STPI Condonation of Delay: Meaning, Process, and Compliance Guide for IT/ITES Companies

Created By : Prashant Sharma

Compliance with Softex certification is a statutory requirement under FEMA and RBI guidelines, serving as the formal recognition of export proceeds. It ensures that foreign exchange remittances are duly validated, prevents exposure to FEMA-related non-compliance risks, and enables Authorized Dealer (AD) Banks to close export realization entries without objection.

What is ‘Condonation of Delay’?

In simple terms, condonation of delay is the formal approval (an official waiver or relaxation) granted by the Software Technology Parks of India (STPI) to regularize a compliance filing—such as Softex certification—submitted after the prescribed deadline. It may also be sought to validate export transactions undertaken prior to the issuance of the unit’s Letter of Permission (LOP).

Typical scenarios where condonation is sought include:

Delayed Softex submissions beyond the filing due date.
Certification of exports raised prior to receiving the LOP.
Non-submission of Annual Performance Reports (APR) or other statutory filings.

Over the past few years, both banks and regulators have tightened their checks on software export compliance. Even small lapses—like delay in Softex certification or pending export closure— can lead to penalties, compliance gaps, and disruptions in operations.

For exporters, obtaining condonation of delay is not just about ticking a compliance box. It provides a structured way to address such lapses without reputational or financial fallout.

By the end of this article, readers will gain a clear understanding of what ‘condonation of delay’ means, the approval process involved, and the practical steps required to ensure smooth and timely compliance.

Why IT/ITES Companies Need It

IT and IT-enabled services (ITES) companies operate within a framework of frequent compliance touchpoints under STPI, including Softex filings, periodic reports, and renewals. Given the industry’s nature—serving global clients across time zones, working under tight delivery schedules, and adapting to fast-changing business requirements—instances of compliance delays are not unusual.

Failure to obtain condonation can expose companies to:

Regulatory penalties under FEMA and STPI
Rejection of pending filings by regulators
Disruption in export remittance closure at banks
Reputational risks during audits or client/vendor checks

In short, condonation acts as a regulatory safeguard to maintain compliance credibility.

STPI Condonation of Delay – Step-by-Step Process

Step 1: Identify the Lapse

Begin by identifying exactly what has been missed. This could be a Softex filing made late, a pending Annual Performance Report (APR), or a delay in renewal of approvals. Knowing the specific lapse helps in preparing the condonation request correctly.

Step 2: Draft the Condonation Request

Prepare a formal application – a formal request to the STPI officer explaining the reason for the delay.

Step 3: Attach Supporting Documentation

Enclose all necessary documents to substantiate the request. These typically include:

Copies of invoices/returns not filed on time
Proof of foreign exchange realization (FIRC/Bank advice)
Auditor’s certificate validating exports
Evidence of the cause of delay (system issues, client correspondence, etc.)

Step 4: Submit the Request to STPI

The request, signed by the authorized signatory, must be submitted to the relevant STPI office.

Step 5: Await Approval and follow Directions

Once submitted, the STPI Director reviews the application and may seek clarifications, if required. If the request is approved, a formal condonation order will be issued.

Documents Typically Required

• Board Resolution / Authorization Letter

If someone other than a director is signing the condonation request, an authorization letter or board resolution must be provided. This ensures that the signatory is properly empowered to act on the company’s behalf before STPI.

• Auditor’s Certificate

A certificate from the statutory auditor or a chartered accountant confirming the export details, invoice values, and foreign exchange realization. This adds credibility to the filing and assures STPI of the genuineness of the exports.

• Proof of Reason for Delay

Common reasons for delay include technical problem, lack of compliance awareness, system slowdown, etc.

• Copy of the Unfiled Document

The relevant unfiled return or statement should be attached—such as the Softex form, APR, or renewal application. This shows STPI what exactly is being regularized through condonation.

• Proof of Penalty Payment (if applicable)

Sometimes, the department may also charge some fines or penalties based on the reason of the delay.

Common Scenarios Where Condonation is Needed

Export Certification Prior to Date of LOP – Such transactions cannot be certified in the normal course and require condonation to be formally recognized.
Delay in Softex Submission – Softex forms must be filed within 30 days from the date of the export invoice. If this timeline is missed, the delay must be regularized through condonation.
Missed APR Filing Deadlines – The due date for submitting the APR is 30th June following the end of the financial year. If a company fails to submit the report within this statutory timeline, condonation is required.
Delay in Renewal or Exit Formalities – STPI approvals also require timely renewal, and even the exit process from the scheme follows a structured procedure. Any delay in completing these formalities calls for condonation to avoid complications with the unit’s status.
Non-Compliance with STPI Procedural Instructions – Apart from statutory filings, STPI also sets out certain procedural requirements. If those requirements are not met within the prescribed time, condonation may again be necessary.

Impact on Compliance and Business Continuity

Condonation helps companies:

Shield from penalties: By regularizing missed / delayed filings, condonation prevents potential penalties and enforcement actions under FEMA and STPI regulations.
Keep benefits flowing: Timely condonation ensures you don’t miss out on GST refunds, export incentives, or STPI-linked advantages.
Ensure continuity: Banks can close export proceeds without hassles, and your auditors/regulators see you as fully compliant.
Boosts credibility: A company that stays compliant builds stronger trust with clients, investors, and partners.

Best Practices to Avoid Needing Condonation

Track: Maintain an internal compliance calendar that contains due dates of filing monthly and/or annual compliances.
Check: Conduct periodic internal audits to ensure no filings are pending or delayed, and that any applications returned by STPI are resubmitted within the stipulated timeframe.
Assign: Appoint a compliance officer – a dedicated employee who keeps track of all the filings.
Automate: Leverage digital tools for filing reminders – use dashboards or compliance software to automate alerts and stay ahead of deadlines.
Culture: Make timely filings part of the DNA of your finance and ops teams—not just a tick-box exercise.

How AKM Global Can Help

• End-to-end support for STPI registrations and filings:

From obtaining approvals to managing ongoing Softex and APR submissions, we ensure smooth handling of all compliance touchpoints.

• Drafting and filing condonation applications:

We assist in preparing well-structured condonation requests, compiling supporting documents, and liaising with STPI authorities to regularize past delays.

• Advisory on compliance frameworks for IT/ITES exporters:

Apart from routine fillings, we also help maintain proper compliance system that includes internal control and reporting practices to minimize future risks.

Remember: Condonation is a remedy, not a routine.

While it provides a way to fix past delays, repeated reliance on condonation can weaken your case with authorities. Proactive compliance, on the other hand, ensures business continuity, preserves credibility, and avoids unnecessary costs.

Consult with AKM Global today to simplify your STPI compliance, avoid delays, and ensure smooth export operations.

FAQs

Q1: What is condonation of delay in STPI?

Ans: Condonation of delay is the formal approval granted by STPI authorities to accept compliance filings—such as Softex forms, APR, or renewal requests—that were not submitted within the prescribed deadlines.

Q2: Who can apply for STPI condonation?

Ans: Any IT or IT-enabled services (ITES) company that is registered with STPI and missed a statutory filing deadline.

Q3: How long does the condonation process take?

Ans: The timeline generally depends on the reason for filing of the condonation request – typically, from a few weeks to a few months – depending on the complexity and supporting documents.

Q4: Is there always a penalty for applying late?

Ans: Not always. Penalties are levied only in certain cases depending on the reason and extent of delay.

Q5: Does condonation guarantee acceptance?

Ans: No. but a well-prepared application with valid reasons and proper documentation increases the chances of acceptance significantly.

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