AD Code Registration - An Overview

Unlock Global Trade: Your Guide to AD Code Registration in India

Venturing into international trade opens up a world of opportunities, but it also comes with essential regulatory requirements. One of the cornerstones for seamless import and export operations in India is the Authorized Dealer (AD) Code. At Trustra.in, we understand the complexities involved and are here to simplify the process for you.

This post will walk you through everything you need to know about AD Code Registration, why it's crucial, and how Trustra.in can assist you every step of the way.

What is an AD Code?

An AD, or Authorised Dealer, Code is a 14-digit code issued by a bank that is authorised to deal in foreign currency. It is a mandatory requirement for all export and import transactions involving foreign currency. The primary purpose of the AD Code is to ensure that these foreign currency transactions are legitimate and not used for illegal activities like money laundering or the illegal outflow of foreign exchange.

Benefits of AD Code Registration

Registering for an AD Code offers several significant advantages for your international trade business:

• Ease of Making and Receiving Foreign Currency Payments: The AD Code verifies your identity and the transaction's authenticity, streamlining foreign currency payments and receipts, saving you time and hassle.
• Faster Customs Clearance: The AD Code helps customs authorities quickly identify your shipments and ensure compliance with necessary regulations, leading to quicker clearance of goods.
• Access to Government Incentives and Schemes: An AD Code signifies that you are a legitimate business engaged in genuine trade, making you eligible for various government incentives and schemes designed to promote exports.
• Reduced Risk of Penalties and Fines: Proper AD Code registration ensures compliance with the Foreign Exchange Management Act (FEMA) and other regulations, helping you avoid potential penalties and fines.

Eligibility for AD Code Registration

To be eligible to apply for AD Code registration, your entity must meet the following criteria:

• Must be registered with the Directorate General of Foreign Trade (DGFT) and possess a valid Import Export Code (IEC).
• Must have a current account with a bank specifically authorised by the Reserve Bank of India (RBI) to deal in foreign currency.
• Must be able to provide all the required documents to the bank and customs authorities.

Documents Required for AD Code Registration

The exact list of documents may vary slightly depending on the bank and the type of entity, but here are the most commonly required documents:

Applying for an AD Code: A Step-by-Step Guide

The process of obtaining and registering your AD Code involves two key steps:

1. Apply for AD Code through your Bank:

• Visit your Bank Branch: Go to the branch where you hold your business's current account dealing in foreign currency.
• Submit an Application Letter: Submit a formal request to your bank manager for the issuance of an AD Code for your business. Your bank may have a specific format for this letter. Ensure you include essential details like your IEC number, GST registration number, and the names of the ports where you intend to register the AD Code.
• Provide Supporting Documents: Submit the required documents as requested by the bank (refer to the table above).
• Pay Applicable Fees: Be prepared to pay any processing fees charged by the bank for issuing the AD Code letter.

2. Register your AD Code on ICEGATE:

• Access the ICEGATE Portal: Go to the official Indian Customs Electronic Gateway (ICEGATE) portal.
• Login/Sign Up: Sign up if you are a new user or log in with your existing credentials.
• Navigate to e-Sanchit: Under 'Filing Services', select 'e-Sanchit'.
• Upload Documents & Generate References: Upload scanned copies of your supporting documents (like the AD Code letter from the bank, GST certificate, cancelled cheque). The system will generate a Document Reference Number (DRN) and Invoice Reference Number (IRN).
• Go to Financial Services: Return to the main ICEGATE page and select 'Financial Services'.
• Select Bank Account Management > AD Code Registration: Choose these options from the menu.
• Fill the Registration Form: Accurately fill in all the required details in the AD Code registration form, including your AD code, bank account details, and the specific port locations where you want to register the code.
• Submit the Form: Review all the entered information carefully and submit your application.

Important Note: Currently, there is no fully online facility to obtain the initial AD Code letter from your bank. This step must be done in person at your bank branch. The ICEGATE registration is the online part of the process, allowing you to link your AD Code to specific customs locations.

List of Ports / ICDs for AD Code Registration

AD Code registration is required for all ports and Inland Container Depots (ICDs) through which you conduct import or export activities. You need to register your AD Code at each specific location. While the list is extensive, some of the major ports and ICDs include:

• Chennai Port
• Cochin Port
• Kolkata Port
• Mumbai Port
• New Delhi Air Cargo Complex
• Kandla Port
• Visakhapatnam Port
• Haldia Port
• Paradip Port
• Mangalore Port
• Tuticorin Port
• ACC Coimbatore Sriperumbudur ICD
• Agra ICD
• Ahmedabad ACC
• Bangalore ACC
• Bangalore ICD (Whitefield)
• Jawaharlal Nehru Port Trust (JNPT), Mumbai

You can find a comprehensive list and verify specific locations on the ICEGATE portal or by consulting with customs brokers.

Verifying Your ICEGATE Registration

You can verify your ICEGATE registration details through the portal:

1. Checking Your User Details (PAN based):

• Go to the ICEGATE page for User Details against PAN.
• Enter your PAN number and click 'Reload'.
• If registered, your details like User ID, Role, Registration Date, and Registered Filing Service will be displayed.

2. Checking Your IE Code Status:

• Go to the ICEGATE IE Code Status Enquiry page.
• Select the appropriate option from the dropdown ('DGFT Headquarter' or 'Various Offices of DGFT...').
• Enter your IE Code and click 'IE Code @ DGFT'.
• If valid, details like the issuing office, date, and validity will be shown.

Why is AD Code Registration Required?

AD Code registration is mandated under the Foreign Exchange Management Act (FEMA) and serves several critical purposes:

• Preventing Illegal Foreign Exchange Outflow: It allows authorities to track foreign currency transactions and identify suspicious activities that could be linked to illegal outflows or terrorist financing.
• Ensuring Genuine Trade Purposes: By linking transactions to businesses with an AD Code, it helps confirm that foreign currency is used for legitimate import/export activities.
• Facilitating Customs Processes: It's a mandatory requirement for generating shipping bills, which are essential for customs clearance.
• Eligibility for Government Benefits: It's often a prerequisite for availing various export promotion schemes and incentives.

Consequences of Not Registering for an AD Code

Failing to register for an AD Code can lead to severe disruptions and penalties for your business:

• Inability to Make or Receive Foreign Currency Payments: This will directly impact your ability to pay suppliers or receive payments from customers overseas.
• Inability to Clear Goods from Customs: Without a registered AD Code at the port of export, you cannot generate a shipping bill, preventing your goods from being shipped.
• Ineligibility for Government Benefits: You will miss out on crucial export incentives and schemes.
• Potential Penalties and Fines: Non-compliance with FEMA regulations can result in significant financial penalties and legal action.

Did You Know?

• Penalties for non-compliance with FEMA can be substantial, potentially running into millions of rupees.
• Engaging in foreign currency transactions without a registered AD Code could also lead to prosecution under the Prevention of Money Laundering Act (PMLA), which carries severe penalties, including imprisonment.

Why Trustra.in for Your AD Code Registration?

At Trustra.in, we understand that navigating the complexities of AD Code registration can be challenging. We are committed to providing comprehensive support to simplify this essential process for your business.

Here's how Trustra.in can assist you:

• Talk to an Expert: Get guidance from our experienced professionals who can answer your questions and clarify the process.
• Submit Your Documents: We help you ensure all your required documents are ready, organized, and correctly formatted for submission.
• Application Process: We assist in the filing and processing of your application with the relevant authorities, keeping you informed of the status throughout.

Our aim is to make your AD Code registration efficient and hassle-free, allowing you to focus on growing your international business.