Chartered Accountants |
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STPI & SEZ
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 services.
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 STPI
- 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
permitted.
- Re-Export of capital goods are permitted.
- Simplified Minimum Export Performance norms i.e.,
Net Foreign Exchange Earnings to be positive.
- 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 (upto 2009-10).
- 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 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
three years.
- 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 service House'
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Statutory Complaince for STP Units
Important statutory compliance for STP units are listed below as reference
Accounts :
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 done:
- Maintenance of Separate Cash & Bank book and corresponding
vouchers.
- 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.
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Banking :
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
SEZs
The incentives and facilities offered to the units in SEZs for
attracting investments into the SEZs, including foreign investment include:-
- Duty free import/domestic procurement of goods for development,
operation and maintenance of SEZ units
- 100% Income Tax exemption on export income for SEZ units under
Section 10AA of the Income Tax Act for first 5 years, 50% for next 5
years thereafter and 50% of the ploughed back export profit for next
5 years.
- Exemption from minimum alternate tax under section 115JB of the
Income Tax Act.
- External commercial borrowing by SEZ units upto US $ 500 million
in a year without any maturity restriction through recognized
banking channels.
- Exemption from Central Sales Tax.
- Exemption from Service Tax.
- Single window clearance for Central and State level approvals.
- Exemption from State sales tax and other levies as extended by
the respective State Governments.
- Enhanced limit of Rs. 2.4 crores p.a. allowed for Managerial
Remuneration
The major incentives and facilities available to SEZ
developers include:-
- Exemption from customs/excise duties for development of SEZs for
authorized operations approved by the BOA.
- Income Tax exemption on income derived from the business of
development of the SEZ in a block of 10 years in 15 years under
Section 80-IAB of the Income Tax Act.
- Exemption from minimum alternate tax under Section 115 JB of the
Income Tax Act.
- Exemption from dividend distribution tax under Section 115O of
the Income Tax Act.
- Exemption from Central Sales Tax (CST).
- Exemption from Service Tax (Section 7, 26 and Second Schedule of
the SEZ Act)
A SEZ can be set up by the following
- Central Government
- State Government
- Private Limited Company
- Public Limited Company
- Foreign Company
- Jointly by any of the above
How we can help
Regulatory Support
- Approval of SEZ (Settling application before BOA, preparation of
project report, facts sheet in case of conversion etc.)
- Approval of letter of permission (LOP) / renewal of letter of
permission
- Approval of green card
- Approval of Import Export Code Number
- Permission for inter-unit transfer of capital goods
- Permission for disposal of waste and scrap
- Approval for enhancement of production capacity
- Permission for additional location / change of location
- Permission for sale of rejects
- Permission for sale of DTA sale
- Assisting in claiming Duty Drawback
- Assisting in claiming DEPB
- NOC for de bonding of materials
- NOC for de bonding of premises
Compliance Support
- Structuring of contracts/transactions to optimize indirect tax
incidence
- Formulating indirect tax efficient business models
- Conducting VAT impact assessment studies
- Harmonising customs valuation
- Undertaking comprehensive reviews of business operations
- Conducting indirect tax specific due diligence reviews
- Advice on classification, valuation, applicability of taxes on
transactions and admissibility to tax benefits/exemptions
- Opinions on indirect tax issues
- Identification of innovative tax planning opportunities
- Preparations of customized compliance manuals on all taxes
- Single point contact & centralized coordination for tax
payments, filing of returns & compilation of documents
Litigation Support and Representations
- Drafting appeals & submissions
- Appearances & arguments before adjudication & appellate
authorities
- Briefing Senior Counsel on need basis
- Representation before relevant Government authorities on tax &
trade policy issues
- Developing economic justification for tariff/non-tariff
concessions
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