Accounting and Audit News

In an import export business, there are risks and rewards of being part of the international trade. The Indian regulatory authorities have implemented measures for closely monitoring the import-export business. The government has stepped in to offer some incentives and benefits specifically to encourage importers/exporters to keep dealing with the global trade challenges. 

The most important compliance to be undertaken in the import export business is to go through the IEC registration process & obtaining LUT (Letter of Undertaking) in case exporters are to ship goods and services without payment of GST. 

Note: IEC & LUT both are required to be renewed annually.

Additionally, the Government has established automated database for data collection on imports and exports. The Export Data Processing and Monitoring System (EDPMS) is a digital platform that has been implemented to track, manage, and process data related to the export trade whereas the Import Data Processing and Monitoring System (IDPMS) is the platform for import trades and businesses. We can leverage the IDPMS/EPDMS facility to ensure compliance and facilitate smoother operation of the import-export business.

2. Compliance: Since EDPMS keeps tabs on export transactions you can ensure that there is compliance with international trade regulations, managing export quotas, issuance of licenses, and adhering to restrictions. 

3. Integrates with other systems: The EDPMS will interface with other related systems like the banking, customs, and other logistics to facilitate information flow to ensure that all the stakeholders in the process are updated. 

4. Analytics: Exporters and other authorities will be able to access export data in real-time to make better decisions. We can leverage va​rious reports like performance, compliance, and trend analytics to track export-related activities.

5. Manage risks: Export like any other trade has a lot of risks associated with it. In fact, export poses more risks, and the export data processing and monitoring system (EDPMS) will help mitigate risks in the export process. It puts compliance checks in place to deal with international sanctions and regulations.

In IDPMS, ORM (Outward Remittance Monitoring) helps track & manage payments that businesses make to foreign suppliers for imports.  It monitors the payment process from start to finish, making sure all documents and rules are followed.

2. Role of AD: Authorized Dealer (AD) banks report the import transactions using the IDPMS system to enable tracking.

3. Tracking by system: The system then tracks to see if the goods, as per the records, have been received by the importer within the correct period.

4. Preventing Fraud: By checking import data, RBI can spot unusual or suspicious transactions. For example, if a payment is unusually high or doesn’t match the goods received, RBI can investigate for potential fraud.

5. Managing Foreign Currency: It helps the RBI ensure there is enough foreign currency available for paying for imports. For example, if a company imports raw materials, RBI needs to make sure there are sufficient foreign reserves to cover these payments.​