we can say that GSTIN will not be a universal code as IEC was. DGFT only applies to corporate entities and not individual transactions. As a measure of ease of doing business, it will be kept uniform across all ministries and departments. From now on, PAN of a business will be used for the purpose of IEC i.e. IEC will be used by DGFT and will be the same as PAN of an entity. For the existing holders, DGFT is making necessary changes so that their PAN becomes their IEC. The current IEC holders are not required to undertake any additional act and DGFT will undertake this migration.As this is a new approach, it may take some time to adjust with it but it also removes some of the complications that were associated with IEC.