Is AD Code Required to Sell Products to Retail Customers Outside India?

If you are looking to expand your business and sell to retail customers outside India, you must get AD Code Registration. Let’s understand the complete process to get AD Code Registration.

What is an AD Code?

AD Code stands for Authorized Dealer Code. It is a 14-digit numerical code and is issued by the bank through which an exporter handles foreign exchange transactions. AD Code is also tied to the IEC Import Export Code Registration.

Furthermore, when you export physical goods out of India, the Indian customs department requires this code to be registered at the port of export. Without it, your shipment may not be cleared for export.

Is AD Code Mandatory for Selling to Retail Customers Abroad?

In most cases, it is necessary to have an AD Code Registration. However, there can also be exceptions. Let’s analyze this in detail:

• If you’re selling digital products or services (like eBooks, courses, consulting, SaaS, etc.), and you didn’t do any physical shipment of goods, then your AD Code is not required. You still need to report your foreign earnings under FEMA guidelines, but physical shipping documents are not in the picture.
• If you’re shipping physical products (like clothing, accessories, or any tangible item) to retail customers outside India, then AD Code Registration is required. It is mandatory because the AD Code ensures that foreign exchange is correctly received and reported to the RBI. 

Importance of Selling Products to Retail Customers Outside India

1. Customs Clearance:

   You cannot export goods without registering your AD Code with Indian customs at the port through which you’re shipping.

2. Foreign Exchange Monitoring:

   The RBI uses this code to ensure that the foreign currency payments for exports. And therefore, they have it as a mandatory requirement.

3. GST Refund Eligibility:

   For claiming GST refunds on exports after you are done with GST Return Filing, you will need to get AD Code Registration.

4. Smooth Banking Process:

   Your bank uses the AD Code to facilitate foreign currency receipt. Getting AD Code Registration means you comply with FEMA Regulations and can  get your money without any issue.

How to Get AD Code Registration?

The process to get AD Code Registration is simple:

1. Firstly, you need to get an Import Export Code (IEC) from DGFT (Directorate General of Foreign Trade). IEC Code Registration is a prerequisite to getting an AD Code Registration. 
2. Once you are done with that, you need to apply for AD Code through your bank where you hold your current account.
3. Lastly, you need to register the AD Code with the customs department at the port(s) of export using the ICEGATE portal.

After the process is done, the bank issues the AD Code in a letter format. Then you will need it to upload to the customs portal.

Conclusion

If you are serious about building a global eCommerce or export business from India, understanding the AD Code for selling products abroad from India is crucial. While it may seem like a tiring step, it ensures legal compliance and smooth customs clearance. Thus, it is sure that AD Code Registration helps you in the long term to make your international trade experience efficient and reliable. If you still have any doubts about AD Code Registration, feel free to consult our experts for free at: 8881-069-069.

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