NON-STPI Registration & Compliance

No. 'NON-STPI' is a descriptive category used in regulatory and industry parlance, not a formal registration in itself. It refers to any IT, software development, or ITES company that exports services from regular commercial premises — without being registered under the STPI scheme or located within a notified SEZ. Such companies are simply standard Indian entities (Private Limited Companies, LLPs, etc.) exporting IT services with IEC and GST registrations. The 'NON-STPI' label is most commonly used by DGFT, the income-tax department, and export promotion councils to categorise IT exporters who fall outside the zone-based frameworks.

Not through a specific export-based deduction. The income-tax exemptions for IT exporters — Section 10A (STPI units established before 31 March 2000) and Section 10B (EOU/STPI units before 31 March 2003) — have expired. Section 10AA (SEZ units) is available only to units physically within a notified SEZ with a valid Letter of Approval from the Development Commissioner. A NON-STPI DTA exporter has no export-specific income-tax deduction. It pays corporate tax at the standard rate — 22% concessional under Section 115BAA or 30% standard rate. It can, however, claim all standard business deductions, R&D deductions under Section 35, MSME benefits if eligible, and DPIIT Startup India deductions under Section 80-IAC if recognised.

Yes. Export of services is zero-rated under Section 16 of the IGST Act regardless of whether the exporter is an STPI unit, SEZ unit, or NON-STPI DTA exporter. Zero-rated means no GST is charged on the export invoice, and the exporter is entitled to claim a refund of input tax credit accumulated on business expenses. The mechanism is the same: file a Letter of Undertaking (LUT) on the GST portal annually under Rule 96A CGST Rules, issue export invoices without IGST, and claim input credit refund via Rule 89 application quarterly. STPI units and SEZ units do not have a GST advantage over NON-STPI exporters — the GST treatment is identical for export turnover.

The LUT (Letter of Undertaking) is a declaration filed by an exporter on the GST portal under Rule 96A of the CGST Rules, undertaking to: (a) pay the applicable IGST within 15 days if the export proceeds are not realised within 1 year of the invoice date, and (b) comply with GST export provisions. Filing the LUT allows the exporter to issue invoices to foreign clients without charging IGST — instead accumulating the input credit and filing a refund claim. Without a valid LUT for the current financial year, every export invoice must include IGST at the applicable rate — and the company must then claim a refund of that IGST, which delays receipt of working capital. The LUT must be renewed at the start of each financial year.

Under the Foreign Exchange Management (Export of Goods and Services) Regulations, all foreign currency received for export of services must be repatriated to India and credited to the exporter's INR account through an authorised dealer bank within a prescribed period. For IT and software services, the RBI extended this period from 9 months to 15 months from the date of the export invoice, effective 13 November 2025 (subject to further RBI directions that may vary). Each receipt is evidenced by a Foreign Inward Remittance Certificate (FIRC) or Bank Realisation Certificate (BRC) issued by the bank. Invoices not realised within the permitted period must be reported to the bank and, beyond the extended period, require a formal FEMA compounding application to regularise the violation.

Yes. An Importer-Exporter Code (IEC) issued by DGFT is mandatory for any entity exporting services from India in foreign currency. 'Exporter' in the IEC context includes service exporters — not only goods exporters. Without an IEC, the authorised dealer bank will not process inward foreign currency remittances as export proceeds, and FIRC issuance requires an IEC on record. The IEC is also required for any future capital goods import under DGFT schemes (EPCG, Advance Authorisation) if the company later decides to import hardware. IEC registration is relatively straightforward — online application on the DGFT portal with PAN, incorporation documents, and bank details, typically issued in 3–5 working days.

An IT services exporter pays GST on its business inputs — office rent (18% GST on rent for commercial property), professional services and consultancy (18%), software subscriptions and cloud services (18%), and most office supplies and equipment (18%, under the rationalised 5%/18%/40% GST rate structure effective 22 September 2025, which abolished the earlier 12% and 28% slabs), and so on. Since exports are zero-rated and no output GST is charged, this input GST accumulates as a credit in the GST ledger. A Rule 89 refund application is filed on the GST portal (manually or via a registered GSTP), with a supporting statement (Statement 3) listing all export invoices and a statement of input credit for the refund period. The GST department is required to process the refund within 60 days of the complete application. For a company with ₹50 lakh of export services per quarter and ₹5–10 lakh of GST-bearing input costs, the quarterly input credit refund is typically ₹90,000 to ₹1.8 lakh — significant working capital when accumulated over 3–4 quarters without a refund.

Transfer pricing provisions under Chapter X of the Income-tax Act (Sections 92 to 92F) apply to any Indian company that has 'international transactions' — defined as transactions with 'associated enterprises' outside India — if the aggregate value of such transactions in a financial year exceeds ₹1 crore. An 'associated enterprise' broadly means any entity in which the Indian company (or its promoters) have more than 26% equity, or which participates in the management or control of the Indian company. A NON-STPI IT company that is a captive development centre of a foreign parent, or whose key promoter also owns or controls the foreign client entity, is in a related-party export situation requiring TP documentation. A small IT company selling to an unrelated, arm's-length foreign client with no ownership link is not subject to transfer pricing for those transactions.

Table 6A in GSTR-1 is the specific section where exporters must report all zero-rated export invoices (both 'export with LUT' and 'export with IGST payment'). Each export invoice must be entered with: invoice number, date, port of loading (or, for services, the service export GSTIN of the foreign client), foreign currency, invoice value, and the SWIFT reference or BRC number once realised. The GSTN (GST Network) uses Table 6A data to validate refund claims filed under Rule 89 — an export invoice not reported in Table 6A cannot be included in the refund application. Errors in Table 6A (wrong port code, missing SWIFT reference, incorrect currency) cause refund applications to be rejected or placed in deficiency, requiring amendment GSTR-1 filing in the subsequent month.

Form 3CEB is the Accountant's Report on International Transactions, required under Section 92E of the Income-tax Act. It must be filed electronically by a Chartered Accountant before the due date of the income-tax return (usually 31 October, currently 30 November in years where the deadline is extended) for any company whose aggregate international transactions with associated enterprises exceed ₹1 crore in a financial year. The CA certifies in Form 3CEB: the aggregate value of international transactions, the nature of each transaction type (export of services, import of services, payment of royalties, loans, etc.), and that the transactions have been reported in the prescribed format. Failure to file Form 3CEB when required attracts a penalty of ₹1 lakh under Section 271BA.

FIRC (Foreign Inward Remittance Certificate) is a document issued by the exporter's authorised dealer bank confirming receipt of a specific foreign currency amount from a specific foreign entity. BRC (Bank Realisation Certificate) is a similar document issued by the bank and uploaded on the DGFT's EDPMS (Export Data Processing and Monitoring System) portal — it serves as the official DGFT evidence of export realisation. For GST export refund purposes, the Statement 3 (list of export invoices) in the Rule 89 refund application requires the FIRC/BRC number to be linked to each export invoice. DGFT requires BRC for scheme benefits under export promotion schemes. Both serve the same FEMA compliance purpose. PNPC tracks both and uses whichever the specific application requires.

Yes, an existing company can apply for STPI registration at any stage of its operating history — there is no requirement to apply at incorporation. The company simply applies to the STPI nodal office with jurisdiction over its premises. It does not lose any benefit by waiting — there is no deduction window that starts counting from registration for STPI units (unlike SEZ's Section 10AA, which starts from commencement). The practical consideration is the timing of capital goods import needs: if significant hardware needs are anticipated, registering before the import secures the duty-free benefit from the first import. If there are no near-term capital goods import plans, the registration can wait until the business case is clearer.

GSTR-3B is the monthly summary GST return covering outward supplies, input credit availed, and tax paid. Filing it late attracts a late fee: ₹50 per day (₹25 CGST + ₹25 SGST), capped at ₹10,000 per return, for returns with a tax liability; and ₹20 per day (₹10 CGST + ₹10 SGST), capped at ₹500 per return, for nil-tax-liability returns (which many IT exporters filing under LUT will have). From time to time the CBIC also runs amnesty schemes that reduce or waive part of this late fee for older pending returns filed within a specified window — but the GST portal may block subsequent returns if GSTR-3B for a prior month is pending. Additionally, a late GSTR-3B may delay the processing of export refund claims for that quarter, as the GST department cross-checks GSTR-3B data when processing refunds.

The Employees' Provident Fund (EPF) is mandatory once the establishment has 20 or more employees (covered under the Employees Provident Funds and Miscellaneous Provisions Act 1952). Once the threshold is crossed, even if headcount later falls below 20, EPF continues to apply. Employer contribution: 12% of basic wages (subject to the statutory wage ceiling of ₹15,000 per month for mandatory coverage, though many IT companies contribute on higher wages as a practice); employee contribution: 12% of basic wages. ESI (Employees' State Insurance) applies to establishments with 10 or more employees (in states and areas notified under ESI Act 1948) where employees earn wages below ₹21,000 per month. Employer contribution: 3.25%; employee: 0.75% of gross wages. For software companies with employees earning above ₹21,000, many employees are not covered under ESI, but the registration requirement still applies.

Professional tax is a state-level tax levied on employment. It is applicable in Tamil Nadu, Karnataka, Maharashtra, Andhra Pradesh, Telangana, West Bengal, and several other states — but not all. In Tamil Nadu, the employer pays professional tax at a flat rate per employee per half-year based on salary slabs. In Karnataka, professional tax is deducted from the employee's salary and remitted by the employer. In Maharashtra, there is both an employer-level professional tax (Enrolment) and an employee-level deduction (Registration). A NON-STPI IT company operating in any of these states must register for professional tax in the relevant authority, deduct employee professional tax as applicable, and pay the employer professional tax by the due dates. The registration is state-level — a company with employees in multiple states must comply with each applicable state's professional tax law separately.

RoDTEP (Remission of Duties and Taxes on Exported Products) is a DGFT scheme introduced in 2021 to refund embedded taxes and duties not otherwise refunded on exported goods. It is available for goods exporters under a Schedule of rates notified by DGFT. For service exporters — including IT and ITES companies — RoDTEP is generally not applicable, as the scheme is specifically designed for goods exports where embedded costs like state-level taxes on inputs for physical products are refunded. IT/ITES companies exporting services do not carry embedded goods-level duties in the same sense. However, if a NON-STPI IT company also exports IT hardware or embedded systems products, the goods export component may be eligible for RoDTEP at the applicable rate for the tariff classification of the exported product.

Yes. A NON-STPI IT company can register as a 'Startup' under DPIIT (Department for Promotion of Industry and Internal Trade) Startup India scheme if it meets the eligibility criteria: incorporated as a Private Limited Company, LLP, or Registered Partnership; no more than 10 years from the date of incorporation; annual turnover not exceeding ₹100 crore in any previous year; working towards innovation, development, or improvement of products/processes/services and has potential to generate employment. DPIIT recognition provides: eligibility for Section 80-IAC income-tax deduction on profits (3 consecutive years out of the first 10 — requires DPIIT plus ITSC approval), fast-track patent and trademark processing, self-certification under 9 labour and environment laws, eligibility for Startup India Fund of Funds (FFS) investments, and access to government procurement through GeM. The 80-IAC deduction is different from and potentially additive to Section 10AA — the interaction must be modelled for SEZ startups.

Section 80-IAC of the Income-tax Act provides a deduction of 100% of the profits from an eligible startup's eligible business for any 3 consecutive assessment years out of the first 10 years from the year of incorporation. Eligibility: the company must be incorporated on or after 1 April 2016, must hold DPIIT startup recognition, must have turnover not exceeding ₹100 crore in the relevant assessment year, and must be engaged in an 'eligible business' involving innovation, development, or improvement. The approval for Section 80-IAC must be obtained separately from the Inter-Ministerial Board for Startup Intellectual Property Protection. The deduction is from the total income of the company — reducing its taxable income to zero for the claimed years.

EDPMS (Export Data Processing and Monitoring System) is an RBI system through which authorised dealer banks report and monitor export transactions. When a NON-STPI IT exporter issues an export invoice and subsequently receives payment from the foreign client, the bank processes the inward remittance and matches it to the export invoice in EDPMS. The Bank Realisation Certificate (BRC) is generated on EDPMS once the export proceeds are matched. IT service exporters working with software exports must ensure their bank is aware of the invoice-level tracking requirement in EDPMS — particularly for large contracts with multiple milestone invoices under a single contract. Unmatched entries in EDPMS lead to the RBI treating the export invoice as unrealised.

Yes. A NON-STPI DTA company has full flexibility to serve both Indian and foreign clients from the same entity. There is no restriction on the proportion of domestic vs export revenue. From a GST perspective, domestic invoices attract GST at the applicable rate (18% for most IT services), while export invoices are zero-rated with LUT. From an income-tax perspective, all income (domestic and export) is aggregated and taxed at the corporate rate — there is no export-specific deduction to apportion. From a FEMA perspective, only the export transactions (inward foreign currency remittances) carry the FEMA realisation obligation — domestic invoices are in INR and have no FEMA implication. This flexibility is one of the practical advantages of the NON-STPI DTA path over the SEZ structure.

Section 195 of the Income-tax Act requires Indian entities to deduct tax at source (TDS) on payments made to non-residents (individuals or foreign companies) where the payment represents income that is chargeable to tax in India. Common IT company payments to non-residents that may trigger Section 195: payments to foreign software licensors (royalty under Section 9(1)(vi)), payments to foreign consultants or contractors for services utilised in India (fees for technical services under Section 9(1)(vii)), and payments to foreign cloud infrastructure providers if classified as royalty. The applicable TDS rate is 20% (+ surcharge + cess) or the rate prescribed by the applicable Double Tax Avoidance Agreement (DTAA) between India and the non-resident's country of tax residence — whichever is lower — provided the non-resident furnishes a Tax Residency Certificate (TRC) and Form 10F. Failure to deduct TDS under Section 195 results in disallowance of the expense under Section 40(a)(i) and penal interest.

PNPC begins with a compliance gap audit covering all regulatory dimensions: GST (pending returns, late fees, input credit accumulation), FEMA (outstanding FIRCs, realisation status of each export invoice), income-tax (pending ITR filings, advance tax defaults, TDS return arrears), MCA (pending AOC-4, MGT-7, director KYC), DGFT (IEC status), and PF/ESI if applicable. We then prepare a regularisation roadmap: which filings can be filed late with late fees, which require compounding, and what the estimated cost of regularisation is. We sequence the filings to avoid triggering cross-regulator scrutiny where possible. After regularisation, we implement a forward-looking compliance calendar so the situation does not recur.

PNPC offers annual retainer packages for NON-STPI IT exporters that cover: GST monthly/quarterly returns (GSTR-1, GSTR-3B), GST annual return (GSTR-9), LUT filing each April, quarterly input credit refund applications, TDS quarterly returns (24Q, 26Q, 27Q), advance tax computation and payment, ITR-6 filing, MCA annual returns (AOC-4, MGT-7), director KYC (DIR-3), IEC maintenance, and FEMA FIRC tracking. The retainer fee is based on the scale of operations — transaction volume, number of export invoices, number of employees, and number of states of presence. The scope and fee are confirmed in writing before engagement. Transfer pricing documentation and STPI/SEZ-related work are separately scoped and priced.

NASSCOM (National Association of Software and Service Companies) is the primary industry body for IT/ITES companies in India. Membership provides industry advocacy, benchmarking data, and certification of software export figures — sometimes useful for banking relationships. NASSCOM does not provide the regulatory compliance benefits of STPI or SEZ. SEPC (Services Export Promotion Council) is the DGFT-recognised export promotion council for service exporters — RCMC (Registration Cum Membership Certificate) from SEPC enables access to DGFT market development assistance schemes and is sometimes requested by foreign buyers for export documentation. STPI itself issues 'Export of Software Reports' to STPI-registered units — non-STPI companies do not have this certification, which can be a minor disadvantage in certain government or defence-adjacent contracts requiring STPI export certification.

Converting from a NON-STPI DTA structure to an SEZ unit is a significant step. The process: (1) the company must identify a notified SEZ location for its proposed premises, (2) obtain a lease/allotment from the SEZ developer for the SEZ premises, (3) apply to the Development Commissioner for a Letter of Approval (LOA) with a project report, (4) upon LOA issuance, the new SEZ unit is a separate 'undertaking' within the same legal entity — it begins operations in the SEZ premises from the LOA date. The company can simultaneously continue its DTA operations from the original premises under a separate division. The Section 10AA deduction window begins from the first year of the SEZ unit's operations — prior DTA operating history does not extend the window backward. The capital goods register for the SEZ unit must be separately maintained.

PNPC Global has been managing IT/ITES exporter compliance since the inception of the software export frameworks in India — pre-dating the current STPI scheme. Our Chennai, Bangalore, and Hyderabad offices work with a range of IT exporters from early-stage product companies and boutique consulting firms to mid-sized ITES operations and GCC (Global Capability Centre) subsidiaries of foreign companies. Our team handles the full compliance stack simultaneously: GST (refund-specialised team), income tax (including transfer pricing for captive IT units), MCA filings, FEMA and DGFT, and cross-border India-UAE structures from our Dubai office. We understand that NON-STPI IT compliance is not simpler than STPI compliance — it spans equally many regulations, just without the zone-specific overlay.

In order of frequency in our regularisation engagements: (1) LUT not filed before first export invoice of the year — first quarter's exports processed without LUT, leading to retroactive amendments. (2) FIRC not tracked — export invoices accumulating beyond the 15-month FEMA realisation window (extended from 9 months effective 13 November 2025) without a realisation record, creating FEMA defaults. (3) GST input credit refund not filed — accumulated input credit sitting idle, sometimes for years. (4) Section 195 TDS not deducted on payments to foreign cloud/software providers — resulting in expense disallowance. (5) MCA annual returns missed for a year — director DIN deactivated by default chain. (6) Transfer pricing documentation not prepared for captive-centre structures — penalty exposure. (7) IEC not updated after company address or signatory change — FIRC mismatch.

Many NON-STPI IT exporters have a parallel presence in the UAE — whether a Free Zone company acting as the foreign billing entity, a Mainland LLC handling UAE-based clients, or simply a UAE bank account through which international receipts flow. India-UAE cross-border IT business has specific tax and regulatory implications: India-UAE DTAA (avoidance of double taxation) applies to services provided between the two jurisdictions; UAE Corporate Tax (introduced at 9% on business profits above AED 375,000 from June 2023) applies to the UAE entity; transfer pricing between the Indian and UAE entities (if they are associated enterprises) must be at arm's length; and Permanent Establishment (PE) risk exists if the UAE entity performs substantive functions that could be attributed to the Indian entity. PNPC's Dubai office works alongside the India team on all cross-border structuring — the same CA firm manages both sides without the context loss inherent in referrals to a UAE partner.

RCMC (Registration Cum Membership Certificate) from SEPC (Services Export Promotion Council) is the export promotion council membership certificate for service exporters under the DGFT framework. It is required to access certain DGFT market development assistance schemes, participate in government-sponsored trade fairs and buyer-seller meets for services, and — in some cases — to claim benefits under export promotion schemes that mandate RCMC from the relevant council. For IT service exporters, SEPC is the designated council. NASSCOM membership (for IT companies) is separately recognised for industry purposes. RCMC is not mandatory for day-to-day GST or FEMA compliance — but it is required for any DGFT scheme benefit that has a services-sector RCMC condition.

Under FEMA, export of services must be paid for in freely convertible foreign currency — the receipt must come in as foreign exchange, be processed through the banking channel, and generate a FIRC. If a foreign client remits payment in INR (from an INR account held in India or through an arrangement that avoids foreign exchange), it may not qualify as an 'export realisation' for FEMA purposes. RBI has made specific provisions for certain categories of INR-denominated exports — including trade with countries that face foreign exchange shortages and have specific RBI approval frameworks. For standard IT service exports, INR payment from a foreign client is unusual and should be flagged to the authorised dealer bank for assessment before the invoice is raised in INR.

The India-US DTAA (Double Taxation Avoidance Agreement) is relevant in two directions for NON-STPI IT exporters: (1) when the Indian company receives fees from US clients for services performed in India, the income is generally business income of the Indian company taxable only in India (unless the Indian company has a permanent establishment in the US) — the US client does not withhold US withholding tax if the services are performed entirely from India with no US PE; (2) when the Indian company makes payments to US-resident individuals or companies (for technical services, software licences, royalties, etc.), Indian withholding tax under Section 195 applies, and the DTAA rate for royalties and fees for technical services between India and the US is typically 15% (subject to confirmation of US residency via TRC and Form 10F). FATCA and FBAR obligations may apply to the US clients — but these are the US client's obligation, not the Indian exporter's.

A Global Capability Centre (GCC) — also called a Global In-house Centre or captive centre — is an Indian subsidiary or branch of a foreign company that provides IT, ITES, finance, or operations services exclusively or primarily to its foreign parent or group companies. An independent NON-STPI IT exporter sells services to unrelated foreign clients. The compliance difference is significant: a GCC is by definition in a related-party export relationship with the foreign parent, making transfer pricing documentation mandatory from the first year of international transactions exceeding ₹1 crore. An independent IT exporter selling to unrelated foreign clients generally has no transfer pricing obligation. GCCs also typically have Permanent Establishment (PE) risk considerations — if the GCC performs functions that effectively constitute the foreign parent's business in India, the parent may be treated as having a PE in India, with consequential Indian income-tax exposure on the parent's India-attributed profits.

Notices and assessments are part of the post-filing lifecycle that PNPC manages as an extension of the compliance retainer — not as a separately billable emergency. For GST scrutiny: we respond to DRC-01 notices (demand notices), ASMT-10 scrutiny notices, and audit notices from the GST department, with the underlying return data, refund claim documentation, and export invoice records immediately to hand. For income-tax assessments: we represent clients before the Assessing Officer, prepare the assessment response, and manage the appeal to CIT(A) and ITAT if required. Transfer pricing scrutiny assessments — where the AO challenges the export price to a related party — are handled with the full TP documentation record prepared contemporaneously. Having continuous engagement with a single firm means the response to any notice is grounded in the full history of the client's compliance — not a reconstruction exercise.