Software Technology Parks of India is a Software and technology autonomous society under Ministry of Electronics and Information Technology. STPI was established in 1991 with the objective of encouraging, promoting and boosting the export of software from India.
Exporting goods goes through customs. However when software is being exported, it goes through internet or media. To track such exports, RBI established the submission of software export forms (SOFTEX). Similar to customs, STPI is the administrative authority kept in place to oversee the software exports in India.
STPI VS NON STPI UNITS
BENEFITS OF STPI REGISTRATION
- No import/Customs duty.
- The unit can acquire 100% FDI without any prior approval from the Reserve Bank or Govt. of India. (Automatic route). Hence, 100% foreign equity is permitted.
- An STP unit may be set up anywhere in India.
- All the imports of Hardware & Software in the STP units are duty free, import of second-hand capital goods are also permitted.
- Re-export of capital goods is also permitted.
- Sales in the Domestic Tariff Area (DTA) are permissible. In addition, the capital goods purchased from the DTA are entitled for refund of GST.
- For the capital invested by foreign entrepreneurs, know-how Fees, royalty, dividend etc., can be freely repatriated after payment of Income Taxes due on them, if any
- 100 Percent Depreciation on computers and computer peripherals over a period of five years.
NON-STPI UNITS : Any company involved in export of software outside India is eligible to obtain a NON STPI registration.
Registering as a NON-STPI unit would also have other forms of added benefits such as govt. incentives related to software exports
Ensures adequate compliance with law.
CHARGES FOR CERTIFICATION OF SOFTEX BY STPI
REPORTING REQUIREMENTS
- Monthly Progress Report (MPR): within 7th of the next month
- Quarterly Progress Report (QPR): within 10th of the month succeeding the quarter.
- Annual Progress Report : Within 30th June of every year.
- SOFTEX : within 30 days from date of last invoice raised in that month.
PENALTY FOR NON FIILING OF SOFTEX :
1. As an STPI registered unit, the member unit is required to pay Advance Service Charges each year but in the event of non-certification of submitted Softex (due to non-submission of required details), STPI shall retain 20% of the Service Charges deposited for that .
2. Remittance received from parent company will be treated as general service and not as an export proceed. This adversely affects the company, as they cannot claim that they have previous export performance in participation in tenders.
3. Exporters are allowed to export goods or services without payment of GST by filing a Letter of Undertaking. This might cause a problem when the RBI database eventually gets linked with GST database.
At PKC, we understand the challenges business face in navigating the complex landscape of STPI compliance. Ensuring accurate and timely STPI reports is not only essential for regulatory adherence but also crucial in avoiding penalties that may adversely impact your financial health. We are here to offer our expertise and support to streamline your STPI filing process and safeguard your business from unnecessary penalties.
Author
Abhi Ananth S
