PRAKASH K PRAKASH is among the prominent STPI Consultants in Delhi specializing in STPI Registration. We offer excellent Consultancy for Software Technology Park scheme and can provide expert assistance in all related matters. From detailing the benefits of the STP scheme to highlighting the statutory compliances which a software company has to adhere to – We can offer our professional expertise in all aspects. The dedicated team will acquaint you with all the procedures and legalities involved in STPI Registration.
Policy and Benefits
Software Technology Park [STP] Scheme is a 100% export oriented scheme for undertaking software development for export using data communication links or in the form of physical media including export of professional services.
The society was set up to contribute to the prosperity of the national economy through promotion of exports from the Software & services Industry by facilitating all the statutory services of the Govt.Strengthening the Communication Infrastructure and by increasing the quality consciousness in the Industry.
The Benefits under the STP Scheme
- Approvals are given under single window clearance mechanism.
- An STP project may be set up any where in India.
- Jurisdictional Directors have the powers to approve import of capital goods (net of taxes) not more than US$ 20 million.
- 100% Foreign equity is permitted.
- All the imports of Hardware & Software in the STP units are completely duty free, import of second hand capital goods also permitted.
- Re-Export of capital goods are permitted.
- Simplified Minimum Export Performance norms i.e. (STP scheme)
- Implified Minimum Export Performance norms i.e. (EHTP scheme)
- Domestic purchases by STP unit are eligible for the benefit of deemed exports to the equipment suppliers.
- Use of computer system for commercial training purpose is permissible subject to the condition that no computer terminals are installed outside the STP premises.
- The sales in the Domestic Tariff Area [DTA] shall be permissible upto 50% of the export in value terms.
- STP units are exempted from payment of corporate income tax for a block of 10 years
- The capital goods purchased from the Domestic Tariff Area [DTA] are entitled for the benefits like levy of Excise Duty & Reimbursement of Central Sales Tax [CST].
- Capital invested by Foreign Entrepreneurs Know - How Fees, Royalty, Dividend etc. can freely be repatriated after payment of Income Taxes due on them if any.
- Depreciation on Capital Goods above 90% over a period of five years and also the accelerated rate of 7% per quarter during the first two years subject to an overall limit of 70% in the first three years.
- Call center permitted under the STPI scheme.
- All Services as listed in appx.54 of hand book of procedures (EXIM) are eligible for facility of STP scheme
- Service providers eligible for recognition as 'Service Export House', 'International Service Export House' or 'International Star service House'.
- Exempted from Service Tax levy.
Statutory Complaince for STP Units
Important statutory compliance for STP units are listed below as reference
Accounts :
Each of such unit is required to maintain separate accounts for its operations. Separate annual balance sheet will have to be made for each such unit which would be become a part of the main balance sheet of the company. For maintaining separate accounts the following will have to be done :
- Maintenance of Separate Cash & Bank book and corresponding vouchers.
- Maintenance of sales invoices.
- Maintenance of Fixed Assets register.
- Maintenance of Foreign Inward Remittance Certificate file (FIRC's) & Bank Realisation Certificate file where the original of the FIRC's and BRCs are kept.
- Maintenance of contract file, where copies of contracts received from buyers are maintained.
- Preparation of yearly balance sheet for the unit which would ultimately become a part of the balance sheet of the company.
Banking :
Each unit is required to maintain separate bank accounts for its operations. The units is free to have as many bank accounts as it desires but shall have to designate a single branch of bank whom all export documents will be submitted. In other words the work of handling of all shipping documents and realisation of export proceeds will have to be entrusted to this designated bank branch.
Salient Features of STP Scheme
- Approvals are given under single window clearance mechanism.
- Projects costing upto Rs.100 millions with Indian investment & NRI funds on non-repatriable basis are cleared by local STP authorities at Centre level itself.
- 100% foreign equity is permitted.
- All the imports in the STP units are completely duty free.
- Import of Goods on loan, Free of cost & lease basis is permitted.
- Re-export of capital goods brought on loan/lease/free of cost is permitted.
- Domestic purchases are completely excise duty free.
- Domestic purchases are eligible for the benefit of deemed exports to the suppliers.
- The sales in the Domestic Tariff Area (DTA) are permissible upto 50% of the export in value terms.
- STP units are exempted from corporate income tax.
- Net Foreign Exchange Earning as a percentage of exports (NFEP) and minimum export performance (EP) would be as follows.
NFEP shall be calculated annually and cumulatively for a period of five years from the commencement of commercial production according to the following formula:
NFEP = ((A - B)/A)*100
Where NFEP is Net Foreign Exchange Earning as a Percentage of Export
A is the FOB value of exports by the STP unit
B is the sum total of the CIF value of all imported inputs
The CIF value of all imported capital goods and the value of all payments made in foreign exchange by way of commission, Royalty, Fees, Dividends, Interest on external borrowings during the first five year period or any other charges. "Inputs mean raw materials, Intermediates, components, Consumables, Parts and packing materials".
NOTE :-
- If any input is obtained from another EOU/EPZ/EHTP/STP unit, The value of such input shall be included under B.
- If any capital goods imported duty free is leased from a leasing company, Received free of cost and/or on loan basis, The CIF value of the capital goods shall be included, Pro-data, Under B for the period it remains under bond.
- For annual calculation of net foreign exchange as a percentage of exports, 1/5th value of the imported capital goods shall be included under B above. iv) In the case of projects where the investment in land, Building, Plant & machinery exceeds Rs.200 crores, The value of the capital goods shall be amortised over a period of seven years. i.e. in such cases, Only 5/7th of the CIF value of the imported capital goods shall be included under B.
Contact PKP for STPI Related Services
Contact Person : Mr. Prakash k Gupta
Email - pgupta@pkpconsult.com
Telephone Numbers : +91-11-23312207/ 23328753
Mobile Number : +91-9811031841
