In a move that would improve ease of doing business in the country, Commerce Ministry has allowed using PAN as Importer Exporter Code (IEC) with the introduction of Goods & Services Tax (GST).
According to the Foreign Trade (Development &Regulation) Act, 1992, no person shall make any import or export except under an IEC number, granted by the Director General of Foreign Trade or the officer authorized by the Director General in this behalf.
Further, FTP, 2015-20 also lays down that IEC, a 10 digit number, is mandatory for undertaking any import export activities, while Para 2.08 of the HBP (2015-20) lays down the procedure to be followed for obtaining an IEC, which is PAN based.
As on date, PAN has one to one correlation with IEC.
With the implementation of the GST from July 1, 2017, GSTIN would be used for purposes of – credit now of IGST on the import of goods, and refund or rebate of IGST related to the export of goods.
Registration No. under GST, called GSTIN, is a 15-digit alpha numeric code with PAN pre fixed by State Code and suffixed by 3 digit details of business verticals of the PAN holder.
“As GSTIN will be used for the purposes mentioned, it thereby assumes importance as an identifier at the transaction level. In view of this, it has been decided that importer/exporter would need to declare only GSTIN (wherever registered with GSTN) at the time of import and export of goods the PAN level aggregation of data would automatically happen in the system,” DGFT said.
Since e 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 IGST), 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.
As a measure of ease of doing business, it has been decided to keep the identity of an entity uniform across the Ministries/Departments. 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 digits numeric at present) and will be same as PAN of an entity, said the DGFT.
For new applicants, with effect from 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 2.07of 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.
Further, 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, said DGFT.
IEC holders are required to quote their PAN (in place of existing IEC) in all their future documentation, with effect from notified date of GST.
The legacy data which is based on IEC would be converted into PAN based in due course of time, said DGFT.
Chartered Accountant by profession, CA Sakshi Agarwal has an experience of above11 years in Cross Border compliance , Import Export , International Taxation & is a passionate content creator.