Ready to take your D2C home decor or apparel business global? For Indian MSME exporters, getting your Import Export Code (IEC) and Goods and Services Tax (GST) registration is the first crucial step. These licenses unlock international marketplaces like Amazon Global and Etsy, but the process involves specific rules and potential pitfalls that can trip up first-timers.

Why IEC and GST Matter for New Exporters

IEC is a 10-digit code issued by the Directorate General of Foreign Trade (DGFT). It acts as your business's passport for any import or export activity. Without it, you cannot clear customs, receive export payments, or claim incentives like duty drawbacks.

GST registration, on the other hand, is mandatory for exporters once your annual turnover hits Rs 20 lakhs (or Rs 10 lakhs in special category states). It ensures you can claim refunds on input taxes paid on raw materials or shipping, keeping your costs low when selling to the US or UAE markets.

Together, they form the foundation for compliant exporting. In 2025 alone, over 5 lakh new IECs were issued to small businesses, helping them tap into a global e-commerce market worth $6 trillion. Skipping or delaying these means stalled shipments and lost sales.

Who Needs IEC and GST as a New Exporter?

Any Indian MSME shipping physical goods—like handcrafted sarees from Surat or brass idols from Moradabad—needs an IEC. Proprietors, partnerships, LLPs, or private limited companies qualify. No minimum turnover is required, making it ideal for startups testing Etsy with small batches.

GST kicks in for exporters to handle refunds under the Letter of Undertaking (LUT) system. You file a simplified LUT annually instead of paying taxes upfront on exports, which are zero-rated. A Jaipur-based apparel exporter recently saved Rs 4 lakhs in a year by properly linking GST with IEC for Amazon US sales.

Actionable Insight 1: Check your turnover early. If under threshold, get voluntary GST for credibility with platforms like Shopify.

Documents Required for IEC Registration

Gather these essentials before starting. Missing one delays approval by weeks.

• PAN card of the proprietor or entity.

• Aadhaar card, passport, voter ID, or driving license (for identity proof).

• Address proof like electricity bill, rent agreement, or property tax receipt (not older than 2 months).

• Cancelled cheque or bank certificate showing account details.

• Digital photo of the applicant (passport size).

• For firms/companies: Partnership deed, incorporation certificate, or MOA/AOA.

Aadhaar-based e-KYC is now mandatory for proprietors since January 2025, speeding up verification but requiring a linked mobile number.

Common Pitfall: Uploading blurry scans or mismatched names between PAN and Aadhaar. Double-check everything.

Step-by-Step IEC Registration Process

The entire process is online via the DGFT portal at dgft.gov.in. It takes 1-2 days if documents are perfect. Government fee is just Rs 500.

Step 1: Register on DGFT Portal

Visit dgft.gov.in and click "Apply for IEC." Select "Register" as Importer/Exporter. Enter your PAN, email, mobile, and name. Verify via OTP sent to your registered mobile and email. Create a password.

Step 2: Log In and Fill ANF 2A Form

Log in with credentials. Go to "Apply for IEC" and fill the online ANF 2A form. Provide business details, PAN, bank account, and trade activity (select export). No need for Digital Signature Certificate (DSC) anymore—it's paperless.

Step 3: Upload Documents

Scan and upload all required files in PDF/JPG (max 5MB each). Ensure Aadhaar details match PAN exactly for e-KYC.

Step 4: Pay Fee and Submit

Pay Rs 500 via net banking, card, or UPI. Review details, then submit. You'll get an application reference number.

Step 5: Download IEC Certificate

Approval comes via email within 24 hours. Download your IEC from "IEC Profile Management." Link it instantly to ICEGATE for customs clearance.

Actionable Insight 2: Update IEC annually by December 31 (free via OTP). Non-update deactivates it, blocking shipments—as happened to 10% of IEC holders last year.

Relatable Example: A Mumbai candle maker applied online in one evening, got IEC next morning, and listed on eBay within a week.

Documents Needed for GST Registration

GST is handled via gst.gov.in. It's free but needs precise details.

• PAN and Aadhaar of proprietor/entity.

• Proof of business address (rent agreement/utility bill).

• Bank account statement or cancelled cheque.

• Partnership deed or incorporation certificate (if applicable).

• Digital photo and authorization letter.

For exporters, add IEC once obtained.

Step-by-Step GST Registration for Exporters

Processing takes 3-7 working days. Aim for composition scheme if turnover under Rs 1.5 crore for simplicity.

Step 1: Access GST Portal

Go to gst.gov.in > "Services" > "Registration" > "New Registration." Select "Taxpayer," enter state, district, legal name, PAN, email, and mobile. Verify OTPs.

Step 2: Fill Part A of Form REG-01

Provide business type (proprietorship, etc.), constitution, and promoter details. Submit Temporary Reference Number (TRN).

Step 3: Log In with TRN and Complete Part B

Upload documents. Specify you're an exporter—mention IEC if ready. Declare turnover and choose regular scheme for refunds.

Step 4: Verification and ARN

Use EVC (via OTP) or DSC. Get Application Reference Number (ARN) to track status. Approval issues GSTIN (15-digit number).

Step 5: File LUT for Exports

Post-registration, file LUT-I annually under Services > User Services > Furnish LUT. This bonds your exports as zero-rated.

Common Pitfall: Mismatch in business address across IEC/GST/PAN leads to rejection. Use the same premises proof.

Actionable Insight 3: Link GST with IEC immediately via gst.gov.in for seamless refund claims. Exporters recovered Rs 1.2 lakh crore in GST refunds last fiscal year.

Common Pitfalls and How to Avoid Them

New exporters often face delays from incorrect bank details or unlinked Aadhaar. IEC cancellation hit 20,000 firms last year for missed updates.

• Always use a current account for exports—not savings—for RBI compliance.

• For MSMEs, apply under Startup India for faster processing.

• Beware FEMA rules: Export proceeds must return within 9 months.

Actionable Insight 4: Test your IEC by checking status on dgft.gov.in before first shipment.

Actionable Insights for Quick Wins

• Start with IEC—it's faster and unlocks everything else.

• Use free tools like PAN-Aadhaar linkage on incometax.gov.in beforehand.

• Budget Rs 1,000-2,000 for professional scans if tech-challenged.

• Track applications daily via reference numbers.

• Once registered, apply for AD Code (customs ID) next—takes 1 day.

Real Example: A Delhi handicraft seller got both in 5 days, exported diyas to UAE via Etsy, and hit $10,000 sales in three months.