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1.What are the legal registrations required
to start a software export business in India?
The following are the requirement in
chronological order:
1.The first step is to incorporate a company
under the Indian Companies Act of 1956. A company is the most
preferred entity, though proprietorship or partnership firms
also do exist. (Refer section under Companies Act for procedure
to incorporate a company)
2.Apply for Permanent Account Number (PAN) with the Income Tax
department (Refer section under Income Tax Act for procedure)
3.Apply to get the unit registered under the Software Technology
Park (STP) scheme.
4.Apply for Import Export Code after receipt of PAN.
5.Get the unit custom bonded, a requirement under STP scheme
6.Get started
2.What is Software Technology Park scheme?
Software Technology Park (STP) Scheme is
a 100 per cent export-oriented scheme for undertaking
software development for export. The Software Technology
Parks of India (STPI) is a society formed to promote export
of software and IT services.
3.What are the benefits under the STP
scheme?
The benefits under the STP & EHTP scheme:
1.Approvals are given under single window
clearance mechanism.
2.An STP project may be set up anywhere in India.
3.Jurisdictional directors have the powers to approve import
of capital goods (net of taxes) not more than $ 20 million.
4.100 per cent foreign equity is permitted.
5.All the imports of hardware and software in the STP units
are completely duty free, import of second hand capital
goods also permitted.
6.Software units may undertake exports using data
communication links or in the form of physical exports
(which may be through courier services also), including
export of professional services.
7.Re-export of capital goods are permitted.
8.Simplified Minimum Export Performance norms i.e., STP &
EHTP scheme
9.Net Foreign Exchange Earnings to be positive.
10.Domestic purchases by STP unit are eligible for the
benefit of deemed exports to the equipment suppliers.
11.Use of computer system for commercial training purpose is
permissible subject to the condition that no computer
terminals are installed outside the STP premises.
12.The sales in the Domestic Tariff Area (DTA) shall be
permissible up to 50 per cent of the export in value terms.
13.STP units are exempted from payment of corporate income
tax for a block of 10 years (up to the financial year
2008-09).
14.The capital goods purchased from the DTA are entitled for
the benefits like levy of Excise Duty and Reimbursement of
Central Sales Tax (CST).
15.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.
16.Depreciation on capital goods above 90 per cent over a
period of five years and also the accelerated rate of 7 per
cent per quarter during the first two years subject to an
overall limit of 70 per cent in the first three years.
17.Call center permitted under the STPI scheme.
18.All Services as listed in appx.54 of hand book of
procedures (EXIM) are eligible for facility of STP scheme.
19.Service providers eligible for recognition as ‘Service
Export House’, ‘International Service Export House’ or
‘International Star Service House’.
Vinod Kuriakose
(The writer Vinod Kuriakose can be contacted at
feedback2vinod@yahoo.co.uk)
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