Guide To Registration Under STP Scheme (What, How, Why, Who, By Whom)
The Software Technology Park Scheme (under the Ministry of Communication and Information Technology, Govt. of India) is a 100% export-oriented scheme for software development and IT enabled services. Exports under this scheme can either happen through data communication links, or physically, such as export of professional services for consultancy and software development.
A Software Technology Park may be set up by the central government, state government, public or private sector undertakings, or any combination thereof. An STP may be a stand-alone unit or one of the units located in an area designated as an STP Complex by the Ministry of Communication and Information Technology.
A unique feature of the STP scheme is single-point contact services for member units, enabling them to conduct exports operations at a pace commensurate with international practices.
Scheme Benefits & Highlights:
- Approvals are given under a single-window clearance scheme.
- A company can set up an STP unit anywhere in India.
- 100% foreign equity is permitted and approved by the jurisdictional director of STPI.
- All imports of hardware & software in STP units are completely duty free.
- Import of second-hand capital goods is permitted.
- The unit has to be a positive net foreign-exchange earner. Net Foreign Exchange Earnings (NFE) are to be calculated cumulatively in blocks of five years, starting from the commencement of production.
- Use of computer systems for commercial training purposes is permissible, subject to the
condition that no computer terminals are installed outside the STP premises.
- Sales in the Domestic Tariff Area (DTA) are permissible up to 50% of
exports in value terms.
- STP units are exempt from payment of corporate income tax up to 2010-2011.
- Capital goods purchased from the Domestic Tariff Area (DTA) are entitled for
benefits like exemption of excise duty and reimbursement of Central Sales Tax (CST).
- Capital invested by foreign entrepreneurs, know-how fees, royalty, dividend etc., can
be freely repatriated after payment of income taxes due on them, if any.
- Repatriation of foreign currency for payments can be done freely.
Checklist for STP/EHTP registration
Units undertaking export of their entire production of goods and services may be set up under the Electronic Hardware Technology Park (EHTP) Scheme. Units engaged in manufacture and services will be encouraged to avail of this scheme, in keeping with the policy to give a special thrust to export of electronic hardware.
Scheme Benefits and Highlights:
- An EHTP unit may import, free-of-duty, all types of goods including capital goods required by it for manufacture, services, production and processing, or in connection therewith, as defined
in the EXIM policy.
- The units shall be permitted to import goods, including capital goods required for the approved activity, free of cost or on loan from clients.
- EHTP units may procure goods required by them for manufacture, services, production and processing, or in connection therewith, from bonded warehouses in the DTA set up under the Exim policy. This procurement will be free of duty.
- Unit shall be a positive net foreign exchange earner. Net Foreign Exchange Earnings (NFE) shall be calculated cumulatively in blocks of five years, starting from the commencement of production.