In India, the Software Technology Parks of India (STPI) scheme has been a significant catalyst for the growth of the IT and software industry. Established in 1991 by the Ministry of Commerce, STPI provides a robust infrastructure and a range of incentives to boost the software export sector. However, not all IT units are STPI-registered, and understanding the differences and registration processes for both STPI and non-STPI units is crucial for businesses in the tech industry.

What is STPI?

Software Technology Parks of India (STPI) is a premier S&T organization under Ministry of Electronics and Information Technology (MeitY) engaged in promoting IT/ITES Industry, innovation, R&D, start-ups, product/IP creation in the field of emerging technologies like IoT, Blockchain, Artificial Intelligence (AI), Machine Learning (ML), Computer Vision, Robotics, Robotics Process Automation (RPA), Augmented & Virtual Reality, Animation & Visual effect, Data Science & Analytics for various domains like Gaming, FinTech, Agritech, MedTech, Autonomous Connected Electric & Shared(ACES) Mobility, ESDM, Cyber Security, Industry 4.0, Drone, Efficiency Augmentation, etc, It aims to promote software exports from India by providing a conducive environment through the development of software technology parks, offering infrastructural support, and facilitating various government schemes and incentives.

The objectives of the Software Technology Parks of India are:

• To promote the development and export of software and software services including Information Technology (IT) enabled services/ Bio- IT.
• To provide statutory and other promotional services to the exporters by implementing Software Technology Parks (STP)/Electronics and Hardware Technology Parks (EHTP) Schemes and other such schemes which may be formulated and entrusted by the Government from time to time.
• To provide data communication services including value added services to IT / IT enabled Services (ITES) related industries.
• To promote micro, small and medium entrepreneurs by creating a conducive environment for entrepreneurship in the field of IT/ITES.

STPI provides two types of registration: 

• STPI registration and non-STPI registration. STPI registration is required for companies that are located within the STPI premises.
• Non-STPI registration is required for companies that are located outside the STPI premises.
• BENEFITS OF STPI REGISTRATION

1. Tax Benefits: STPI units enjoy several tax benefits under the Income Tax Act, including exemptions from customs duties on imported hardware and software and tax exemptions on income earned from software exports.
2. Infrastructure Support: STPI units have access to state-of-the-art infrastructure, including high-speed data communication facilities and ready-to-use office spaces.
3. Government Incentives: STPI units benefit from various government schemes such as the Software Technology Parks (STP) scheme, which offers financial and non-financial incentives to support software exports.
4. Single Window Clearance: The STPI provides a single-window clearance mechanism for various approvals and clearances required for setting up and operating a software unit.

FAQs

Q1. Who can become a STP unit and how?

An Indian company, A Subsidiary of a Foreign Company or A branch office of Foreign Company can become STP Unit. Further In order to become certified member unit under STP scheme, approval from the competent authority is required. The following steps are involved in obtaining approval:

An application in the prescribed format for registering and establishing a STP unit is to be submitted to the Software Technology Parks of India.

The application should be along with the details of the Software Project in terms of strengths, area of expertise, marketing arrangement, business plans, means of finance.

Q2. Can I operate from any location in the country?

Yes, operations under the STP Scheme can be carried out from any location in the country Subsequent to the approval granted by STPI, the approved unit will be signing a legal agreement, with a list of capital goods and Indigenous purchases for attestation to obtain Private Bonded Warehouse License from the Customs Department.

Q3. What is import and how can I do the same under STP?

A unit operating under STP Scheme can import capital goods (i.e., Computer Hardware & Software and basic infrastructure support) without paying any Customs Duty, as may be levied to the importer in normal cases.

NON-STPI UNITS

Not all IT and software companies are STPI-registered. Non-STPI units are those that choose not to register under the STPI scheme. These units may operate under different regulatory frameworks and benefit from other government schemes or incentives specific to their business model.

 Registration of Non-STPI Units

While non-STPI units do not receive the same benefits as STPI-registered entities, they can still thrive under alternative regulatory frameworks.

Any business entity which is into the development of Export-oriented Computer Software/IT Enabled Services, is required to register itself as NON-STP unit under STPI to avail Softex certification. Further as per RBI Master Circular, Softex Certification is mandatory for any company that does IT/ITES exports through Data communication links. For Non-Filing of Softex funds received from Out India is treated as General Income rather than as Export Income. In addition to this Banker may issue a letter for holding your account. Further, this will lead to violation of FEMA Regulations

In order to Comply with Softex Certification requirement, the Business entity is required to be registered as Non-STPI Unit and Commonly asked question and answer for the same in this regard is enumerated below:

Q1. Who can become a NON-STP unit under STPI and how?

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. In order 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) + GST in the form of demand draft or through NEFT in favour of the Director STPI.

Q2. Is it mandatory for any IT/ITES companies who are into exports to get registered as NON-STP unit under STPI?

As per the prevailing RBI Master Circular No. RBI/2013-14/14 dated 1st July 2013 (Para B 15), RBI Circular No.80 dated 15thFebruary 2012 and RBI Circular No.43 dated 13th September 2013, any company that does IT/ITES exports through Data communication links needs to submit the Softex Form for certification. For getting the Softex certification by STPI (which is the Designated Authority), the companies have to become STP members by either registering under STP scheme or as NON-STP unit with STPI. Nevertheless, the companies registered under STP scheme will have other benefits apart from getting their Software Exports certified.

Q3. Once the Non-STP registered unit Letter of Permission (LoP) expires after 3 years, what is the procedure to be followed for renewal of LoP?

Letter of permission for Non-STP registration is issued for a period of 3 years. During the last three months prior to the expiry of LoP, Non-STP registered unit should approach Director STPI for the renewal of LoP. There shall be no charges for renewal of Lop.

Q4. Once the company gets registered as non-STP unit, what will be the procedure to certify the Softex forms from STPI?

Non-STP units should register each of their export contracts prior to the submission of Softex against that contract. The Unit also needs to submit its projected exports during the next financial year as well as applicable STPI service charges.

Q5. What is the proof of NON-STP registration?

The company registered under STPI as NON-STP unit will be issued a Registration Certificate with a validity of 3 years by the respective jurisdictional STPI Director. Renewal of registration will have to be applied three months prior to the expiry of the registration.

Q6. Can a NON-STP operate from any location in the country?

Yes, operations as NON-STP unit can be carried out from any location in the country. However, registration has to be made withthe respective jurisdictional STPI Centre.

Q7. What are the entitlements of NON-STP registration?

Once NON-STP units get registered with STPI, they will be entitled for submission of Softex for certification as per prevailing guidelines of RBI. However, non-STP units should also register each of their export contracts prior to submission of Softex against that contract.

Benefits of non-STPI Registration:

Entities in the IT and ITes Sectors can enjoy various advantages by opting for Non-STPI registration. Such as:

• Exemption from payment of service tax on services exported from India.
• Exemption from payment of income tax on profits earned from software development for export.
• Exemption from payment of customs duty on imported goods required for software development.
• Exemption from payment of central excise duty on indigenous goods required for software development.
• Access to high-speed data communication links.
• Access to incubation facilities and other support services provided by STPI.

 CONCLUSION

Both STPI and non-STPI units play crucial roles in India’s IT ecosystem. Understanding the benefits and registration processes for each can help businesses make informed decisions and optimize their operations. While STPI offers extensive support and incentives for software exporters, non-STPI units can thrive by navigating alternative compliance and regulatory frameworks effectively. Ultimately, the choice depends on a company’s specific needs and strategic goals.