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SOFTEX Compliance Services

In India, export regulations require exporters to file documents that declare the value of goods when they leave the country, using the Export Declaration Form (formerly known as GR and PP forms). This process oversees and regulates foreign exchange transactions related to the export of physical goods.

Technology companies have been exporting services outside India. However, the Customs department faced challenges in evaluating software exports transmitted via data communication channels as they lacked a physical product. To address this issue, the Indian Ministry of Electronics and Information Technology (MeitY) introduced the concept of SOFTEX forms in 1991 and established the Software Technology Parks of India (STPI). STPI is the administrative authority for software export valuation and certification of SOFTEX forms.

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What is a SOFTEX Form?

According to RBI regulations, any company engaged in IT or ITeS (Information Technology enabled Services) and exporting software over a digital platform must submit a SOFTEX form. IT encompasses a range of activities including software products and services, such as design, development, implementation, deployment, and maintenance. ITeS covers services supported by Information Technology, including BPO (Business Process Outsourcing), KPO (Knowledge Process Outsourcing), and data processing. Failing to report these exports and obtain SOFTEX certification can lead to penalties or violations.

This requirement also applies to firms that are not registered under the STP (Software Technology Parks) or SEZ (Special Economic Zones) schemes, also referred to as non-STP(NSTP) units.

The SOFTEX compliance have been recently introduced in India and not many companies are well-versed with the requirement and the compliance.

AKM Global has been offering comprehensive services and proactive solutions to companies that need to declare exports using the SOFTEX form. We act as the one-stop-shop for all compliance requirements related to STPI regulations for our clients. For recurring compliances, we follow an extensive checklist to ensure thorough review and submission of the applications. We also specialize in matters related to rectifications/cancellations and condonations of past incorrect applications.

Our services include:

1. STP/NSTP Registrations

Assisting into the submission of the application along with the supporting documents. A nominal fee is payable along with the application. Documents to be uploaded are enlisted below:

  • Memorandum of Association / MOA
  • Article of Association / AOA
  • Import Export Code / IEC
  • Permanent Account Number / PAN
  • Lease Deed, GST certificate, Company Profile, Director Profile, etc.

2. Monthly Performance Report (MPR)/Quarterly Performance Report (QPR)

MPR tracks the export certification target of the STP/NSTP units on a monthly basis. It can be filed with zero export value unlike the SOFTEX application. Registered entities must report monthly investments, exports and changes in employment count.

3. SOFTEX Filings

  • The procedure for filing the SOFTEX Form is divided into three main steps:
    • Generation of SOFTEX Number
      Generate SOFTEX Form under single/bulk category on the RBI website under 'Foreign Exchange Management Act Forms'. Download the form for uploading on the STPI portal with the SOFTEX application.
    • Online Filing of SOFTEX Form
      After generating the SOFTEX number, complete the online SOFTEX Form available on the STPI website. The form must be submitted within 30 days of the invoice date or from the date of the last invoice issued in the month.
    • Submission of SOFTEX Form for Certification
      Download a copy of the completed SOFTEX Form. Digitally sign the downloaded form and submit it to the STPI officer for certification.
  • STP and NSTP units are mandated to report the export invoices within 30 days from invoice date or last invoice of the month. Export certification should be accompanied with RBI letter and copy of the internet/datacom bill for the respective period.

4. Annual Performance Report (APR) Certifications

  • Entities liable to report the monthly exports must file the APR with the STPI authority by 30th June after end of the reporting period (Financial Year).
  • APR is a CA certified form and should match the certified exports reported in SOFTEX.

5. Assistance in Amendment/Cancellations/Condonation advisory

  • Many times, a filed application needs revision due to changes. Such applications are available for revision upon request to the respective STPI authority.
  • Condonation period for monthly and annual compliance vary for each STPI centre. However, generally accepted period as per the RBI guidelines is 30 days from the date of invoice.
  • Cancellation of the approved SOFTEX application is possible till the time AD Bank has not authorised SOFTEX number on the EDPMS portal.

FAQs

Any company/partnership firm/proprietorship which is into development of Export oriented Computer Software/IT Enabled Services can register itself as Non-STP unit under STPI to avail SOFTEX certification. To become a Non-STP unit under STPI, the company has to get register itself with STPI on submission of application form along with the supporting documents, to the jurisdictional Director, STPI along with applicable processing fee of Rs.1000/- (one thousand only) + taxes as applicable in the form of demand draft in favour of the Director STPI.

Yes, operations as Non-STP unit can be carried out from any location in the country. However, registration must be made with the respective jurisdictional STPI Centre.

As per the prevailing RBI Master Circular No. RBI/2013-14/14 dated 1st July 2013, RBI Circular No.80 dated 15th February 2012, RBI Circular No.43 dated 13th September 2013, “any company who does IT/ITES exports through Data communication links needs to submit the SOFTEX to Designated Authority for certification.”

A common monthly SOFTEX in the form of summary sheet as prescribed by RBI can be filed for all invoices raised in a month. The SOFTEX is required to be filed within 30 days from the date of last invoice raised in that month.

Service charges for Non-STP units will be determined based on the value of the contracts registered. The Service charges slabs for different export values as per the STPI guidelines.