Distinguishing STPI and Non-STPI Registrations

Introduction

When stepping into India’s IT and software export landscape, it becomes vital to grasp the difference between Software Technology Parks of India (STPI) and Non-STPI registrations. Each serves different business models, providing distinct advantages and compliance obligations. This piece sheds light on these disparities, helping you make a well-informed choice.

What is STPI?

STPI, or Software Technology Parks of India, functions as an independent society under the Ministry of Electronics and Information Technology, Government of India. It was conceived to enhance the nation’s software exports, offering various incentives to businesses operating under this framework.

Objectives of STPI

Encouraging Software Export: The primary aim is to foster the development and export of software, including IT-enabled services (ITES) and Bio-IT.

Providing Statutory Services: The STPI scheme also offers statutory and promotional services to software exporters by implementing government schemes like STP and EHTP.

Data Communication Services: It provides communication services, including value-added services, to help IT and ITES businesses.

Support for MSMEs: The program promotes micro, small, and medium enterprises by cultivating a business-friendly environment in the IT/ITES domain. Read more

Key Benefits of STPI Registration

Tax Exemptions: STPI units benefit from corporate income tax exemptions for a specific period.

Duty-Free Imports: These businesses enjoy duty-free imports on hardware and software, including second-hand capital goods.

Flexibility for Domestic Projects: While focused on exports, STPI units are allowed to engage in domestic work, as long as they meet minimum export performance standards.

How to Register as an STPI Unit

To become an STPI unit:

Submit an application in the required format.

Provide project details, covering areas like expertise, marketing strategy, business plan, and funding.

Upon approval, sign a legal agreement and obtain a Private Bonded Warehouse License from the Customs Department.

What is Non-STPI?

Non-STPI registration targets companies in the IT and IT-enabled services (ITES) sector that are not fully export-oriented, yet must adhere to specific compliance standards, particularly Softex certification.

Key Requirements for Non-STPI Registration

Softex Certification: This is compulsory for companies exporting IT/ITES services through data links. Failure to submit Softex forms could lead to revenue being taxed as regular income instead of export income.

Registration Process: Submit an application along with supporting documents and processing fees to the jurisdictional STPI Director.

Letter of Permission (LoP): Granted for three years, it must be renewed three months before expiry.

Benefits of Non-STPI Registration

Softex Certification: This allows the company to comply with RBI regulations by submitting Softex forms for certification.

No Duty-Free Imports: Unlike STPI units, Non-STPI units do not enjoy duty-free imports of hardware and software.

Comparing STPI and Non-STPI Registrations

Criteria	STPI Registration	Non-STPI Registration
Target Companies	Export-focused IT/software firms	IT/ITES companies not exclusively focused on exports
Tax Benefits	Eligible for corporate income tax exemption	No tax relief
Import Benefits	Duty-free imports of software and hardware	No duty-free imports
Softex Certification	Automatic with registration	Requires separate application for compliance
Operational Scope	Can operate from anywhere in the country	Can also operate from any location with jurisdictional registration
Additional Compliance	Requires Private Bonded Warehouse License	LoP renewal every three years, adherence to RBI regulations

Conclusion

Deciding between STPI and Non-STPI registrations depends on your company’s operational focus. If software export is your core business, STPI registration offers significant advantages, including tax relief and duty-free imports. On the other hand, if your company isn’t primarily export-oriented but operates in the IT/ITES space, Non-STPI registration is crucial for regulatory compliance, particularly Softex certification.