Your bank has asked for a SOFTEX number and nobody told you what that was.

It is the declaration that a software or IT service export has taken place, certified by Software Technology Parks of India, and the banking system uses it to match your export invoices against the money that arrives. If you export software or IT-enabled services from India you generally need it, and the requirement is not limited to companies located inside an STPI park. It matters because realisation of export proceeds under the exchange-control rules is tracked against these declarations — which is why the request usually reaches you from your bank rather than from a regulator.

Precisely so that your SOFTEX forms can be certified. An exporter outside a park registers as a non-STPI unit, which is an administrative registration rather than joining a scheme — you get no premises, no duty benefits and no tax holiday from it. It exists because the certification has to come from somewhere. Small exporters and consultancies routinely do not know this until a remittance will not close, and then have to register and file retrospectively.

No. The old STPI income tax holiday ended many years ago, and the tax holiday for units in a special economic zone closed to units that commenced operations after 31 March 2020. So the choice between SEZ, STPI and an ordinary office is now about duty treatment, operating constraints and where you want to be, not about income tax. Anyone presenting an SEZ or STPI tax holiday to a new venture is working from material that is more than half a decade out of date.

Exports are zero-rated, and you have two routes. File a letter of undertaking and export without charging or paying the tax, which is renewed each financial year and is much better for cash flow. Or pay the integrated tax on the export and claim it back as a refund. Either way you can claim refunds of the tax paid on your own inputs. What trips people up is the documentation: the payment must come in convertible foreign exchange, the recipient must be outside India, and the supplier and recipient must not be merely establishments of the same person — that last one catches an Indian branch billing its own head office.

Export proceeds must be realised and repatriated within the prescribed period, and receipts that stay open show up as outstanding export bills at your bank. In practice this happens for dull reasons — a remittance not matched to an invoice, a missing SOFTEX number, a short payment after bank charges — rather than because a client did not pay. The fix is reconciliation and, where the delay is real, an extension or a write-off through the proper route. The cost of leaving it is that the bank becomes reluctant to process further remittances.

For services, an Import Export Code is needed where the payment comes through banking channels or where you claim a benefit under a foreign trade scheme, which covers most software exporters. It is issued against your PAN, one per PAN, and it does not expire — but it has to be confirmed online every year between April and June, and an unconfirmed code is deactivated. That deactivation is another way a remittance suddenly stops clearing.

Yes, in two ways. The pricing has to be at arm's length because you are related parties, which brings transfer pricing documentation and the annual accountant's report — a cost-plus markup benchmarked and documented rather than a number the group agreed internally. And on the GST side, check carefully that the supply qualifies as an export at all: where the Indian entity and the overseas recipient are merely establishments of the same person, it does not, and an intra-group arrangement can fall on the wrong side of that line depending on how it is structured.

Invoices matched to SOFTEX declarations, the inward remittance certificates or bank advices proving receipt in foreign currency, the contract or purchase order with the overseas client, your letter of undertaking for the year, and the GST returns and refund claims. Kept as you go, this is fifteen minutes a month. Reconstructed at the year end, or when a refund is queried, it is the most expensive housekeeping in a small export business.