IEC Code or Importer & Exporter Code is s unique 10 digit code . This code is allotted by the Director General of Foreign Trade under Section 7 of the Foreign Trade (Development & Regulation) Act, 1992 (22 of 1992) . It is found from readers & postings of queries on various blogs and sites , that freelancers from India who work on oDesk or Freelancers dot com or elance or elsewhere are concerned whether they are breaking law by not obtaining IEC code or whether such code is indeed mandatory for doing job for foreign service recipients. It is sorry to note that most of the sites and blogs are publishing only half of the law and explains only partially the actual law which regulates IEC Code . Thus ,more confusion have been generated for freelancers on this issue.
Accordingly , taxworry.com has decided to publish a series of articles for the benefit of freelancers who are exporting their expertise from India . First in the series is the article explaining the actual law of Importer & Exporter Code ( IEC Code ) and why most of the freelancers from India would not be required to apply for it .
What is the law regarding IEC Code ?
Section 7 of the Foreign Trade (Development & Regulation ) Act, 1992 :
No person shall make any import or export except under an Importer-exporter Code Number granted by the Director General or the officer authorized by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General.
However, the aforesaid section 7 of FT( D& R) Act 1992 got amended in the year FY 2009-10 vide Foreign Trade (Development & Regulation ) Amendment Act 2010 which got President’s assent on 19th August 2010 . Under this amendment Act 2010, a new proviso was added to section 7 of FT (D & R) Act which reads as under :
“Provided that in case of import or export of services or technology the Importer-exporter Code Number shall be necessary only when the service or technology provider is taking benefit under the foreign trade policy or is dealing with specified services or specified technologies”.
So, from 19th August 2010 , the law provided that Importer & Exporter Code (IEC No) is mandatory only when in one of the following cases
- the service or technology provider is taking benefit under the foreign trade policy
- is dealing with specified services or specified technologies
What is meaning of “specified services or specified technologies” ?
The Amendment Act 2010 also provided meaning of these terms which have been used in the proviso to section 7 which makes the application for Importer & Exporter Code NO . Read the excerpt :
“specified goods or services or technology” means the goods or services or technology, the export, import, transfer, re-transfer, transit and transshipment of which is prohibited or restricted because of imposition of conditions on the grounds of their being pertinent or relevant to India as a Nuclear Weapon State, to the national security of India, to the furtherance of its foreign policy or its international obligations under any bilateral, multilateral or international treaty, convenant, convention or arrangement relating to weapons of mass destruction or their means of delivery to which India is a party or its agreement with a foreign country under the foreign trade policy formulated and notified under section 5 of the Act;
So ,one needs IEC code mandatorily for exports or imports of specific service or technology which are prohibited on account of being associated with nuclear weapon programs , not for others.For a list of Specified Goods & Services , you can click here. Please remember , the list is updated time to time
In my opinion, 99 % of the freelancers from India may not be related to such programs.
Conclusion on IEC Code No[infobox style=”alert-success”]
Thus , as per my understanding of law, one needs to have IEC code under Foreign Trade ( Development & Regulation) Act :
- If you are exporting or importing GOODS , you have to seek IEC code whether or not you desire any benefit from Govt. of India.
- If you are exporting SERVICES , IEC code is mandatory only if you desire to take any benefit under Export & Import regulation of India.
- If you are exporting SPECIFIED SERVICES or TECHNOLOGIES , you need IEC Code
Therefore most of the software freelancers who work on elance or freeelancer or oDesk will not be required to apply for IEC code.