Companies planning to start an international trading business or begin importing and exporting to India should know. Here I explain import export procedures. The various stages and parties involved in the process and, the regulatory requirements for the framework and documents needed.
In India, The imports and exports are governed through the Foreign Trade Act of 1992. Allowing the Federal Government to create rules for developing and regulating trade with foreign countries. The current laws about imports and exports within India are in the Foreign Trade Policy.
Import Export Procedures
The typical procedure for both export and import includes:
Ensuring that the company is licens and compliant before the shipment of goods. Arranging for transportation and warehousing after the unloading of the goods. And getting first customs clearance as well as paying taxes before the release of goods/product.
Below, we will outline what steps are involv in importing goods.
Prior to importing goods from India; the business must first get the Import Export Code (IEC) number from the joint regional DGFT. IEC is an international registration with lifetime validity. And IEC can be describ as a global registry of traders with lifetime validity. It is also need to clear customs and send a shipment and for the transfer of foreign currency.
The process of obtaining the IEC registration usually takes between 10 and 15 days.
Ensure Legal Compliance Under Different Trade Laws
IEC is allott, companies can import goods in compliance with Section 11 of the Customs Act (1962), Foreign Trade (Development & Regulation) Act (1992), And the Foreign Trade Policy.
However, certain items, restricted or canaliz in the prohibited, are declared and reported by the government; require additional permits and licenses from the DGFT and the federal government.
Get Import Permits
To determine if a license is required to import a particular commercial product or service. The importer needs to first categorize. The item by identifying the Indian Trading Clarification based on the Harmonized System of Coding or ITC (HS) classification.
ITC (HS) is one of India’s principal methods of classifying goods for import and trade operations. The ITC-HS code, which the DGFT issues, Is an eight-digit alphanumeric code representing a specific item or class. That permits the importer to adhere to rules about the goods.
An import license may be a general license or a specific license. Under a general permit, goods can be import permitt from any nation. Whereas a characteristic or individual support allows import only from certain countries. Import licenses use in import clearance, renewable, and typically valid for 24 months for capital goods or 18 months for the raw material components, consumables, and spare parts.
File Bill of Entry and Other Documents to Complete Customs Clearing Formalities
After obtaining import licenses, importers are requir to submit a declaration of import on the Bill of Entry along with permanent account numbers (PAN). Based business identification number (BIN), as per section 46 of the Customs Act (1962).
A Bill of Entry gives information about, The exact nature of quantity, And the value of the goods that have to arrive or be transported into the country.
If the goods are clear through the Electronic Data Interchange (EDI) system, no formal Bill of Entry is filed since the system generates it. However, the importer must file a cargo declaration after providing the Entry’s necessary details for customs clearance.
Suppose file the Bill of Entry is file without using the EDI system. The importer is to submit supporting documents. That include a certificate of origin, certificate of inspection, bill of exchange, commercial invoice cum packing list, among others.
When the items are deliver, Customs officials inspect and evaluate the information provided in the declaration of Entry and verify it against the import items.
There are no irregularities, the officials issue a ‘pass out the order’ that allows. The imported goods to be replaced from the customs.
Determine import duty rate for clearance of goods
India charges an essential customs duty on imported products. As stipulated in the first section of the Customs Tariff Act, 1975. Along with goods-specific duties such as anti-dumping duty, safeguard duty, and social welfare surcharge.
In addition to The government also imposes another tax, integrated goods, and services tax (IGST), under the new GST system. The IGST rates are based on the classification of imports according, To the Schedules issued in Section 5(1) of the IGST Act (2017).
As with imports, any company that plans to undertake exports must get the IEC Number from the local joint DGFT. After receiving the IEC. The exporter has to make sure that all legal compliances are adher to according to the different laws governing trade.
Additionally, the exporter should determine if an export license is requir and apply for the permit to the DGFT.
A person who exports goods must also register at the Indian Chamber of Commerce (ICC). Which issues the Non-Preferential Certificates of Origin that prove the exporte goods are originat in India
Documents for Export and Import
Businesses must submit documents when performing import and export actions in India.
These include commercial documents – the ones exchanged between buyer and seller, and legal documents that address various regulatory authorities. Such as Customs, Excise, and licensing authorities, and the export promotion organizations that assist in obtaining export benefits for imports.
The Foreign Trade Policy requires. The following commercial document below, to be use for the execution of export and import activities:
- Bill of lading or airway bill;
- Retail invoice cum packing list;
- Shipping bill or bill of export.
Additionally, documents like certificate of origin and inspection certificate may be require as per the case.
The critical regulatory documents comprise:
- Forms for GST returns (GSTR 1 and GSTR 2);
- GSTR refund form
- Exchange Control Declaration;
- Bank Realization Certificate; and
- Registration cum Membership Certificate (RCMC).
The RCMC assists importers and exporters get benefits as part of the Foreign Trade Policy.
The content of this article is intend to provide a general guide to the subject matter. And I explained Import Export Procedures above.