Is Tax Filing Required Under an IEC Code?

The Import Export Code (IEC) is a mandatory registration for businesses engaged in international trade. It is issued by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, Government of India. While IEC registration is essential for businesses dealing with imports and exports, many business owners often wonder whether tax filing is required under an IEC code.

This article explores the taxation and compliance aspects related to IEC code registration, the need for tax filing, updates in IEC regulations, and how it connects to corporate and government compliance such as LLP Registration, CSR-1 Registration, NITI Aayog Registration, Startup India Registration, and Government e-Marketplace (GeM) Registration.

What Is an IEC Code?

An IEC code (Import Export Code) is a 10-digit unique identification number assigned to businesses or individuals who wish to import or export goods and services from India. Without IEC registration, companies cannot conduct international trade legally.

Key Features of IEC Code Registration:

• Mandatory for Imports & Exports: Required for businesses dealing with international trade.
• One-Time Registration: No need for renewal unless an IEC update is required.
• Issued by DGFT: Managed through the DGFT portal.
• No Compliance with Dormant IEC: If not used for transactions, it does not require renewal.

Is Tax Filing Required Under an IEC Code?

No, the IEC code itself does not require tax filing. However, businesses operating under an Import Export Code registration must comply with various tax laws such as:

1. Income Tax Act, 1961: Tax on income earned from imports or exports.

2. GST (Goods and Services Tax): Applicable for international trade transactions.

3. Customs Duty & Export Duty: Taxes levied on imports and exports.

4. TDS (Tax Deducted at Source): Deduction on certain transactions related to foreign trade.

Even though IEC registration does not directly require tax filing, businesses must file income tax returns (ITR), GST returns, and customs-related documents as per applicable laws.

Income Tax Compliance for IEC Code Holders

(a) Income Tax Return (ITR) Filing

Every business with an IEC code must file an income tax return (ITR) based on its income:

• Proprietorship Firms: ITR-3 or ITR-4
• LLPs (Limited Liability Partnerships): ITR-5
• Private Limited Companies: ITR-6

(b) Deadline for ITR Filing:

• July 31st (If tax audit is not applicable)
• September 30th (If tax audit is applicable)

(c) Tax Audit Applicability: A tax audit is mandatory for IEC holders if:

• Turnover exceeds ₹10 crore (for businesses with digital transactions).
• Turnover exceeds ₹1 crore (for businesses with cash transactions).

GST Filing for IEC Code Holders

(a) GST Registration for Importers & Exporters

Businesses with an IEC code engaged in international trade must register for GST if:

• Annual turnover exceeds ₹20 lakh (₹10 lakh for special category states).
• The business exports goods or services and wants to claim GST refunds.

(b) GST Returns for Importers & Exporters

Once registered, an IEC code holder must file regular GST returns, including:

• GSTR-1: Details of outward supplies (exports)
• GSTR-3B: Monthly summary return
• LUT (Letter of Undertaking): For GST-free exports

Note: Exporters can claim GST refunds by submitting LUT (without payment of tax) or paying GST and claiming a refund later.

Customs Duty and Import-Export Tax Compliance

(a) Import Duties: All importers must pay Customs Duty, IGST, and other applicable charges. Some common import duties include:

• Basic Customs Duty (BCD)
• Integrated GST (IGST)
• Anti-Dumping Duty (if applicable)

(b) Export Duties: Certain goods attract export duties, and businesses must file shipping bills and export declarations with the customs department.

(c) Bill of Entry & Shipping Bill Compliance

• Bill of Entry: Filed by importers for customs clearance.
• Shipping Bill: Filed by exporters for shipment approval.

Other Important Compliances for IEC Holders

(a) IEC Update & Renewal

• The IEC code must be updated every year through the DGFT portal.
• If not updated, the IEC Code Registration may become inactive or deactivated.

(b) CSR-1 Registration & CSR Fund Compliance

Businesses with an IEC code engaging in CSR activities must comply with CSR-1 registration under MCA. This is required if:

• The business contributes to CSR projects.
• The company receives CSR funds from eligible entities.

(c) Startup India Registration

Businesses looking to export innovative products or services can apply for Startup India Registration and DPIIT recognition for benefits like:

• Tax exemptions
• Easier funding access
• Relaxed compliance requirements

(d) NITI Aayog Registration

Required for NGOs or businesses working on government-funded research projects under Niti Aayog Registration.

Government e-Marketplace (GeM) Registration

IEC code holders supplying goods/services to government departments must register on the Government e-Marketplace (GeM) portal for tenders and contracts.

Consequences of Non-Compliance

Failing to comply with tax laws and IEC-related regulations can lead to:

• IEC deactivation by DGFT for not updating details.
• GST penalties for non-filing of returns.
• Customs penalties for incorrect duty payments.
• Income tax penalties for non-filing of returns.

8. Conclusion

While tax filing is not directly required for an IEC code, businesses holding an Import Export Code registration must comply with income tax, GST, and customs duty regulations.

Key Takeaways:

• ITR filing is mandatory for businesses with IEC codes.
• GST registration is required for exporters and importers.
• Customs duty must be paid for imported goods.
• Annual IEC update is necessary to avoid deactivation.

To stay compliant and avoid penalties, businesses should regularly update their IEC, file tax returns, and maintain proper financial records. Consulting with tax and compliance professionals is highly recommended for smooth international trade operations.