What is a SOFTEX Form? Filing Process for Export of Software Services in India

India's economy is more global than ever, and software plus ITeS exports power much of that growth. If you invoice overseas clients for code, support, implementations, analytics, or other services delivered online, your compliance workflow must include the Softex form.

The Softex form captures your invoice and export details, gets certified by STPI or your SEZ office, and gives your authorized Dealer bank the basis to report the export under FEMA. Missing or delaying your filings can trigger bank follow-ups, EDPMS mismatches, and refund queries. 

In this guide, we explain what a Softex form is, who must file it, how to file it online, and how Softex differs from a regular shipping bill and from GST returns.

A Softex Form, or Software Export Declaration form, is a mandatory regulatory document in India for companies that export software and IT-enabled services (ITeS) via data communication links. It is an official declaration of the value and nature of the software or services exported to a foreign client. The Softex form for exports is a crucial component of India's foreign exchange compliance framework. The Reserve Bank of India (RBI) makes filing this form mandatory under the Foreign Exchange Management Act (FEMA) and other accompanying regulations. 

Softex helps the RBI monitor and track the inflow of foreign currency into the country. This helps them check that export proceeds are properly realized and repatriated within the stipulated time. In essence, it is a "shipping bill" for all intangible software exports.

A Softex Form, or Software Export Declaration form, is a mandatory regulatory document in India for companies that export software and IT-enabled services (ITeS) via data communication links. It is an official declaration of the value and nature of the software or services exported to a foreign client. The Softex form for exports is a crucial component of India's foreign exchange compliance framework. The Reserve Bank of India (RBI) makes filing this form mandatory under the Foreign Exchange Management Act (FEMA) and other accompanying regulations. 

Softex helps the RBI monitor and track the inflow of foreign currency into the country. This helps them check that export proceeds are properly realized and repatriated within the stipulated time. In essence, it is a "shipping bill" for all intangible software exports.

Filing a Softex Form is a legal requirement that applies to a wide range of entities in India's IT and ITeS sectors. It is mandatory for any company, partnership, or individual freelancer who exports software or IT-enabled services, regardless of their size or whether they are registered with a specific export promotion scheme. 

This includes:

1. Software Technology Parks of India (STPI) units: All companies registered under the STPI scheme for export-related benefits must file Softex forms.
2. Special Economic Zones (SEZ) units: Companies operating within SEZs should file the form with their specific Development Commissioners.
3. Domestic Tariff Area (DTA) units: Businesses located in the domestic area and not registered with any specific scheme must register as a "Non-STP unit" with the STPI. This is solely for the purpose of Softex certification.

Who is not required to file   

Not all exporters are required to file a Softex Form. You do not need to file if you belong to any of these categories: 

1. If you export tangible products, like hardware, machinery, or textiles, you need not file. You would have to file a Shipping Bill with Customs authorities instead.

2. Exports of services outside the IT/ITeS category may not require Softex filing. However, you should verify the classification (P‑code) of your service and check with the certifying authority before assuming an exemption.

3. Even small-value software exports generally require Softex filing. Certain minor exemptions may apply depending on your certifying authority, but always check the latest RBI/STPI guidelines to stay compliant.

As an IT and software exporter, you have to submit the form to the designated certifying authority without delays. The authority could be the Software Technology Parks of India (STPI) or the Special Economic Zone (SEZ) Development Commissioner.

Here is how to go through the filing process:

Step 1: Generate your Softex Number

Before filing, generate your unique SOFTEX number. This is a mandatory number that links your export declaration to the banking system and the RBI's monitoring systems. You can get this number from the RBI's portal, either as a single number for a specific invoice or in a bulk series for multiple invoices.

Step 2: Prepare your Softex Form

Once you have your SOFTEX, prepare the form with accurate details of the export transaction. The form usually requires in-depth information, including:

1. Exporter details 
2. Foreign client's details 
3. Invoice number and date.
4. Value of the exported software/service.
5. A brief description of the services provided.
6. The mode of export

Step 3: Gather all supporting documents 

You also need to submit supporting documents, typically including export invoices, contracts, and technical documentation of the software. In some cases, certifying authorities may request additional documents, such as communication bills.

Step 4: Submit for certification

Submit the completed Softex form and supporting documents to STPI or the SEZ within 30 days of the invoice date. If filing multiple invoices in a monthly batch, the deadline is 30 days from the last invoice in that batch, if permitted by the certifying authority.

Step 5: Certification and approval

Next, the STPI or SEZ authority reviews your documents and checks that they are complete and accurate. If all the details are in order, you will receive a certified Softex form. 

Step 6: Submission to authorized dealer bank

Once you receive your certified Softex form, present it to your Authorized Dealer (AD) or your bank. This helps the bank certify that foreign inward remittance and issue a Bank Realization Certificate (BRC). A BRC is mandatory for any GST refunds. 

Certifying authorities offer digital portals to help you file SOFTEX forms online. This makes it a lot quicker and easier. 

Here are the steps for filing the form online:

1. First, register as a unit with the STPI and log in to their online portal.
2. Fill out the online SOFTEX form with details from your invoices. For multiple invoices, you can use a bulk upload feature. 
3. Upload all required supporting documents, such as scanned copies of export invoices and contracts.
4. The authorized signatory must digitally sign the application and submit it through the portal to the STPI officer for certification.
5. Once approved, you can download the digitally certified form. The data is automatically transmitted to the RBI and your bank for further processing, which is required for foreign remittance and other compliances.

Here’s why you need to file the Softex form: 

• Filing the Softex form is a legal obligation under the Foreign Exchange Management Act (FEMA). It is enforced by the Reserve Bank of India (RBI). If you fail to comply with this requirement, fines can be up to three times the transaction value plus possible daily penalties.

• The form is also essential for your Authorized Dealer bank to issue a Bank Realization Certificate (BRC). The BRC is what officially confirms that the foreign exchange from your exports has been received and repatriated.

• As software exports are 'zero-rated supplies' under GST, a certified Softex form is a prerequisite for you to claim refunds of your Input Tax Credit (ITC). 

• Timely and accurate filing helps in the proper reconciliation of foreign payments, ensuring that your financial records are clean and transparent for audits and other compliance checks.

Software transmitted online does not pass through Customs, while physical goods do. That difference drives which document you use and when you file it. The SOFTEX Form is a post-facto declaration for intangible software and services, while a Shipping Bill is a pre-facto declaration for tangible goods that are physically shipped out of the country.

The SOFTEX Form and GST returns form, especially the GSTR-1 and GSTR-3B, are related compliance requirements. However, they are not interchangeable and serve very different purposes under entirely different regulatory frameworks. The Softex Form focuses on foreign exchange, whereas GST returns are for tax compliance.

Though technology has advanced and you can now file Softex online, some issues can still come up in the process and jeopardize your compliance. Here’s what you need to watch out for: 

1. Delayed Submission: Missing your filing deadline is a common issue. The deadline is 30 days from the date of the invoice and missing it can complicate the process when you file for a BRC or for GST refunds.

2. Incorrect Documentation: If the details in the documents that you share while filing do not match, the authorities would reject your submission. You have to take care that information like dates, names and addresses match exactly on all your documents. 

3. Coordination with Banks: Once you get an approved Softex form in hand, the next step is to make sure that it reaches your bank on time. Failing to do so will create issues when it comes to both foreign exchange and tax compliance.

4. Technical Issues: The online portals of the STPI and SEZ authorities may glitch occasionally and this can delay your filing process. Make sure you do not put off filing until the last day to avoid being affected by these glitches. 

Now let’s look at some best practices to help you avoid the issues and challenges we discussed above: 

1. Establish an internal system

Create a careful system for recording all of your export invoices, contracts, and foreign remittances. This way, you will have all data available at your fingertips before you start filing. If you use platforms like Xflow for receiving payment, all your data will be automatically recorded. 

2. Be proactive and timely

Make it a practice to file your Softex forms on a monthly basis. Since the deadline is just 30 days from the last invoice date, filing monthly will help you avoid missing the deadline. Also, if you schedule Softex filing as a regular task, you can prepare for this early and avoid rushing at the last moment. 

3. Cross-verify all your data

The last step before you submit your form should be to carefully cross-check that all the information across various documents matches perfectly. You can be penalized even for small discrepancies. Create a checklist of all data points that you need to check so that you don’t miss anything. 

Filing Softex Forms is a mandatory compliance requirement governed by specific Indian laws and regulations. The primary regulatory body overseeing this process is the Reserve Bank of India (RBI), which mandates the filing to monitor foreign exchange earnings from software exports. This is done under the provisions of the Foreign Exchange Management Act. 

1. Foreign Exchange Management Act (FEMA)

According to Section 7 of FEMA, every exporter needs to submit a declaration to the RBI and to all other designated authorities with true and correct information of all the services they rendered and how much payment they received for it.

For IT exporters like you, Softex forms are this official declaration. It helps authorities verify that foreign exchange earned is accounted for and repatriated to India. Not complying with FEMA can cost you up to three times the value of the transaction in the form of fines and penalties. 

2. Goods and Services Tax (GST) Act

While the Softex Form is primarily a foreign exchange regulation, it is also intertwined with GST compliance. According to GST guidelines, software exports are zero-rated supplies. This means no GST is charged on these. You can also claim a refund Input Tax Credit (ITC) on the inputs and input services used for your export. However, to make this claim you need to submit a verified Softex form. 

3. Foreign Trade Policy (FTP)

The FTP, issued by the Directorate General of Foreign Trade offers several export promotion schemes and benefits. For most of these, Softex filing is a prerequisite to be eligible for benefits. 

For IT services exporters, managing international payments and the associated compliance can be a significant challenge. Xflow streamlines your entire payment infrastructure and gives you access to all your payment information in one place. This makes filing for Softex and then for BRC a lot easier. When your funds are processed and settled efficiently, it makes it easier to file the necessary declarations.

Xflow simplifies this process by offering:

1. Complete visibility and transparency: With clear visibility of FX rates and upfront costs, you can accurately report the value of your export proceeds on the Softex Form.

2. Faster settlements: Payment settlements within 1 business day ensure that your foreign exchange is realized and repatriated quickly. 

3. Multi-currency support: Xflow allows you to collect payments from a diverse client base by supporting over 30 currencies in 140 countries. 

4. Guaranteed live FX rates: With Xflow’s live FX rates, you know exactly how much you will receive. This reduces the discrepancies between your invoice value and actually received fund. 

Stop dealing with complex compliance and lost time. Join the thousands of businesses using Xflow to grow their global footprint. Sign up today!