Understanding the documents required for KYC processing

India is the world’s sixth largest economy. As India’s middle class grows, so does its demand for imported goods. India’s total imports from the years 2021 to 2022, reported the Ministry of Commerce and Industry, were US$610.22 billion, showing an increase of 54.71% over the last year. These numbers indicate the large number of products imported into the country and hold great potential for entrepreneurs.

However, just like many countries of the world, India also has some strict rules and regulations regarding shipping products into the country and clearing them from customs. One such requirement essential for customs clearance is the documents required for KYC. So what is KYC, and why are KYC documents required for a smooth import clearance process in India? What exactly is the process of submitting KYC documents? We provide the answers to these questions in this article. 

What is KYC?

KYC is the abbreviation of ‘Know Your Customer’. Simply put, it is a mandatory procedure where entities are required to submit documents to verify the identity and address of the receiver. Whether an individual is sending a shipment to India or a company is sending bulk products, KYC documents must be submitted to the logistics carrier. 

India’s KYC regulations were implemented, as part of the Money-Laundering Act (2002) and the prevention of Money-Laundering Rules (2005), to prevent anyone from fraudulently making use export incentives, misusing export promotion schemes, and evading import duties. Therefore, when consignees receive products from abroad, they must submit KYC documents in order for their imports to cleared by Indian customs This is irrespective of the value of those shipments.

KYC documents required for clearing shipments

Since KYC documents should be provided to the customs officials during the import clearance process, the receiver needs to submit them to the logistics carrier before the shipment arrives. If the documents are not submitted at that time, it will not only result in the process of clearance being delayed but can even incur penalties in some cases.

The KYC documents the receiver must submit can be categorised under two groups: proof of identity and proof of address. These are discussed below:

Proof of identity

• Any of the following identification documents, including an Aadhar Card, Voter ID, driver’s license, or passport, must be provided by the recipient.
• The receiver can also submit any document the State or Central government issued bearing the consignee’s photograph.
• Identity cards issued by a college or university affiliated with professional bodies can also be used for this purpose.
• The receiver’s credit or debit card issued by a bank that mentions his name and address can also be submitted.

Proof of address

• If the address is shown there and the one on the shipment match, the proof of identification can also be used as a proof of address.
• However, suppose the address on the KYC document differs from the shipment delivery address. In that case, the receiver provides any of the following records that include the address listed on the shipment: a bank account statement, an electricity bill, an employee identification card, a hotel booking receipt, an LPG connection receipt, or a rent agreement.
• If the receiver is a minor below 18, the following documents need to be submitted as proof of ID and address: Aadhar Card, PAN Card, Birth Certificate, or Passport of the minor. Also, any of the following documents of the parent/guardian must be submitted: Aadhar Card, PAN Card, or Passport.