How AD Code Impacts the Timely Settlement of Export Proceeds?

For Indian exporters who deal internationally, their primary requirement is to obtain verification from the authorities. In India, AD code registration is prioritized to deal with global markets. Through the authorized dealer submission, the exporters are eligible to receive the foreign remittances. But have you ever discovered how the AD code helps in timely export proceeds settlement? Let’s dive into this guide to know how the 14-digit authorized dealer code is linked to export payment. Explore more in the next section.

1. The Role of AD Code Registration for Export Transaction

To make the export transactions smooth and compliant, the Reserve Bank of India and FEMA mandate the compulsory AD code registration for export. This comprehensive registration route is vital to enable customs clearance, ensure compliance, and facilitate a smooth payment flow. On the other hand, the AD Code is furnished by the bank with a 14-digit code. The linking the business’s bank account to export transactions via EDPMS, the code manages the foreign exchange flow. The entire process is automated and presents a lighter paperwork burden for both the exporters and the officials from the authorities. 

2. Why is the AD Code important for Export Payment Settlement?

For the smooth and transparent export payment settlement, the exporters use the 14-digit authorized dealer code. The key reasons for AD code importance are:

• Facilitates Customs Clearance:  For the shipping bill filing, the exporters use the AD code on the ICEGATE portal. While the customs authorities use it to ensure the export legitimacy. They ensure that the goods process meets all laws and regulations.
• Foreign Exchange Tracking: For the bank, the AD code acts as a unique identifier for the exporter. It enables the RBI to manage the foreign currency flow. 
• Claim Incentives and Refunds: As being the legitimate and connected to a right bank account, the exporters can get access to claim the government benefits. The amount listed on the AD code is credited directly to the exporter account. 
• Proof and Audit Trail: For the global transactions, the AD code offers the audit trail proof. It is important for the tax authorities, as it serves as proof for them. 

3. Link between AD Code, Shipping Bill, and Bank Realisation Certificate (BRC)

The AD code, shipping bill, and BRC are linked to each other, and each is mandatory. The AD Code reminds one of a link to the exporter’s account with international trade transactions. The shipping bill is used for the customs declaration, and the BRC serves as the payment settlement proof. Here is, in more detail, how the AD code links to the shipping bill and BRC:

Step 1: AD Code Bank Account Registration

The exporters get the AD code letter from the bank, which requires registration on the ICEGATE portal. It is crucial to get the customs clearance at the port. 

Step 2: Shipping Bill Filing

At the time of customs approval, the code is a part of the shipping bill filing, which is the first document to report to customs inspection.

Step 3: Payment and Realization

The designated bank of the exporter receives the foreign currency payment. The bank then scrutinizes the corresponding shipping bill. 

Step 4: Bank Realization Certificate (BRC)

Once the foreign currency is paid, the bank generates an e-BRC digitally. By linking it to the shipping bill, it uploads to the DGFT portal. 

 Step 5: Final Step

The exporter can download their electronically e-BRC certificate from the DGFT portal. With this certificate, they can avail the export incentives and benefits.

4. The Challenges Exporters Face Without AD Code

Not having the valid code can create significant challenges for exporters. Without the AD code registration, the shipment will be blocked by the customs authority and held at the ports. Even the code is also used for shipping bill filing on the electronic portal. But, without it, you will not be eligible to create the shipping invoice to show customs authorities. The other significant challenges exporters might face include being unable to receive foreign currency payments, being unable to access government benefits, financial losses, damage to business reputation, and non-compliance with regulatory laws.

Explore more About: AD Code Registration for Export-Oriented Units

5. Get the AD Code for Foreign Remittances

For the AD code application, you must follow these steps:

Step 1: Contact your authorized dealer bank

You must visit the bank where you hold your current bank account. But without it, you will not. And the only entity able to issue the AD code is your bank; it has to be dealing in foreign exchange and be authorized by the RBI. 

Step 2: Provide the Necessary Documents

For the AD code bank account registration, you need to provide several documents in an accurate format. As stated below, the main documents to provide are the bills.

• IEC (Import-Export Code) certificate copy
• PAN card of the company
• GST registration certificate
• Current account cancelled cheque
• Business registration proof (director/proprietor/partner identification)
• During the process, you will  get the bank certificate on the bank’s letterhead

Step 3: Submit Application

With a formal letter request, complete the specific application form and attach all the necessary documents to it. Before approval of the application, the bank will verify details and all submitted documents. If you are approved, the bank then issues the 14-digit bank code on its letterhead for the AD code. 

Step 4: Register on the ICEGATE Portal

To register the AD code letter with the customs system, you will need to register it first on the ICEGATE portal. Visit the ICEGATE portal official website and navigate to the Foreign remittances section.  Link your current bank account, including the AD code. 

Sum Up | AD Code Registration for Export Proceeds Settlement

In India, the exporters use the AD (Authorized Dealer) code for the timely settlement of export proceeds. The AD code registration for export is a legal requirement, as it is required for smooth customs clearance, facilitates financial transactions, and provides access to the RBI to monitor the flow of foreign currency. This, again, is to verify the legitimacy, transparency, and discovery of an international financial transaction. In other words, the AD code can potentially ease and speed the entire foreign exchange process. Get your important document in a short period. For legal assistance, visit to LegalRaasta.com website.