When you start an import-export business as a sole proprietor, you have many questions. One of the most common questions is about the bank account required for IEC registration. Can a proprietor use a savings account? Can they submit a cancelled cheque? The answer is yes, where applicable. But the bank account details should meet the requirements of the Directorate General of Foreign Trade (DGFT).
What Is IEC Registration?
If you are in the business of importing and exporting goods, then you will need an Importer Exporter Code (IEC). In case of a sole proprietorship, the IEC application is made in the name of the proprietor using the proprietor’s PAN. The DGFT has also asked the firm to provide valid details of its bank account. So, new importers and exporters need to choose the right Savings Account for IEC.
Can a Sole Proprietor Use a Savings Account for IEC?
Generally, Sole Proprietors can use a Savings Account for IEC Registration. But the details of the account must be valid and successfully verified. The following are accepted by DGFT as proof of the bank account:
- Cancelled cheque
- Bank certificate
The account needs to be active and linked to the applicant’s details.
For example, Priya is a sole trader who runs a handicrafts business. She’s got a savings account in her name and a cancelled cheque. The Bank will verify these successfully, and she can use them for IEC Registration.
Is a Current Account Better?
As the sole owner, a current account is not automatically required for IEC. Business owners, though, should verify their bank’s policies before using a savings account for regular business transactions. A Savings Account can be used for IEC registration purposes. If you have a business with lots of transactions, then you might want to think about getting a current account.
For example, an exporter who is regularly being paid from overseas should speak to his bank about what type of account would be most suitable for him.
Things to Check Before Applying
Before applying for IEC via a Savings Account, one should make sure that:
- The person possesses a valid and active bank account.
- One’s name and other particulars are correct.
- The cheque is clear and cancelled.
- The account particulars tally with those furnished in one’s IEC application form.
- The business activities desired are permissible under the terms of one’s bank.
- The bank account is able to pass through the necessary bank validations.
Final Takeaway
As per the applicable terms and conditions, an individual proprietor can generally use a Savings Account for IEC. A cancelled cheque can also be submitted as bank proof for IEC Registration. But banks may have different rules for normal commercial transactions. So, talk to your bank before you start making regular import or export payments.
FAQs
Q1. Can a Savings Account be used for IEC?
Yes. If the conditions are met then a sole proprietor can use a savings account for
IEC Registration.
Q2. Do you need a cancelled cheque for IEC?
A cancelled cheque can be submitted as bank proof. A bank certificate can also be submitted.
Q3. Do I need to open a current account for IEC registration?
No. You need a bank account that can be successfully verified.
Sources:
- https://www.hubco.in/articles/how-can-a-sole-proprietor-individual-in-india-get-an-iec-import-export-code
- https://growthora.co.in/blog/import-export-code-iec-registration
- https://www.eximly.in/blog/iec-documents-required-india
- https://razorpay.com/blog/how-to-apply-for-an-iec-code-online-india/
Moreover, if you want any other guidance relating to Savings Account for IEC, Best country for traders India or UAE , please feel free to talk to our business advisors at 8881-069-069.
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