When you start your import-export business from India, you generally hear about lots of paper work to get going in the business. Registering on GST portal, getting IEC (import & exports code), getting SWIFT code and AD code from the bank and so on.
In this blog, we are going to discuss the AD Code registration process and why it is important for your export & import business.
What is AD Code?
The AD code is a unique identifier issued by the dealer bank under the RBI (Reserve Bank of India) supervision. This code serves as an official authorization for the business to engage with the international transactions related to goods export and imports. It is a crucial part of trade documentation and business registration process, as it would help you get registered with the port of shipment.
The letter is typically issued by the bank in their format as required by the Directorate General of Foreign Trade (DGFT) and port authorities.
Why is AD Code so important?
The AD Code serves as the unique identifier number for a business involved in international trade activities. This helps the exporter to link their IEC with the records and avail foreign exchange transactions as per the government law.
The AD Code also plays a key role in the customs clearance process of goods and helps the customs authorities to track and verify the compliances within the international as well as domestic laws. In its absence, the system may reject the process. This also helps in the monitoring of compliances for the taxes and accounting purposes.
Making or receiving international trade payments also needs authorization and record keeping with the authorized receiver bank, thus the AD Code provides a legal compliance for the business. It also helps make sure that the exporters get the most benefit from the exporter initiative schemes.
How to get AD Code for your business?
To register for an AD Code with the desired bank, you need to open a current account with the RBI authorised bank who can issue AD codes.
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Submit a request for AD Code: a business needs to provide documents like PAN card, Import Export Code (IEC), valid bank account details, GST certificate and business activities to the bank in their request format.
Approval process from bank: when you submit a request to your registered bank, they would assess your application and documentations. Sometimes, site visits are also required by the bank officials and upon successful approval, you get AD code issues in their format.
Using AD Code for registration: once you get the AD Code from the bank, you can submit the same to the customs authorities or give it to your CHA for further processing.
Can you do export or import without AD Code?
Yes, the AD Code is a mandatory document to clear goods from customs authorities across the Indian ports. To streamline the process and work with a reliable CHA, you need to keep the documentation on track and this will help you maintain an effective business operation.
