Difference Between STPI and Non-STPI Registrations

When setting up a business in the IT and software export sector in India, it's crucial to understand the difference between Software Technology Parks of India (STPI) and Non-STPI registrations. Both have distinct features, benefits, and compliance requirements. This article will help you navigate through the key differences to make an informed decision.

What is STPI?

The Software Technology Parks of India (STPI) is an autonomous society under the Ministry of Electronics and Information Technology, Govt. of India. The STPI scheme is designed to promote software export from the country and offers various benefits to units operating under this scheme.

Objectives of STPI

1. Promotion of Software Export: To promote the development and export of software and software services, including IT-enabled services (ITES) and Bio-IT.

2. Statutory Services: To provide statutory and other promotional services to exporters by implementing the STP/EHTP scheme and other schemes formulated by the government.

3. Data Communication Services: To provide data communication services, including value-added services to IT/ITES industries.

4. Support for MSMEs: To promote micro, small, and medium entrepreneurs by creating a conducive environment for entrepreneurship in IT/ITES.

Key Benefits of STPI Registration

• Tax Exemptions: STPI units are exempted from paying corporate income tax up to a specified period.

• Duty-Free Imports: All imports of hardware and software are completely duty-free. Second-hand capital goods are also permissible.

• Domestic Operations: STPI units can undertake domestic projects subject to Minimum Export Performance norms.

How to Become an STPI Unit

1. Submit an application in the prescribed format.

2. Provide the details of the software project, including expertise, marketing arrangement, business plans, and means of finance.

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

What is Non-STPI?

Non-STPI registrations cater to companies involved in IT and IT-enabled services (ITES) that do not fall under the export-oriented STPI scheme but still need to comply with particular regulations, especially regarding Softex certification.

Key Requirements for Non-STPI Registration

1. Softex Certification: Mandatory for any company exporting IT/ITES through data communication links. Non-filing can lead to the income being treated as general income instead of export income, potentially resulting in regulatory violations.

2. Registration Process: Submit an application form with supporting documents and a processing fee to the jurisdictional Director of STPI.

3. Letter of Permission (LoP): Issued for three years and needs renewal three months before expiry.

Benefits of Non-STPI Registration

• Softex Certification: Enables the company to submit Softex forms for certification, essential for compliance with RBI regulations.

• No Duty-Free Imports: Unlike STPI units, Non-STPI units do not enjoy duty-free import benefits.

Key Differences Between STPI and Non-STPI Registrations

Conclusion

Choosing between STPI and Non-STPI registrations depends on your business model and objectives. If your main focus is on software export, STPI registration offers significant benefits, including tax exemptions and duty-free imports. However, if your business does not primarily export but still engages in IT/ITES services, Non-STPI registration is crucial for Softex certification compliance.

Whichever path you choose, understanding the key differences can help you align your business operations with regulatory requirements efficiently.