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
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
- Re-Export of capital goods are permitted.
- Simplified Minimum Export Performance norms i.e., (STP scheme)
"US $ 0.25 Million or 3 times of CIF value of imported
capital goods whichever is higher & 10% Net Foreign Exchange
Earnings against Export Earnings".
Statutory Complaince for STP Units
- Simplified Minimum Export Performance norms i.e., (EHTP scheme)
"US $ 1 Million or 3 times of CIF value of imported capital
goods whichever is higher & Net Foreign Exchange Earnings to be
- 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 (2009).
- 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
- 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
Important statutory compliance for STP units are listed below as
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
- Maintenance of Separate Cash & Bank book and corresponding
- 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.
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
- Re-export of capital goods brought on loan/lease/free of cost is
- 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 till the year
- 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".
- 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.