Key takeaways
- Most Indian freelancers exporting services do not need an IEC code, your PAN, clean invoices, RBI purpose codes, and e-FIRA handle compliance.
- IEC is mandatory only if you claim DGFT incentives, join export councils, export physical goods, or a client requires it.
- Banks settle SWIFT, ACH, SEPA remittances using PAN and purpose codes, not IEC, so you can receive payments smoothly.
- For zero-rated GST on service exports, use LUT, maintain SAC codes, and keep e-FIRA and contracts for audits.
- If needed, IEC can be obtained via the DGFT portal within 1–2 working days, then confirmed annually.
- Platforms like Karbon Business automate e-FIRA, settle quickly, and cut fees, saving time on compliance.
What Is an IEC Code and How It Differs From PAN, GST, and Bank Docs
An IEC is a 10-digit identifier issued by DGFT for foreign trade. Historically mandatory for all import-export activity, today the framework distinguishes between goods and services: IEC is mandatory for goods, optional for pure service exports unless you claim government benefits.
PAN is your tax identity and is always required, it ties every export receipt to you. GST applies only after crossing turnover thresholds, exports are zero-rated under LUT. IEC unlocks DGFT incentives and export council memberships, mandatory for goods or when a client demands it. e-FIRA is your bank’s proof that foreign currency proceeds were received, critical for compliance.
The key distinction: banks and payment processors settle service-export remittances via PAN and RBI purpose codes, not IEC. When you ship no goods, your PAN effectively serves as the identifier for service-only exports.
Example: A designer in India billing a client in London gets paid via SWIFT or PayPal, the bank tags the receipt with P0802 (IT/computer services) and issues e-FIRA. IEC is not part of settlement for such service transactions.
Do You Need an IEC for Export of Services? Decision Tree
You Do NOT Need IEC When
- You export services only (software development, design, consulting, writing, tutoring), and receive via bank transfer, PayPal, or OPGSPs.
- You’re not claiming DGFT benefits like SEIS or similar schemes.
- No client mandates it in onboarding or procurement.
What you do need instead
- PAN linked to bank and payment accounts.
- Invoices stating “Export of Services,” overseas buyer details, currency, and service description.
- RBI purpose codes on each transaction, e.g., P0802 (IT), P0803 (consulting), P0805 (engineering).
- e-FIRA within 24–48 hours of receipt to prove export proceeds.
- GST + LUT if registered, to claim zero rating without paying IGST upfront.
You SHOULD Get IEC When
- Claiming DGFT incentives under the Foreign Trade Policy.
- Registering with EPC/SEPC where IEC is a membership prerequisite.
- Exporting both services and goods (training kits, merchandise, hardware samples).
- A large client requires IEC in compliance checklists.
- Supplying specified/sensitive services under trade restrictions.
Real-World Freelancer Scenarios
Scenario 1: Bengaluru UI/UX freelancer billing a US startup via ACH
Priya invoices $3,000 monthly for design services and gets ACH credits to her Indian bank account. Status: No IEC needed. PAN + e-FIRA + correct purpose code (P0802) keep her compliant.
Scenario 2: Pune consulting boutique aiming for SEPC membership
Rahul wants SEPC membership and DGFT-linked benefits. Status: IEC required to join councils and access incentives.
Scenario 3: Delhi marketing studio selling training (services) and course kits (goods) overseas
Neha ships printed materials and merchandise with online training. Status: IEC required because goods are exported alongside services.
IEC for Freelancers: What Your Bank Actually Asks For
- PAN linked to your account.
- Export invoice with overseas buyer details and “Export of Services.”
- RBI purpose code on every receipt (P0802, P0803, P0805, P0806, P0809, P0811, etc.).
- GST certificate/LUT if registered.
- Contract or SOW proving scope and client location.
- e-FIRA issued post receipt.
Invoice best practices for service exports without IEC
- Use SAC codes, not HSN.
- Mention “Place of Supply: Outside India”.
- Reference PAN prominently.
- State “Export of Services” clearly.
- Retain records for seven years.
Answering clients who ask “Do you have an IEC?”
Explain: “We are a pure service exporter, we comply via PAN, RBI purpose codes, GST/LUT, and bank e-FIRA. IEC isn’t required unless we claim DGFT benefits or join export councils.” Most enterprises accept this, and if they insist, apply and obtain IEC via the DGFT portal within 1–2 working days.
The DGFT IEC Process: Step-by-Step
Prerequisites
- PAN (individual or entity).
- Aadhaar linked to mobile and email for OTP.
- Bank account details (account number, IFSC).
- Entity address with proof.
- Basic business information.
Application Steps
- Create an account on the DGFT IEC Profile Management portal using PAN + Aadhaar-linked mobile.
- Fill the IEC form with entity type, PAN, addresses, bank details, and business description.
- Upload/verify documents: PAN, ID (Aadhaar/passport), address proof, photograph.
- Verify via OTP to confirm contact details.
- Pay fee (typically under ₹500) online.
- Submit and track using the application reference number.
- Download IEC once approved, usually same day or within 1–2 working days.
Post-Approval: Annual Confirmation
Confirm or update IEC annually, or it may be deactivated. Set a reminder to log into the DGFT portal and click “Confirm IEC,” update details if needed, and avoid reactivation delays.
Compliance Essentials for Service Exporters Without IEC
Bank documentation
Request and retain e-FIRA for every foreign payment, essential for GST refunds and tax audits. With Karbon Business, e-FIRA generation is automated within 24–48 hours, so you don’t chase your bank.
RBI purpose codes
Tag each receipt correctly:
- P0802: Computer and information services.
- P0803: Business and management consulting.
- P0805: Architectural and engineering.
- P0806: Maintenance and repair.
- P0809: Research and development.
- P0811: Advertising and market research.
Incorrect codes can trigger bank/RBI queries, so double check before booking receipts.
GST and LUT
If GST registered, file LUT annually to claim zero rating on service exports, avoid upfront IGST, and keep input tax credits intact. LUT is separate from IEC.
Recordkeeping for tax and FEMA
- Signed contracts or SOWs with overseas clients.
- Export invoices with SAC codes and PAN reference.
- Bank statements matching inward remittances.
- e-FIRA for every foreign receipt.
- GST returns and reconciliations.
Maintain these for seven years to stay audit-ready.
Streamlining International Payments for Service Exporters
Choose a platform that reduces fees, speeds settlement, and automates compliance:
- Karbon Business: Local USD/GBP/EUR/CAD accounts, INR settlement in 24–48 hours, automated e-FIRA, flat 1% fee with zero FX markup, currency holding up to 60 days.
- Wise Business: Multi-currency accounts with transparent FX.
- Payoneer: Receiving accounts and marketplace integrations.
- PayPal: Broad client acceptance, higher fees in some cases.
- Razorpay X International: Collection solutions for Indian businesses.
- Tazapay: B2B cross-border payments with escrow.
Compare fees, settlement timelines, and features like automated e-FIRA and WhatsApp tracking to fit your workflow.
Wrap-Up and Next Steps
If you export services only and don’t claim DGFT benefits, keep invoices clean with SAC codes, PAN references, RBI purpose codes, and collect e-FIRA promptly. Platforms such as Karbon Business automate e-FIRA and settle fast, freeing you from IEC overhead.
If you do need IEC—goods exports, DGFT claims, or council membership—apply via the DGFT portal, then confirm it annually.
Handy checklist to keep
- Visit the DGFT portal for IEC application, status, and annual confirmation.
- Explore SEPC membership if you plan to use DGFT-linked incentives.
- Review LUT steps on the GST portal for zero-rated exports.
- Store PAN, latest e-FIRA, and export invoices securely for seven years.
- Maintain a compliance calendar for IEC confirmation, LUT renewal, and GST filings.
FAQ
Do freelancers in India need IEC to receive international payments for services?
No, if you export services only (design, coding, content, consulting) you can receive SWIFT, ACH, or SEPA payments with PAN, clean invoices, correct RBI purpose codes, and e-FIRA. IEC is needed only for DGFT incentives, export councils, goods exports, or specific client mandates.
Is IEC compulsory for PayPal, Payoneer, or Wise Business receipts into my Indian bank?
No, these platforms settle service-export receipts using PAN and RBI purpose codes. Ensure your invoice says “Export of Services” and request e-FIRA from your bank or the platform, IEC is not required for settlement.
What documents do banks ask for when I don’t have IEC?
Banks typically request PAN, export invoice, the correct RBI purpose code, contract/SOW, GST certificate/LUT if registered, and e-FIRA post receipt. This bundle satisfies audit and FEMA needs for service exports.
My enterprise client is asking for IEC in vendor onboarding, what should I do?
Explain that as a pure service exporter you comply via PAN, purpose codes, GST/LUT, and e-FIRA. If they still insist, apply for IEC on the DGFT portal and share the number in 1–2 working days, meanwhile continue invoicing under PAN.
Will IEC help with PayPal disputes or chargebacks?
No, IEC is a regulatory identifier, not dispute protection. Disputes are handled by the payment platform’s policies and your customer communication. Keep strong SOWs, delivery proofs, and milestone approvals to minimize chargebacks.
I’m under the GST threshold, do I still need LUT for export of services?
If you are not registered under GST, LUT doesn’t apply. If you are GST registered, file LUT annually to claim zero rating on exports and avoid paying IGST, this is separate from IEC requirements.
Which RBI purpose code should I use for app development invoices?
Use P0802 for computer and information services, it covers software development, web/app design, and IT support, make sure the bank tags receipts with this code and that your invoice clearly states “Export of Services.”
Can I get e-FIRA without an IEC number?
Yes, e-FIRA is issued for foreign inward remittances regardless of IEC, it proves receipt of export proceeds. With Karbon Business, e-FIRA is automated within 24–48 hours, which simplifies compliance for freelancers.
Is IEC needed if I sell online training plus ship physical course kits abroad?
Yes, once physical goods are exported, IEC becomes mandatory. Apply before your first shipment to avoid customs issues, you can still invoice training as services but the goods leg triggers IEC.
How fast can I get IEC if a client asks at the last minute?
IEC approval usually takes 1–2 working days via the DGFT portal. Prepare PAN, Aadhaar, address proof, bank details, and a photograph in advance to speed up the process, then confirm annually to keep it active.
Does IEC replace PAN or GST for freelancers?
No, they serve different purposes: PAN tracks your income, GST tracks tax, IEC tracks foreign trade. You may need all three depending on activity, but for service-only exports, PAN plus invoicing and e-FIRA are generally sufficient.
Will my payments get blocked if my IEC is deactivated?
Service-export payments typically continue based on PAN and purpose codes. However, deactivation can block access to DGFT incentives or council services. Reactivate quickly on the DGFT portal to avoid future issues and keep benefits accessible.
What’s the easiest way to manage international payments and e-FIRA as a freelancer?
Use a platform built for Indian service exporters, for example Karbon Business offers local currency accounts, INR settlement in 24–48 hours, automated e-FIRA, and flat transparent pricing. This reduces compliance friction and saves fees compared to ad-hoc banking.
If I start claiming DGFT incentives later, can I apply for IEC at that time?
Yes, IEC can be obtained when you need it. Past service receipts under PAN remain valid, once IEC is issued you can use it for incentives, export council memberships, and any client compliance forms going forward.
Do Upwork or Fiverr withdrawals require IEC to land in India?
No, for service-only exports, withdrawals via Payoneer, Wise, or direct bank transfers are processed on PAN and purpose codes. Keep invoices and collect e-FIRA; IEC is unnecessary unless you seek DGFT benefits or export goods.
