Import Export Code (IEC) vs. GST: Understanding the Differences

If you are involved in cross-border trade, you might have heard of two important terms – Import Export Code (IEC) and Goods and Services Tax (GST). While both are crucial for businesses engaged in import-export activities, they are not the same thing. In this blog post, we will discuss the differences between Import Export Code (IEC) and GST.

What is Import Export Code (IEC)?

An Import Export Code (IEC) is a unique 10-digit code issued by the Directorate General of Foreign Trade (DGFT). It is mandatory for businesses that engage in import or export activities to have an IEC. The code acts as a unique identity for businesses involved in cross-border trade.

What is GST?

Goods and Services Tax (GST) is a single, comprehensive tax that replaced various indirect taxes such as excise duty, service tax, and value-added tax (VAT). It is applicable to all goods and services, including imported goods.

Import Export Code (IEC) vs. GST: Understanding the Differences

Purpose

1. The purpose of an Import Export Code (IEC) is to identify businesses engaged in import or export activities. It acts as a unique identity for businesses involved in cross-border trade. On the other hand, GST is a tax levied on goods and services, including imported goods.

Applicability

2. An Import Export Code (IEC) is mandatory for businesses engaged in import or export activities. It is applicable to all types of businesses, whether they are individuals, partnerships, or companies. On the other hand, GST is applicable to all businesses, including those engaged in import or export activities.

Registration process

3. The registration process for an Import Export Code (IEC) and GST is different. To obtain an IEC, you need to submit an IEC code application along with the required documents to the DGFT or an authorized agency. On the other hand, to register for GST, you need to submit an online application on the GST portal and complete the verification process.

Validity

4. An Import Export Code (IEC) is valid for a lifetime and does not require any renewal. On the other hand, GST registration is valid for a period of five years, after which it needs to be renewed.

Usage

5. An Import Export Code (IEC) is used for import and export activities only. It is not used for any other purpose. On the other hand, GST is used for all types of transactions, including sales, purchases, and services.

Tax calculation

6. An Import Export Code registration is not used for tax calculation. On the other hand, GST is a tax that is levied on goods and services, including imported goods.

Conclusion

In conclusion, while both Import Export Code (IEC) and GST are crucial for businesses engaged in import-export activities, they serve different purposes. An IEC is used to identify businesses involved in cross-border trade, while GST is a tax that is levied on goods and services, including imported goods. The registration process, applicability, validity, usage, and tax calculation are different for both. So, if you are involved in cross-border trade, make sure you understand the differences between Import Export Code (IEC) and GST.