IEC is a one time harmless document. I do not know if your business or profession needs the document for any purpose during course of your profession. However, it does not harm having one. Even though you have no service tax on your ervice on account of exports, what if an overzealous servie tax officer may deny you exemption on account of not having IEC. Eventually his action will be wrong but our law specifically gives immunity to the government officer even on account of wrong doing. You will be running through inconveniences of appeals. It is absolutely your decision whether you would like to apply for one or not. If any document you file in future requires you to quote IEC number mandatorily, you need one and you cannot justify not having one.

Mr. Simple, you better be careful as you are working for only one client. You qualify to be dependent on him and therefore you have to comply with procedures of arms length remuneration for the work you do for them. There are circulars to this effect in Income Tax for BPOs atleast especially for captive ones. You might land up paying Income Tax at rate for Foreign Companies between arms length price and your price if arms length price is higher than your price by 5%. This will not be your income tax. It will be the income tax that you are deemed responsible for paying on behalf of the principal for whom you are doing work. Better meet your CA and ensure that you structure your business in such a way that you shouldnotbe deemed responisble for the foreigners tx in India. Paying you less than the market rate is the incomeof the foreigner accruing in India. Therefore you take time in the issues that will harmyou at a later date.Not in issues of wasting time on opening an account with just a particular bank or trying to justify not taking an IEC. Eventually these may not harm your business. Your own admission that you are going to work for just one single client as a dependent (you cannot be independent if this is the case) will put you into a lot of difficulties later on. You better consult a professional to help you especially where your business involves complex issues like international business.

I think it is better you take a salary rather than organising a proprietorship and ensure that the work you do does not in even a remote way make any income of the foreigner accrue in India. The worst is you have to pay the income tax on your entire receipt in India. At least no hassles for service tax or audit of accounts and responsibility of taxation of foreigners. Maybe for some months or at least a full financial year you do like this and when you have more than one client you organise a proprietorship.