Service exporters, export service which cannot be physically seen and can generally be classified as IT service and IT Enabled Service (ITES). IT services is related to Information Technology services which includes systems software development, Data Analytics, cloud technology, CRM Solutions, Web Mobile Application, System Integration Networking to name a few. ITES includes services like data entry and processing services, Engineering and design services, business processing services, Health care services, Legal and content writing services, IT education and training services etc.
No physical movement of goods is present in service exports and hence the onus to prove that these are exports lies with the service provider. Some of the main documents to prove export of service is the FIRC-Foreign Inward Remittance/EBRC, Invoice and the Service Agreement entered into with the Foreign Client.
Registration with STPI
RBI Master Circular No. RBI/2013-14/14 dated 1st July 2013, RBI Circular No.80 dated 15th February 2012 and RBI Circular No.43 dated 13th September 2013, states that any company engaged in IT/ITES exports through Data communication links have to submit Softex Form for certification. Such Units which is engaged in IT Or ITES need to file the Softex with Software Technology Park of India ( STPI). Units situated in DTA (Domestic Tariff area) will register themselves as NSTPI and file softex.
SOFTEX Filing Process:
The process involves generating Softex number from RBI . Single number or bulk numbers can be generated online. The related Softex Form No. would be generated for each transaction by the applicant exporter. The Foreign Exchange Management Act (FEMA) requires exporters to complete the SOFTEX Form using the number so allotted and submit them to the specified authority first for certification and then to AD for necessary action as hitherto. Other documents to be submitted online are
- Service export Invoice
- Internet bills
- Service contract
- RBI Softex No generated
STPI will verify the documents and approve the Softex. The approved Softex to be submitted to the bank,which is the authorised dealer. Bank issues the E-BRC for the exports. These details are electronically transmitted to DGFT from the bank. E-BRC copies can be obtained from the DGFT portal.
EBRC and FIRC
Electronic bank realisation certificate is issued by the bank to confirm the payment has been received against export and trade transaction. Hence this is a vital document to prove the receipt against the invoice raised. For Service exporters it acts as a link between the Invoice raised against the Service rendered and the remittance.
- EBRC contains the following details:
- Shipping bills No, date and Port
- Bank Name
- Bill Id no
- Bank realisation certificate no
- Date of realisation,
- Currency and the value
- FIRC –Foreign Inward remittance is issued for the receipt any foreign currency. This may be receipt relating to the trade transactions or even relating to advance , any other charges and fees.
- Inward Remittance no
- Sender Reference no
- Currency and Value
- Exchange rate and the INR value
- Date of credit
- Purpose of remittance
Need to file Softex
The question very often arises with the exporters why should we file Softex or is it mandatory? To answer your question read the below mentioned guidelines of FEMA and the consequence of Non -compliance.
As RBI/FED/2015-16/11 FED Master Direction No. 16/2015-16 (updated from time to time) on Export of Goods & Services, all exporters, who receive advance remittance from buyer(s) outside India, are under regulatory obligation to ensure the documents covering the shipment are routed through the AD Category – 1 bank through whom advance remittance is received within the specified period. In the case of Software exporters, Softex will be document which has to be filed with the bank.
Non filing of Softex by IT and ITES companies will lead to violation of FEMA. RBI issues the list of defaulters to the concerned bank of the exporter. Non-compliance of filing Softex will lead the bank to put the exporter in the caution list. Once the exporter is classified under the Caution list the Authorised Dealer (Bank) will not handle further inward remittance and report to the RBI.
GST Refund Processing
Exports are classified as Zero Rated supply. Service exports can be made under LUT without the payment of IGST. Hence GST refund can be claimed on all the eligible inputs credits related to export of service. Since EBRCs are issued with respect to the invoice raised it becomes easy to provide the link between the remittance and the Invoice raised. EBRC will be issued by the bank on filing the Softex approved invoice. This can expedite the process of GST refunds in case of service exporters.
Incentives and other benefits available to the exporters from the Foreign Trade Policy can be obtained with the help of EBRC.
For further clarification or enquiry please mail to [email protected]
Author Bio
Can we say one cannot export service without filing softex because clients use p0802 code to export sevice without filing of softex.
Thank you for explaining in detail. as per the circular it is mentioned that “In the case of Software exporters, Softex will be document which has to be filed with the bank.” So softex is mandatory for export of software only?….softex is mandatory for ITES is not mentioned in the circular so there is a doubt, whether ITES providers need to file softex? please guide.
As per 2(VIII) FEMA ‘software’ means any computer programme, database, drawing, design, audio/video signals, any information by whatever name called in or on any medium other than in or on any physical medium . Hence it also covers ITES services like Engineering Design, Data Processing etc .Please feel fee to mail me in case any further clarification is required.
All Technicalities of the topic covered in commanding & Lucid manner. A handy resource for One & All.
Very nicely worded and explained in most simplistic way that any one can understand the process.
good keep it up
♡ Excellent coverage on Softex filing with reference to RBI guidelines, Provisions of FEMA and GST.
♡ Significance of EBRC and FIRC and their role in expediting the process of GST refunds in case of Software exporters have been dealt with admitably well.
♡ Best Wishes,💥.
CA K Ravi Shankar
Good presentation on the topic and it helps even a layman to understand the process of Softex filing and compliance requirements.
Very informative article
Thank you for explaining all the aspects of STPI and SOFTEX at length. Helpful for Industry and Professionals.