Difference between IEC code and GST

⚙️ 1. Basic Definition
Aspect IEC (Import Export Code) GST (Goods and Services Tax)
Full Form Importer Exporter Code Goods and Services Tax
Purpose To identify a business or individual engaged in importing/exporting goods or services from India. To register a business for taxation under the GST system for domestic sales within India.
Issued By Directorate General of Foreign Trade (DGFT), Ministry of Commerce, Government of India. Central Board of Indirect Taxes and Customs (CBIC), Ministry of Finance, Government of India.
Legal Basis Foreign Trade (Development and Regulation) Act, 1992 Goods and Services Tax Act, 2017
🧾 2. Applicability
Criteria IEC GST
Mandatory For Businesses or individuals who want to import or export goods or services from India. Businesses whose turnover exceeds the threshold limit (₹40 lakh for goods, ₹20 lakh for services; varies by state).
Used In Customs clearance for imports and exports, shipping, and international trade. Domestic trade within India — to collect and pay GST on sales.
Exemption Not required if goods/services are imported/exported for personal use and not for commercial purposes. Small businesses below turnover threshold can opt out (though voluntarily registration possible).
💳 3. Format and Structure
Aspect IEC GSTIN
Format 10-digit alphanumeric code (same as PAN from 2021 onwards). 15-digit alphanumeric code: first 2 digits = state code, next 10 = PAN, next 1 = entity code, last 2 = check digits.
Example ABCDE1234F 27ABCDE1234F1Z5
📦 4. Function and Usage
Function IEC GST
Used For Import/export licensing, shipping documentation, and customs processing. Filing GST returns, collecting and paying tax on sales, claiming input tax credit.
Transactional Role Enables cross-border trade. Governs domestic tax compliance.
Linkage Often linked with PAN and GSTIN for export/import compliance. Automatically validated with PAN; used to claim export benefits if GST registered.
🧮 5. Key Difference in Nature
Point IEC GST
Nature Business identification for foreign trade. Tax identification for domestic business.
Tax Involvement Not a tax registration — it’s a business license. It’s a tax registration number.
Validity Lifetime validity (no renewal required). Valid as long as business remains active and compliant.
🧩 6. Integration Between IEC and GST

Since July 2017, DGFT integrated IEC with PAN and GSTIN.

If an entity has a GSTIN, that 15-digit GSTIN can serve as the IEC number for import/export purposes.

For businesses without GST registration (like those only exporting services below threshold), the PAN is used as IEC.

🧭 7. Summary Table
Feature IEC GST
Purpose For international trade For domestic taxation
Authority DGFT CBIC
Legal Nature License Tax registration
Format 10 digits (PAN-based) 15 digits (state + PAN-based)
Validity Lifetime Conditional (until business active)
Required For Import/export Domestic sales
Renewal Not needed Annual compliance via returns
✅ Example

Case 1:
A textile company in Delhi sells goods across India → Needs GST registration.

Case 2:
The same company exports garments to the UK → Needs IEC (linked to its PAN/GSTIN).

So, IEC = For Import/Export, GST = For Domestic Taxation.

🧾 Is GST Compulsory for IEC?

👉 No — GST registration is not compulsory to obtain an IEC (Import Export Code).
However, whether you need both depends on the type of business activity you’re doing.

🔹 Scenario 1: Only Importing or Exporting (No Domestic Sales)

If your business only imports or exports goods or services, and you don’t make any taxable supplies within India,
then you can obtain an IEC without GST registration.

The DGFT will issue your IEC based on your PAN (since IEC = PAN-based).

Example:

A freelancer providing export of services to clients outside India (under LUT) and turnover below ₹20 lakh — No GST needed.

✅ IEC Allowed Without GST

🔹 Scenario 2: Domestic Sales + Import/Export

If your business also sells goods or services within India, and your turnover exceeds the GST threshold (₹40 lakh for goods, ₹20 lakh for services — varies by state),
then GST registration becomes compulsory under tax law.

In this case, your GSTIN will also serve as your IEC number (PAN-based linkage).

✅ IEC + GST Both Required

🔹 Scenario 3: Voluntary GST Registration

Even if your turnover is below the limit, you can voluntarily register under GST (for input tax credit, exports under LUT, etc.).

Many exporters prefer having GST registration to:

Claim GST refunds on input tax for zero-rated exports.

Export under Letter of Undertaking (LUT) instead of paying IGST.

✅ GST Optional but Beneficial for Exporters

⚙️ In Summary
Situation GST Needed? IEC Needed?
Export only (below threshold) ❌ Not compulsory ✅ Yes
Import only (below threshold) ❌ Not compulsory ✅ Yes
Domestic + Export (above threshold) ✅ Yes ✅ Yes
Domestic only ✅ Yes ❌ Not needed
Exporter claiming GST refund or LUT ✅ Yes (recommended) ✅ Yes
📌 Key Point

IEC = Identification for foreign trade (DGFT).

GST = Tax registration for domestic transactions (CBIC).

They are linked via PAN, but one doesn’t automatically require the other unless your business activities or turnover demand it.