A Guide to Obtaining an AD Code with ShipGlobal.in

Going global is a dream that every person who owns a business aspires to achieve. Tens of thousands of vendors in India selling everything from jewelry to toys are now able to connect to buyers all over the world because of the Internet and the ability to conduct business electronically.

However, one of the first things that any entrepreneur needs to do in order to export products from India is to get the correct documents for compliance. An AD code (Authorized Dealer Code) is one of the most significant papers necessary for customs clearance.

 

What is an AD Code?

An AD Code is a fourteen-digit code that is provided by the bank with which the exporter holds a business current account. Shared via the official bank letter, this is a routine part of export business.

This code is compulsory for custom clearance and can be obtained when the exporter has secured the IEC number from the DGFT. The AD Code is valid indefinitely, unless there are changes to your bank account, and is essential for customs clearance.

The AD code letter must be kept safely to carry out future export transactions and facilitate seamless customs clearance.

 

 

Why is an AD Code Necessary?

An AD Code or Authorized Dealer Code serves several essential functions in the export process. It is vital for the following reasons:

Customs Clearance: A shipping bill is needed in order to export goods out of India and to ensure smooth customs clearance. The AD Code is essential for preparing a shipping bill on ICEGATE or the Indian Customs Electronic Gateway. With the help of AD Code, a shipping bill can be created, and without it, the exportation process will be an issue.

Government Benefits: Take advantage of the government benefits or financial assistance offered to exporters, including incentives, subsidies, GST refunds, or others. If your business is entitled to any government concessions, the AD Code allows you to quickly avail these benefits with the streamlined process while eliminating the need for manual paperwork.

Compliance: The AD Code makes certain that your export activities do not violate the laws of India and other regulations governing foreign commerce, thus making customs formalities less of a problem.

 

How to Obtain an AD Code?

To obtain an AD Code, the first thing that you need to do is to open a current account with a bank that is approved by the Reserve Bank of India to carry out operations in foreign exchange.

These banks are referred to as Authorized Dealers (AD). When your business account is created, you will be able to apply for an AD Code from the respective bank. It can be done through several working documents, which are required to go through verifications and approvals.

After obtaining the AD Code (via the bank’s authorisation letter), you are required to register the same with customs. With the growing digitalization, the registration process has become entirely digital and contactless. It should be completed on the Indian Customs website, Icegate.

 

Documents Required for AD Code Registration

You are required to submit several necessary documents while registering for an AD Code. These include:

Bank Certificate (in accordance with Customs Public Notice No. 93/2020 dated 29 July, 2020) – Obtain this certificate from the bank and make sure that it follows the format described in the customs public notice.

Company PAN Card (along with seal and signature) – Submit a duly stamped and signed copy of the PAN (Permanent Account Number) Card of the company.

IEC Certificate (along with seal and signature) – The submission of IEC (Import Export Code) Certificate with the company’s seal and signature is an important step since the code serves as a unique identification number for importers and exporters.

GST Certificate (along with seal and signature) – Submit a copy of the GST (Goods and Services Tax) Certificate along with the company’s seal and signature. The certificate must be issued by the appropriate authority.

Cancelled Cheque (issued in the name of the company) – Provide a cancelled cheque bearing the name and account details of the company. The company’s bank account linked with the AD Code registration gets verified as a result, establishing the authenticity of the account.

Class 3 DSC (Digital Signature Certificate) – Obtain a Class 3 Digital Signature Certificate (DSC) from a licensed authority to validate the authenticity of the online submission process and ensure improved security. This is mostly done for providing electronic submissions of forms or documents to the government agencies.

 

Relationship Between AD Code and IEC Code

While understanding the cross-border trade facilitation in India cannot be comprehended without the understanding of a number of codes, the AD Code (Authorized Dealer Code) and IEC Code (Import Export Code) are particularly crucial regulatory standards. Though they have separate functions, they are correlated and function concurrently to make export and import easier.

The IEC Code is the basic code that any business striving to venture into the international markets should meet. They are provided by the Directorate General of Foreign Trade (DGFT) and act as an identification number for exporters and importers. IEC is a legal requirement for export and import businesses since an IEC authorization allows a business to undertake export and import activities legally.

The AD Code, however, is to be acquired from an authorized dealer bank and is necessary for the clearance of goods through customs at the major ports in India. It connects exporters with banks by facilitating the foreign exchange remittances of exported proceeds and is in consonance with the guidelines framed by the RBI.

Any person who seeks an AD Code should first obtain an IEC Code. Combined, these codes ensure legal compliance and best practice standards in global trade.

An IEC coupled with AD Code further opens doors to global opportunities for Indian businesses and companies.

 

Conclusion

In India, it is not possible to export without an AD Code since it has a significant role to play in facilitating smooth customs clearance of  goods. Anyone who acquires an Authorized Dealer (AD) Code gets to enjoy streamlined cross-country commerce.

Moreover, an AD Code registration with customs offers significant benefits to exporters like you. You can avail the various benefits offered by the government, including duty rebates, GST refunds, and others only after you have successfully registered it with customs.

 

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