Establishing of export firm
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The document outlines the key steps and registrations required to establish an export business in India. This includes: 1. Registering the business as a sole proprietorship, partnership, or private/public company. 2. Obtaining an Importer-Exporter Code (IEC) number from the Directorate General of Foreign Trade, which is required for all export and import activities. 3. Registering with relevant export promotion councils, the Export Credit Guarantee Corporation, central excise and sales tax authorities, and other regulatory bodies.
Establishing of export firm
- 1. Export Preliminaries • The setting up of an export firm is completed in two stages: 1.Establishing a business firm 2.Obtaining the Importer-Exporter Code number for the business firm and completing other registrations
- 2. Establishing a business firm • Various formalities and registrations to be made with different authorities: • Selection of Name of Firm: • Any name • Desirable to indicate that the business relates to exports • Export, Import, Overseas, International, global • Approval of Name of firm: • Regional Licensing Authority of DGFT • If the firm is exporting ready made garments-approval from Apparel Export Promotion Council (AEPC) • Once name is approved then company has to register within 3 months • After registration –registered exporter- quota allocation of ready made garments to export quota countries • E.g.: USA, Canada and countries of European Union-Garment Quota System.
- 3. • Registration of Organization: • Sole proprietorship, partnership under Indian Partnership Act 1932 or Joint stock company under Companies Act, 1956 • Joint Stock-Private and Public limited company • Partnership firm or joint stock company-registration under appropriate act is required • Sole proprietor requires permission from local authorities • Opening of bank Account : • With any commercial bank, authorized by RBI to deal in foreign exchange • Firms need pre-shipment and post-shipment assistance from bank • Deciding bank and branch-company’s credit requirements and cooperative attitude to bank to assist , timely credit-as exports need to be highly competitive • Obtaining Permanent Account Number: • Export income is subjected to number of exemptions and deductions under IT Act. • PAN is required for applying for Export Import Code Number.
- 4. • Registration with Sales Tax Authorities: • Exporter need not pay sales tax while making purchases, meant for exports • Export firm has to register with sales tax authorities and secure sales tax number • Exporter/Purchaser has to give Form-H to seller/manufacturer • Export firm has to make an application along with copy of LC or export order to sales Tax office for issuance of Form –H • 3 copies of form H is received-2 copies to seller and 1 with exporter
- 5. • Importer-Exporter Code Number: • It is necessary to get registered with the (Territorial Jurisdiction) DGFT (Director General of Foreign Trade), Ministry of Commerce, Government of India. • DGFT provide exporter a unique IEC Number. • IEC Number is a ten digits code required for the purpose of export as well as import • IEC entitles to import or export any item of non-prohibited goods. i. Profile of exporter/importer ii. DD-Rs. 1000/- iii. Certificate from banker of the applicant iv. 2 passport size photographs of applicant v. Non-resident investment and if such investment is with full repatriation benefit, full particulars of such investment are to be approved by RBI vi. Declaration on applicant’s letterhead that there is no association of applicant’s firm with caution listed firms • No expiry date for IEC Number-Valid till revoked • IEC Number is to be quoted on all documents. • However, if the goods are exported to Nepal, or to Myanmar through Indo-Myanmar boarder or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not necessary to obtain IEC number provided the CIF value of a single consignment does not exceed Indian amount of Rs. 25, 000 /-.
- 6. • Registration Cum Membership Certificate: • Register with respective and appropriate Export Promotion Council (EPC) and obtain RCMC • Benefits provided in the current Exim Policy are available only to those having valid RCMC Literatures and guidance given by EPC MDA and MAI • E.g.: Engineering Export Promotion Council, Textile Export Promotion Council, Apparel Export Promotion Council • 2 types of RCMC’s: Registered Exporter Merchant Exporter
- 7. • Registration with ECGC: • Export Credit and Guarantee Corporation of India • To Secure export payments against political and commercial risk • Also helps to get financial assistance from commercial banks and other financial organizations • Registration under Central Excise Law: • Central Excise levy is applicable if: 1. The duty is on the goods 2. The goods must be excisable 3. The goods must be manufactured or produced 4. The goods must be manufactured produced in India • When Central Excise Registration is to be made: • Application to be made to jurisdictional Range Officer of the Central Excise for registration if total value of goods cleared for home consumption, known as Domestic Turnover exceed exemption limit • SSI-Exemption Limit: Rs. 100 Lakhs • Non-SSI-Exemption Limit: Rs. 50 lakhs • However the unit is exempt from registration if the products manufactured by it are not excisable like salt • This duty is levied when goods are moved out of the factory/warehouse of the manufacturer.
- 8. • Allotment of Central Excise Registration Number: • Firm on register ting with Central Excise Authorities gets ECC Number (Excise Control Code) from Central Excise Authority • Has 15 digits-first 10 are same as PAN number • Applicability of Excise duty to Exporter: • For exports, goods enjoy exemption from duty on the final product, meant for export. • Where exemption is not availed, refund of excise duty is made after actual exports. • Refund of excise duty in made on inputs used in manufacture of goods, meant for exports • Exporter submitted ARE-1, in six tuplicate, to relevant excise authority for clearance of the goods.
- 9. • Registration with other Authorities: • Desirable for exporters to become members of local Chamber of Commerce, Productivity Council or any other trade promotion organization recognized by the Ministry of Commerce or Industry • Local membership helps in getting many facilities like Certificate of Origin, vital for exports to certain countries. • Registration for Business Identification Number: • Exporters have to obtain PAN based Business Identification Number (BIN) from DGFT prior to filing for Customs Clearance of Exports goods • Common identification number to all persons dealing in various regulatory agency such as Central Excise, Customs Department, IT Dept, DGFT Office
- 10. • Export Licensing: • Many items of goods are free for exports without obtaining any license, if they do not fall in Negative List. • Negative List: 1. Prohibited Items-These items cannot be exported or imported. E.g.: Wild life, exotic birds, wood and wood products in form of logs, timber, pulp and charcoal 2. Restricted Items: Items-These are items, export or import of which is restricted through license. They can be imported or exported only in accordance with regulation of government 3. Canalized Items: These items can be imported/exported through Canalizing agency. DGFT issues license to any other person to import or export those items Hence it is must for exporter to check the nature of the item before he enters into contract as should not be banned list.