Import-Export: DGFT, GST and FEMA

Quick View

Why It Matters

DGFT states that IEC is a key business identification number generally required for imports and exports, with specific treatment for services or technology under the Foreign Trade Policy.

Classify product, country, licence, restriction, SCOMET, valuation, origin and shipping terms before dispatch or order. The commercial invoice should align with customs and bank documents.

GST zero-rating, refund, foreign-exchange realisation, eBRC and accounting require separate evidence. Export without tax payment and export with tax payment follow different processes.

Control Framework

Action Checklist

1. Validate IEC and product classification.
2. Review Incoterms and payment risk.
3. Prepare consistent shipping documents.
4. Complete customs and GST processes.
5. Track remittance and eBRC.
6. Reconcile trade ledger monthly.

Practical Example

Evidence to Keep

• IEC and licence records.
• Customer or supplier contract.
• Commercial invoice and packing list.
• Shipping and customs documents.
• GST return and refund file.
• Bank realisation and eBRC.

Warning Signs

Management Decision

Use a shipment checklist that cannot close until customs, GST, bank and accounting references are linked.

Review long-outstanding export receivables and import advances with the authorised dealer before they become FEMA exceptions.

Record the decision, owner, due date and evidence expected. A verbal explanation should become an approved working, board note, contract amendment, statutory filing or reconciliation before the item is treated as closed.

Rules, forms, thresholds and procedures can change. Use the latest official source and the actual company facts rather than copying a prior-year control or another entity’s legal position.

Exception Review

Classify every exception as a timing difference, data error, missing document, legal non-compliance, control-design gap or control-operating failure. This prevents management from treating fundamentally different problems as one ageing list.

The exception file should show amount or exposure, root cause, immediate correction, preventive action, owner and board-escalation threshold. Repeated low-value issues can become material when they reveal weak systems or management override.

Close the item only after the evidence agrees across source documents, books, portal data and management reporting. A screenshot or email promise is not equivalent to a completed filing, lender waiver, signed contract or reconciled ledger.

Board Escalation

The control should operate across the full transaction population, not only the samples management expects a reviewer to inspect. For this topic, the key stages are trade eligibility, shipment, tax, realisation. Each stage should identify the source system, preparer, reviewer, deadline and evidence retained.

A useful management review asks whether the legal document, accounting entry, bank movement, tax treatment and public filing describe the same event. Differences may be valid, but they should be reconciled through a dated working rather than explained from memory during audit or diligence.

Materiality should determine escalation, not whether the company keeps a record. Repeated small exceptions can show weak master data, unclear authority, system bypass or management override. Root cause and preventive action should therefore be documented separately from the immediate correction.

Tag every working with the legal entity, counterparty residence, transaction date, reporting period and governing law. During the 2026 income-tax transition, the date income arose can be more important than the date a form or payment is submitted.

Cross-border and tax records should reconcile to the general ledger, bank statement, contract, invoice and statutory return. Filing one correct form does not cure a different missing event report, withholding obligation or corporate approval.