STPI Compliance: Requirements, Filing Process & Guide

India’s software exports reached $222 billion in 2024-25, which was an 11% increase on a year-on-year basis. With millions of STEM (Science, technology, engineering and mathematics) professionals graduating from institutions like IITs and NITs every year, India ranks among the top countries for software exports.

This has only been possible with the government creating avenues for the growth of software exports. STPI, or Software Technology Parks of India, has been one such initiative that not only provides infrastructural support but also plays a vital role in recording foreign income earned on software exports.

With this article, we explore what STPI is, why you have to register with it and its compliance requirements.

• Software Technology Parks of India was set up in 1991 by the Ministry of Electronics and Information Technology. It aims to promote the development and export of computer software.
• Every company that exports IT and related services has to register with STPI for filing SOFTEX. 
• 100% export-oriented units register as STPI units and get access to benefits like duty-free imports and GST refunds. Companies that operate in the domestic tariff area (DTA) have to register as non-STPI units.
• STPI units can only operate from customs-bonded premises and have to achieve a positive Net Foreign Exchange (NFE) by fulfilling export obligations within a specific period. Along with SOFTEX, they also have to submit a monthly performance report (MPR), a quarterly performance report (QPR) and an annual performance report (APR).
• To enhance their export journey, companies engaged in IT and related service exports should utilize Xflow’s payment solution that would enable faster payment settlements in their INR account with multi-currency support and transparent pricing.

The authority that governs STPI is the Ministry of Electronics and Information Technology. The provisions of STPI compliance are governed by the following laws.

1. Foreign Trade (Development & Regulation) Act, 1992 (FTDR Act)

The government formulates and implements Foreign Trade Policies under the purview of this FTDR Act. The provisions of duty-free imports and export obligations of STPI units are formulated under this Act.

2. Foreign Exchange Management Act, 1999 (FEMA)

All the foreign exchange transactions of STPI-registered IT/ITES exporters are governed under FEMA. It oversees the realisation and repatriation of export proceeds. The reporting requirements of STPI units to the RBI are also covered under FEMA. 

3. Customs Act, 1962

STPI units benefit from duty-free imports and have to operate from customs-bonded premises. They are subject to inspections from customs authorities and must regularly report to them.

4. Goods and Services Tax (GST) laws

GST is not charged on software exports as they are considered “zero-rated supplies”. Moreover, STPI units can claim GST refunds on goods and services that are bought from the Domestic Tariff Area (DTA) for the production of software. 

Every entity that develops and exports computer software has to register with STPI and comply with its rules. This is also necessary for SOFTEX filing. This registration is valid for 3 years from the date of issuance and should be renewed 3 months before the expiration date. Software exporters can register as two of the following units:

1. Non-STPI unit
2. STPI unit

1. Non-STPI unit

Non-STPI units operate as Domestic Tariff Area (DTA) units. Non-STP units do not get any benefits from the exports of software and are only required to register with STPI for filing SOFTEX.

2. STPI Unit

An STPI unit operates as a 100% export-oriented unit and registers under the STP scheme. STPI units work from customs-bonded premises and are eligible for export benefits, such as duty-free imports of capital goods and tax incentives.

1. Monthly Progress Report (MPR)

The Monthly Progress Report (MPR) includes details on capital goods and services either imported or purchased domestically, as well as categorical details of exports made that month. It has to be submitted by the 7th of every month.

2. Quarterly Performance Report (QPR)

Quarterly Performance Report (QPR) includes details about the STPI unit’s export data, domestic turnover, employment details and utilization of capital goods. QPRs have to be submitted within 30 days of the end of each quarter.

3. Annual Performance Report (APR)

Annual performance reports (APR) consist of details of an STPI unit’s export performance, employment data and financials. APRs have to be submitted by June 30th every year.

STPI units and non-STPI units both have to report their export to the Reserve Bank of India. This is done by filing SOFTEX through the STPI portal. It is mandatory under the FEMA guidelines and for obtaining benefits, such as GST refunds and duty-free imports. It is also required to repatriate your foreign earnings and get a Bank Realization Certificate (BRC) from your authorized dealer bank.

STPI units need to achieve a positive Net Foreign Exchange (NFE) by fulfilling export obligations within the specified period. This means it has to ensure that its earnings from exports are greater than spending on capital goods imports.  

The IT/ITEs entities that are 100% export-oriented and want to register as an STPI unit have to operate from customs-bonded premises and execute B-17 bond. This also enables them to import capital goods and services without paying customs duty.

STPI units are subject to inspections from customs authorities to ensure compliance with bonded warehouse norms. They also have to maintain records of the imported capital goods and submit periodic reports to customs authorities on their usage. 

The export proceeds of IT/ITES registered with STPI are regulated under FEMA. In order to comply with FEMA regulations, software exporters have to file SOFTEX through the STPI portal. SOFTEX declares the nature and value of your exported software.

The details in SOFTEX are entered into the Export Data Processing and Monitoring System (EDPMS). On receiving the payment for export, your bank reconciles it in the EDPMS portal and issues eBRC. eBRC verifies the receipt of payment for software exports in foreign currency. It is required for claiming GST refunds.

STPI units that are receiving foreign direct investment (FDI) have to file an annual report on foreign liabilities and assets (FLA) and submit it to the Reserve Bank of India. This is mandated under the Foreign Exchange Management Act, 1999 (FEMA). The FLA annual report has to be filed before the 15th of July every year. 

All software exporters have to register with STPI and comply with its rules. Non-compliance can lead to

1. Fines or frozen bank accounts for not filing Softex.
2. Withdrawal of benefits of STP units, including exemption from customs duties on import of capital goods and GST refunds.
3. Restriction of import and export of software.

The Software Technology Park for India (STPI) provides multiple infrastructure resources, such as data communication services, incubation facilities and value-added services, etc for promoting the development and export of computer software. These resources are accessible to both big and small software exporters.

What these software exporters lack is a fast and reliable cross-border payment solution. This is where Xflow comes into play. Xflow processes all your transactions in accordance with RBI guidelines and streamlines them by offering

1. Faster settlements

With Xflow, you can settle your cross-border payments in your INR account in 1 business day. 

2. Multi-currency support

Xflow enables you to receive payments in 25+ currencies from over 140+ countries.

3. Transparent costs

Xflow provides you with full visibility and control of your cross-border payments, with live FX linked to mid-market rates and transparent upfront costs. 

Sign up with Xflow now and let it handle your cross-border payments for software exports while you focus on STPI compliance.