India is considered one of the lagest IT service exporters in the world. Various companies outsource their IT related work to Indian Companies. India has gained rich experience in providing IT services across the globe.
Every exporter of IT/ITEs services is mandatorily required to file Softex forms to RBI.
Key points to be taken while filing Softex form
1. Periodicity: Softex form is required to be submitted within 30 days of invoice date, typically exporters submit them on a monthly batch basis.
2. Bulk Upload: Details cane also be uploaded in bulk in Softex form.
3. Requirement: It is a mandatory process wherein IT service exporters are required to report the details of their exports to RBI and ensure compliance with Foreign Exchange Management Act, 1999 regulations.
4. Softex number: RBI allots Softex number to the exporter once in a year. Exporters can use the allocated Softex number either for each invoice or for a group of invoices with same currency of a particular customer.
STPI registration
RBI Circulars states that any company engaged in exports of IT & IT enabled services have to submit Softex forms with Software Technology Park of India (STPI).Such units need to file the forms with Software Technology Park of India (STPI). Units situated in Domestic tariff Area ( DTA) will register themselves as Non-STPI & file Softex Forms.
It means every exporter of IT & IT enabled services has to file Softex forms whether STPI or Non-STPI with RBI
Details to be furnished in Softex form
1) Exporter Details : Name, address, IEC Code
2) Software details: Details of software exported
3) Invoice details: Value of Software exported
4) Declaration: That the export value is correct & in compliance with FEMA Act & rules.
Steps involved in filing of form.
1) Registration with STPI-First step is registration with STPI. Exporter must register with STPI to obtain necessary approvals. Units in DTA (Domestic Tariff Area) are treated as Non-STPI but still file Softex through STPI.
2) Preparation of Softex form- After registering with STPI, softex form should be prepared. It includes the details like nature of software exporter, value of export & name of importer etc.
3) Submission to STPI- Post preparations of Softex form, form must be submitted with STPI for approval. This submission is usually done every month.
4) Certification- STPI authority reviews the submitted forms & cerificates to check if the furnished details are true & correct.
5) Submission to AD Bank- After certification, Softex form should be submitted with AD Banker. The bank will then forward these forms to the RBI.
Why to file Softex form
1) GST Refund processing- Since Companies usually export 100% of IT services to the foreign companies. In such cases, input paid on purchases & services paid in India gets accumulated which cannot be adjust with Output liabilities as there are no output liabilities. In such cases, accumulated Input credit can be applied for refund. For GST refund, departments can ask for Softex filing to check the export of software. In such cases, GST refunds usually gets processed easily.
2) To remain Credible- By remaining compliant with Softex filing, exporters can enhance the credibility with financial institutions, investors & other stakeholders. Adherence to statutory obligations ensures compliance & transparency of exporters.
3) To remain compliant with FEMA & RBI rules- Non filing of Softex forms can lead to penalties & fines by RBI on Exporters. To remain compliant with FEMA laws, it is mandatory to file Softex forms on monthly basis.
Need to file Softex
This question usually arises whether every exporter is required to file Softex Form?
The answer is yes. As per RBI circular, all exporter who receive foreign remittances on account of export of IT services export mandatorily required to file Softex form. In case of software exports, Softex form is required to filed with the bank from where remittance is being which is the Authorised Dealer Banker of the Exporter.
Consequences on Non-filing Softex forms
- Non filing of Softex forms can lead to violation of FEM & RBI Rules which can lead to fines & penalties for the Company.
- Delay in realization reporting to RBI.
- Issues with Export Data Processing and Monitoring System (EDPMS) closure at banks.
- Banks may hold foreign remittances if Softex not submitted.
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