Procedure for Setting Up Stp Units

8/20/2019 Procedure for Setting Up Stp Units

1/26

INTRODUCTION

PROCEDURE FOR SETTING UP STP UNITS

Procedure for Application

Competent Authorities for rantin the Appro!als

Criteria for Automatic Appro!al

Procedure for o"tainin appro!al for Su"#contractin

$EGA$ FOR%A$ITIES

Procedure for sinin the leal areement

Green cards to STP units

&ondin

Procedure for &ondin

Sinle all purpose &ond '()*

Distinct identit+

%ultiple locations

Reistration#cum#%em"ership Certificate

Importer#E,porter Code Num"er

I%PORT &- STP UNITS

Import of Capital Goods

Procedure for o"tainin Import Certificate

Appro!al for enhancement in !alue of Capital Goods

Certification for Re#E,port of imported oods

APPRO.A$ FOR INDIGENOUS PURC/ASE 'CT#0*

%ONITORING T/E PERFOR%ANCE OF STP UNITS

%onthl+ proress Reports

Annual proress Reports

http://www.stpi.in/Handbook.htm#INTRODUCTIONhttp://www.stpi.in/Handbook.htm#PROCEDUREFORSETTINGUPSTPUNITShttp://www.stpi.in/Handbook.htm#ProcedureforApplicationhttp://www.stpi.in/Handbook.htm#CompetentAuthoritiesforgrantingtheApprovalshttp://www.stpi.in/Handbook.htm#CriteriaforAutomaticApprovalhttp://www.stpi.in/Handbook.htm#ProcedureforobtainingapprovalforSub-contractinghttp://www.stpi.in/Handbook.htm#LEGALFORMALITIEShttp://www.stpi.in/Handbook.htm#Procedureforsigningthelegalagreementhttp://www.stpi.in/Handbook.htm#GreencardstoSTPunitshttp://www.stpi.in/Handbook.htm#Bondinghttp://www.stpi.in/Handbook.htm#ProcedureforBondinghttp://www.stpi.in/Handbook.htm#SingleallpurposeBond(B-17)http://www.stpi.in/Handbook.htm#Distinctidentityhttp://www.stpi.in/Handbook.htm#Multiplelocationshttp://www.stpi.in/Handbook.htm#Registration-cum-MembershipCertificatehttp://www.stpi.in/Handbook.htm#Importer-ExporterCodeNumberhttp://www.stpi.in/Handbook.htm#IMPORTBYSTPUNITShttp://www.stpi.in/Handbook.htm#ImportofCapitalGoodshttp://www.stpi.in/Handbook.htm#ProcedureforobtainingImportCertificatehttp://www.stpi.in/Handbook.htm#ApprovalforenhancementinvalueofCapitalGoodshttp://www.stpi.in/Handbook.htm#CertificationforRe-Exportofimportedgoodshttp://www.stpi.in/Handbook.htm#APPROVALFORINDIGENOUSPURCHASE(CT-3)http://www.stpi.in/Handbook.htm#MONITORINGTHEPERFORMANCEOFSTPUNITShttp://www.stpi.in/Handbook.htm#MonthlyprogressReportshttp://www.stpi.in/Handbook.htm#AnnualprogressReportshttp://www.stpi.in/Handbook.htm#INTRODUCTIONhttp://www.stpi.in/Handbook.htm#PROCEDUREFORSETTINGUPSTPUNITShttp://www.stpi.in/Handbook.htm#ProcedureforApplicationhttp://www.stpi.in/Handbook.htm#CompetentAuthoritiesforgrantingtheApprovalshttp://www.stpi.in/Handbook.htm#CriteriaforAutomaticApprovalhttp://www.stpi.in/Handbook.htm#ProcedureforobtainingapprovalforSub-contractinghttp://www.stpi.in/Handbook.htm#LEGALFORMALITIEShttp://www.stpi.in/Handbook.htm#Procedureforsigningthelegalagreementhttp://www.stpi.in/Handbook.htm#GreencardstoSTPunitshttp://www.stpi.in/Handbook.htm#Bondinghttp://www.stpi.in/Handbook.htm#ProcedureforBondinghttp://www.stpi.in/Handbook.htm#SingleallpurposeBond(B-17)http://www.stpi.in/Handbook.htm#Distinctidentityhttp://www.stpi.in/Handbook.htm#Multiplelocationshttp://www.stpi.in/Handbook.htm#Registration-cum-MembershipCertificatehttp://www.stpi.in/Handbook.htm#Importer-ExporterCodeNumberhttp://www.stpi.in/Handbook.htm#IMPORTBYSTPUNITShttp://www.stpi.in/Handbook.htm#ImportofCapitalGoodshttp://www.stpi.in/Handbook.htm#ProcedureforobtainingImportCertificatehttp://www.stpi.in/Handbook.htm#ApprovalforenhancementinvalueofCapitalGoodshttp://www.stpi.in/Handbook.htm#CertificationforRe-Exportofimportedgoodshttp://www.stpi.in/Handbook.htm#APPROVALFORINDIGENOUSPURCHASE(CT-3)http://www.stpi.in/Handbook.htm#MONITORINGTHEPERFORMANCEOFSTPUNITShttp://www.stpi.in/Handbook.htm#MonthlyprogressReportshttp://www.stpi.in/Handbook.htm#AnnualprogressReports


2/26

E1PORT PERFOR%ANCE OF STP UNITS

Process for E,port Certification

Throuh data communication lin2s

Ph+sical 'floppies3 manetic tapes3 CDs3 etc4*

On site consultanc+

SA$ES IN DO%ESTIC TARRIF AREA

DTA Sale of Soft5are throuh Data Communication

Elii"ilit+ for DTA Sales

Procedure for ettin appro!al "+ STP units for DTA Sales

PO6ERS OF APPRO.A$ OF T/E DIRECTOR

Con!ersion of e,istin DTA units into STP units

Post Appro!al %atters

Additional import of Capital Goods

Attestation of list of imported CG

Chane of location

E,tension of !alidit+ of $etter of Permission

Disposal of o"solete capital oods

Import of office e7uipment

Chane in name

%erer of t5o or more STP units

.aluation of e,ports declared on SOFTE1 form

Inter unit transfer and temporar+ remo!al of oods

Appro!al for e,pansion of the operations

RE#I%&URSE%ENT OF CENTRA$ SA$ES TA1

Procedure for reim"ursement of CST

http://www.stpi.in/Handbook.htm#EXPORTPERFORMANCEOFSTPUNITShttp://www.stpi.in/Handbook.htm#ProcessforExportCertificationhttp://www.stpi.in/Handbook.htm#Throughdatacommunicationlinkshttp://www.stpi.in/Handbook.htm#Physical(floppies,magnetictapes,CDs,etc.)http://www.stpi.in/Handbook.htm#Onsiteconsultancyhttp://www.stpi.in/Handbook.htm#SALESINDOMESTICTARRIFAREAhttp://www.stpi.in/Handbook.htm#DTASaleofSoftwarethroughDataCommunicationhttp://www.stpi.in/Handbook.htm#EligibilityforDTASaleshttp://www.stpi.in/Handbook.htm#ProcedureforgettingapprovalbySTPunitsforDTASaleshttp://www.stpi.in/Handbook.htm#POWERSOFAPPROVALOFTHEDIRECTORhttp://www.stpi.in/Handbook.htm#ConversionofexistingDTAunitsintoSTPunitshttp://www.stpi.in/Handbook.htm#PostApprovalMattershttp://www.stpi.in/Handbook.htm#AdditionalimportofCapitalGoodshttp://www.stpi.in/Handbook.htm#AttestationoflistofimportedCGhttp://www.stpi.in/Handbook.htm#Changeoflocationhttp://www.stpi.in/Handbook.htm#ExtensionofvalidityofLetterofPermissionhttp://www.stpi.in/Handbook.htm#Disposalofobsoletecapitalgoodshttp://www.stpi.in/Handbook.htm#Importofofficeequipmenthttp://www.stpi.in/Handbook.htm#Changeinnamehttp://www.stpi.in/Handbook.htm.aspx#MergeroftwoormoreSTPunitshttp://www.stpi.in/Handbook.htm#ValuationofexportsdeclaredonSOFTEXformhttp://www.stpi.in/Handbook.htm#Interunittransferandtemporaryremovalofgoodshttp://www.stpi.in/Handbook.htm#Approvalforexpansionoftheoperationshttp://www.stpi.in/handbook.aspx#RE-IMBURSEMENTOFCENTRALSALESTAX%20http://www.stpi.in/Handbook.htm#ProcedureforreimbursementofCSThttp://www.stpi.in/Handbook.htm#EXPORTPERFORMANCEOFSTPUNITShttp://www.stpi.in/Handbook.htm#ProcessforExportCertificationhttp://www.stpi.in/Handbook.htm#Throughdatacommunicationlinkshttp://www.stpi.in/Handbook.htm#Physical(floppies,magnetictapes,CDs,etc.)http://www.stpi.in/Handbook.htm#Onsiteconsultancyhttp://www.stpi.in/Handbook.htm#SALESINDOMESTICTARRIFAREAhttp://www.stpi.in/Handbook.htm#DTASaleofSoftwarethroughDataCommunicationhttp://www.stpi.in/Handbook.htm#EligibilityforDTASaleshttp://www.stpi.in/Handbook.htm#ProcedureforgettingapprovalbySTPunitsforDTASaleshttp://www.stpi.in/Handbook.htm#POWERSOFAPPROVALOFTHEDIRECTORhttp://www.stpi.in/Handbook.htm#ConversionofexistingDTAunitsintoSTPunitshttp://www.stpi.in/Handbook.htm#PostApprovalMattershttp://www.stpi.in/Handbook.htm#AdditionalimportofCapitalGoodshttp://www.stpi.in/Handbook.htm#AttestationoflistofimportedCGhttp://www.stpi.in/Handbook.htm#Changeoflocationhttp://www.stpi.in/Handbook.htm#ExtensionofvalidityofLetterofPermissionhttp://www.stpi.in/Handbook.htm#Disposalofobsoletecapitalgoodshttp://www.stpi.in/Handbook.htm#Importofofficeequipmenthttp://www.stpi.in/Handbook.htm#Changeinnamehttp://www.stpi.in/Handbook.htm.aspx#MergeroftwoormoreSTPunitshttp://www.stpi.in/Handbook.htm#ValuationofexportsdeclaredonSOFTEXformhttp://www.stpi.in/Handbook.htm#Interunittransferandtemporaryremovalofgoodshttp://www.stpi.in/Handbook.htm#Approvalforexpansionoftheoperationshttp://www.stpi.in/handbook.aspx#RE-IMBURSEMENTOFCENTRALSALESTAX%20http://www.stpi.in/Handbook.htm#ProcedureforreimbursementofCST


3/26

DE&ONDING

Procedure for De#&ondin of STP units

Rate of depreciation for de"ondin of Capital oods from the STPunits

DEE%ED E1PORTS

TA1 INCENTI.ES FOR STP UNITS

Conditions

RE$E.ANT NOTIFICATIONS

Temporar+ ta2in out of computers

Customs dut+ e,emption for Computers and Peripherals donated "+

STP units

FOR%S

(8#F#9( : Application for setting up units under STPI Scheme for 100% export of ComputerSoftware

(8#F#9; : Format for Letter of Permission issued to the units

(8#F#9< : Part-I Format for Letter of Permission issued to the units

Part-II Format for Letter of Permission issued to the units

(8#F#9= : Format for otaining appro!al for "TA Sales entitlement # STP units

(8#F#9) : PERFORMA-I $euest for &nhancement in the !alue of Capital 'oods

PERFORMA-II Performance of the Compan#

(8#F#9> : FORM-A &xporter(s "eclaration efore ser!ices are pro!ided

(8#F#(9 : FORM-B Information to e supplied # the exporter of the pa#ment recei!ed inrespect of ser!ices rendered

(8#F#(( : Application for claiming reimursement of Central Sales Tax

(8#F#(; : Chartered Accountant Certificate showing details of goods purchased

(8#F#(0 : PERFORMA-I Performance of the Compan#

PERFORMA-II List of items to e deonded

http://www.stpi.in/Handbook.htm#DEBONDINGhttp://www.stpi.in/handbook.aspx#ProcedureforDe-BondingofSTPunitshttp://www.stpi.in/Handbook.htm#RateofdepreciationfordebondingofCapitalgoodsfromtheSTPunitshttp://www.stpi.in/Handbook.htm#RateofdepreciationfordebondingofCapitalgoodsfromtheSTPunitshttp://www.stpi.in/Handbook.htm#DEEMEDEXPORTShttp://www.stpi.in/Handbook.htm#TAXINCENTIVESFORSTPUNITShttp://www.stpi.in/Handbook.htm#Conditionshttp://www.stpi.in/Handbook.htm#RELEVANTNOTIFICATIONShttp://www.stpi.in/Handbook.htm#Temporarytakingoutofcomputershttp://www.stpi.in/Handbook.htm#CustomsdutyexemptionforComputersandPeripheralsdonatedbySTPunitshttp://www.stpi.in/Handbook.htm#CustomsdutyexemptionforComputersandPeripheralsdonatedbySTPunitshttp://www.stpi.in/downlode.aspxhttp://www.stpi.in/forms/15-f-01.dochttp://www.stpi.in/forms/15-f-02.dochttp://www.stpi.in/forms/15-f-04.dochttp://www.stpi.in/forms/15-f-06.dochttp://www.stpi.in/forms/15-f-07.dochttp://www.stpi.in/forms/15-f-09.dochttp://www.stpi.in/forms/15-f-10.dochttp://www.stpi.in/forms/15-f-11.dochttp://www.stpi.in/forms/15-f-12.dochttp://www.stpi.in/forms/15-f-13.dochttp://www.stpi.in/Handbook.htm#DEBONDINGhttp://www.stpi.in/handbook.aspx#ProcedureforDe-BondingofSTPunitshttp://www.stpi.in/Handbook.htm#RateofdepreciationfordebondingofCapitalgoodsfromtheSTPunitshttp://www.stpi.in/Handbook.htm#RateofdepreciationfordebondingofCapitalgoodsfromtheSTPunitshttp://www.stpi.in/Handbook.htm#DEEMEDEXPORTShttp://www.stpi.in/Handbook.htm#TAXINCENTIVESFORSTPUNITShttp://www.stpi.in/Handbook.htm#Conditionshttp://www.stpi.in/Handbook.htm#RELEVANTNOTIFICATIONShttp://www.stpi.in/Handbook.htm#Temporarytakingoutofcomputershttp://www.stpi.in/Handbook.htm#CustomsdutyexemptionforComputersandPeripheralsdonatedbySTPunitshttp://www.stpi.in/Handbook.htm#CustomsdutyexemptionforComputersandPeripheralsdonatedbySTPunitshttp://www.stpi.in/downlode.aspxhttp://www.stpi.in/forms/15-f-01.dochttp://www.stpi.in/forms/15-f-02.dochttp://www.stpi.in/forms/15-f-04.dochttp://www.stpi.in/forms/15-f-06.dochttp://www.stpi.in/forms/15-f-07.dochttp://www.stpi.in/forms/15-f-09.dochttp://www.stpi.in/forms/15-f-10.dochttp://www.stpi.in/forms/15-f-11.dochttp://www.stpi.in/forms/15-f-12.dochttp://www.stpi.in/forms/15-f-13.doc


4/26

PERFORMA-III Specification of the items to e deonded

(8#F#(


5/26

The customer premises in India is connected to their client located abroad by gateway which is locatedat "T)I:s 4entres through a radio lin ,using either point to point or point +4%-* to multi point radio+T%-* in. This facilitates any company operating in India or abroad connected to Internet, and to access"oft#T. Today all ma(or software e$porters in India are customers of "oftnet +"T)I%atacom.

SoftNet is the data communication networ owned by "T)I. ;ollowing services are provided under this3mbrella.

softin

soft)oint

o #-ail

o ;T) +;ile Transfer )rotocol

o 5emote ogin

o ???

o 3se#T

o %ata base access.

SoftPOINT : "oft)2IT offers )2ITT2)2IT International eased IG ")##% %*T*4ommunication lins of 6@ 7)" upto A -)". The 4ustomer premises in India is connected to their clientlocated abroad by gateway which is located at "T)I 4ente through a radio lin using either the point to pointor point to multi point radio +T%-* in. The "ervice is available round the cloc and charges are fi$edirrespective of the time and volume of data transferred by the user.

o


6/26

o e$emption of local ta$es for domestic purchasesE

o sale in domestic maret upto /BC of e$portE

o e$emption of corporate Income ta$ for a bloc of 1B years.

The "cheme stipulates a -inimum #$port 2bligation for five years at 3"% B.A/ -illion +appro$ 5s.1.A/4rores or F times the 4I; value of imported capital goods, whichever is higher. -inimum et ;oreign#$change #arning as a percentage of e$ports +;#) should be 1BC for "T) units.

PROCEDURE FOR SETTIN" UP STP UNITS

Pro#ed$re for App%i#ation

*pplications for securing both types of approvals +automatic or through the I-"4 is submitted to the%irector, "T)I within whose (urisdiction the unit is proposed to be situated +see page 11 of ;orm 1/;B1.

*n application for setting up a "T) unit is received in the prescribed format no. 1/;B1 +available

from the concerned "T)I from the potential software e$porter.

*pplication should be duly filled in with signatures and rubber stamp on the each page of theapplication.

* demand draft in favour of "T)I within whose (urisdiction the unit falls for 5s.A,/BB= on account of

*pplication ;ee.

)ro(ect 5eport covering details as per the format given at page 11 of form 1/;B1.

-emorandum & *rticles of *ssociation +in case the applicant is a company and chec whether the

!4omputer "oftware=IT enabled services' is one of the ob(ects in the -ain 2b(ect para of the-emorandum of *ssociation.

)artnership %eed +in case of )artnership ;irm

The %irector acnowledges the receipt of the application and a reference number is given to eachapplication.

The applicant is thereafter called to give a presentation on the pro(ect that he proposes to undertae withcomplete profile of the promoters, field of software development, mareting arrangement, business plan etc.in the "T)I office.

2n approval of the pro(ect by the %irector, letter of permission +in format o. 1/;BA is issued to theunits. The unit is thereafter considered registered under the "T) "cheme.

Co&petent A$t'oritie( for )rantin) t'e Appro*a%(

*s per press note no. A of ABBB dt. 11.A.ABBB>

*ll proposals conforming to the prescribed parameters +specified in )ara A.F shall receive

automatic approval within 1/ days from the %irector, "T)I. *ll proposals for ;%I in "T) units Dualifyfor automatic route.


7/26

* proposal of an e$isting company issuing foreign eDuity shall be forwarded by %irector to the Inter

-inisterial "tanding 4ommittee +4haired by the "ecretary, %epartment of Information Technologyfor consideration. I-"4 shall grant approval within @/ days.

Criteria for A$to&ati# Appro*a%

The following will be the criteria for securing automatic approval from the %irector, "T)I within whose (urisdiction the unit is proposed to be set up.

The %irectors of "T)I have been vested with powers to approve pro(ects irrespective of the value

of import of 4apital GoodsE

The 3nits meets the reDuirements of the 4ustoms *uthorities in so far as>

o It is amenable to bonding by the 4ustomsE

o *ll the manufacturing operations are carried out in the same premises and the proposal does not

envisage sending out of the bonded area any raw material or intermediate products for any othermanufacturing or processing activityE

owever, the unit may be permitted to subcontract part of their production process through (ob wor byunits in %T* of other "T) 3nits including subcontracting abroad on fulfillment of prescribed conditions.

Pro#ed$re for o+tainin) appro*a% for S$+-#ontra#tin)

5eDuest in this regard is permitted by the "T)I on the basis of factors such as fi$ation of Input and 2utputnorms, and is processed by 4ustoms authority on furnishing of undertaing by the concerned units. If the (obis subcontracted to another "T) unit then only one of them is eligible to claim e$port benefit.

The unit is reDuired to submit a reDuest letter alongwith the details of materials to be sent for (ob worand the goods to be received after the (ob wor is completed.

The minimum e$port performance for five years should be 3"% B.A/ -illion or F times the 4I;

value of imported capital goods, whichever is higher. -inimum et ;oreign #$change #arning as apercentage of e$ports +;#) should be 1BC.

E"A FORMAITIES

etter of )ermission +2) issued by the "T)I would be construed as a license for all purposes under thescheme including procurement of raw materials and consumables. The 2) shall specify the items ofmanufacture, limit of imported capital goods, pro(ected e$port turnover in / years, location of "T) unit,validity period, et ;oreign #$change earnings as a percentage of e$ports +;#), limitation regarding sale

of finished goods and re(ects in the %omestic Tariff *rea +%T* and such other matters as may be necessaryand also impose such conditions as may be reDuired. The unit is reDuired to send a letter to the %irector,"T)I confirming the acceptance of the terms and conditions as laid down in the 2).

Thereafter, the unit shall e$ecute a egal 3ndertaing as per format in *ppendid$I, with the %irector,"T)I concerned.

Pro#ed$re for (i)nin) t'e %e)a% a)ree&ent


8/26

The egal 3ndertaing is to be e$ecuted on a stamp paper of 5s./B= procured from the civil court

under which the concerned "T)I centre falls.

#ach page of the egal 3ndertaing is reDuired to be signed and stamped by a person duly

authorised in this behalf along with the 4ommon "eal of the 4ompany.

* copy of the oard resolution authorising the person to act as signatory on its behalf is also

reDuired to be enclosed.

The egal 3ndertaing after acceptance is signed by the authorised signatory of "T)I and the

original is retained. * photocopy of the same is returned to the unit for record purposes.

4opy of the egal 3ndertaing is to be given to the 4ustoms by the unit at the time of 4ustoms

onding of the premises.

* unit is reDuired to pay Fyear advance service charges at the time of signing of the legal agreement onthe basis of the pro(ections made by it in the application, sub(ect to a minimum of 5s. /B,BBB= as per thefollowing norms>

Export Pro,e#tion Ser*i#e C'ar)e(

#$ports upto 5s. /B lacs per annum 5s. 1/,BBB per annnum

#$ports more than 5s. /B lacs per annum but upto 5s. FBB lacs 5s. /B,BBB per annnum

#$ports above 5s. FBB lacs per annum 5s. 1,BB,BBB per annnum

"ubseDuent charges will be payable on annual basis as per the above mentioned norms.

In case of failure to fulfill the obligation stipulated in tbe etter of )ermission it would be liable to penaltyin terms of the egal 3ndertaing or any other law for the time being in force. The unit will also be liable forthe following>

payment of custom and e$cise duty on )lant, machinery, eDuipment, raw material, components

and consumables.

)enalty under ;oreign Trade +%&5 19AA and 5ules made thereunder

)ermission under ;oreign Trade +%evelopment & 5egulation *ct, 199A, and the #$im )olicy is

reDuired to be taen by the unit before the products developed for e$ports are disposed off in thelocal maret

"reen #ard( to STP $nit(

Green 4ard enables the units to get priority services from all Government %epartments=its agencies. It helpsunits to get priority allotment of telephones, electricity connections etc..

*s per -inistry of 4ommerce o.6=4oord.=A6=91#)H dt. 1.1.199@, the %irector, "T)I shall issue Green4ards containing particulars of the units, its name, address, location and details of products manufactured.

The unit must mae a single application for the Green card and 54-4.

Green cards are issued to all "T) units on acceptance of the legal agreement. It is valid for two years. *fter its e$piry when the units approach "T)I for its renewal, the card is renewed for another one year afterensuring that the unit has been regularly furnishing monthly=annual progress reports in the specified format+vi. -onthly progress reports in format no. 1/;1@ and *nnual progress report in format no. 1/f1J.


9/26

BONDIN"

"T) units are compulsorily reDuired to carry out their operations in a 4ustom bonded area whether it availsthe benefits of 4ustoms %uty=#$cise %uty e$emption or not.

)rivate onded ?arehouse icense from the 4ustoms.

"ingle all purpose bond +1J.

PROCEDURE FOR BONDIN"

* "T) unit is reDuired to submit the following documents to get the premises bonded>

Three copies of ;loor )lan.

Three copies of tentative list of 4apital Goods +along with their value proposed to be imported andindigenous goods to be procured for the pro(ect.

The %irector attests the floor plan and the list of 4apital Goods. Two copies of the floor plan and onecopy of tentative list of capital goods are forwarded to the 0urisdictional *ssistant 4ollector of 4ustoms in theform enclosed at *ppendi$ I 4ustoms will issue a icense called !)rivate onded ?arehouse icense'indicating its period of validity and 4I; value of duty free eDuipment which can be ept within the same. Thiscustom bonding is valid for / years. The unit is reDuired to submit the following documents to the 4ustomsauthorities>

o 4opy of letter of approval issued by the %irector, "T)I.

o -emorandum and *rticles of *ssociation and 4ertificate from the 5egistrar of 4ompanies for its

incorporation.

o ;loor plan duly approved by "T)I.

o 4opy of )urchase=ease deed of building=premises.

o 4opy of egal *greement e$ecuted with "T)I.

o ist of goods proposed to be imported attested by "T)I.

o 4opy of I#4 code.

o 4opy of Green card issued by "T)I.

o ist of %irectors of the 4ompany.

o 1J ond.

Sin)%e a%% p$rpo(e +ond B-./0


10/26

The "T) unit is reDuired to e$ecute a single bond +1J as per format given in *ppendi$II before the *ssistant 4ommissioner of 4ustoms in whose (urisdiction the unit is situated +in terms of oard:s 4ircularo. J6=994ustoms dt 1J.11.99. The ond amount has to be eDuivalent to A/C of the duty leviable on thesanctioned reDuirement of imported and indigenous capital goods plus duty forgone on the raw materials tobe held in stoc for F months. The *ssistant 4ommissioner of 4ustoms before whom the above bond ise$ecuted would issue a certificate stating that the unit has e$ecuted the bond. 2n the strength of thiscertificate the goods will be allowed clearance under the e$emption notification.

Di(tin#t Identit1

If an industrial enterprise is operating both as a domestic unit as well as an "T) unit, it shall have twodistinct identities with separate accounts including separate ban accounts. It is, however, not necessary forit to be a separate legal entity, but it should be possible to distinguish the imports and e$ports or supplieseffected by the "T) units from those made by the other units of the enterprise.

M$%tip%e o#ation(

* unit may operate from one or more locations falling under the same 0urisdictional *rea of "T)I 4entre.The unit has to provide valid reasons for having more than one operational areas under the same "T)approval. The unit has to get these -ultiple locations custom bonded and have to maintain different bondregisters for each of the locations as per procedure specified in the handboo.

Re)i(tration-#$&-Me&+er('ip Certifi#ate

The registering authority for "T) 3nits is the concerned %irector, "T)I. * separate 5egistrationcum-embership 4ertificate +54-4 shall not be reDuired.

If the party reDuest for 54-4, they may apply in the format no. 1/;18 +)artI.

I&porter-Exporter Code N$&+er

#very e$porter is reDuired to have importer#$porter 4ode umber +I#4 mandatorily as per ;oreign Trade+%evelopment & 5egulation *ct. owever, only one I#4 is necessary for one company, even if it hasmultiple offices and e$port operations.

I#4 number will be issued by %irectorate General of ;oreign Trade based on a reDuest as per formatspecified in *ppendi$ III along with a an certificate as per format in *ppendi$ I< along with a profile of the#$porter in *ppendi$


11/26

"T) units are reDuired to give a reDuest letter in format 1/;B@ +)artI & )artII and three copies

of performa invoice.

The items should be relevant to the activity undertaen by the unit.

In case of "T) units which has completed one year of operation the unit should have met the#$port 2bligation= ;#) as specified in para J.B.

The "T) units should have submitted the monthly progress report and should be prompt in paying

the service charges for that specific financial year.

The total imports of capital goods of the "T) unit should be within the initial approved 4G limit or

subseDuent enhancement of the same.

The ;orm 1/;B@ +)artI should clearly state the method of import i.e., 2utright )urchase or oan

asis or ;ree of 4harge asis.

The invoice should clearly state that,

o !T# G22%" *5# "#T 2 2* *"I"' if the import is on oan basis.

o !T# G22%" *5# ;5## 2; 42"T' in case the import is on ;ree of 4ost basis.

The invoice should be on 4I; value. If it is ;2 value, the unit is supposed to add A1.1A/C to the ;2value and then derive the 4I; value. The supplier should sign the invoice.

* copy of IG "#* "*# agreement should be enclosed in case of import of capital goods

through local vendor.

o If the material sought to be imported are consumable, spares or components ensure that the same

are relevant to activity of the unit as per the approval letter.

o If the capital goods sought to be imported are "econd hand, the reDuest letter should be supported

with "elf%eclaration from the importer +as per the format given in *ppendi$


12/26

The units shall furnish their annual reDuirements of software intended to be imported and estimated

foreign e$change outflow against such import to the %irector, "T)I.

Immediately after the import of software through data communication lin or internet, the unit shall

inform in writing to the %irector, "T)I and shall get a certificate certifying the import of software andits value.

The unit shall produce this letter from the %irector of "T)I to the (urisdictional *ssistant

4ommissioner of 4ustoms incharge of "T) as a proof of import indicating value etc. within @8hours of such import.

The unit shall file ill of #ntry along with certificate from %irector "T)I and invoice, attested by the

an, along with other relevant documents within @8 hours of import to the (urisdictional *ssistant4ommissioner of 4ustoms or 4entral #$cise for obtaining notional !out of charge'.

The documents such as invoice etc. shall be routed through the an.

The unit shall account for such import in their records and the same would be taen into

consideration for determining the e$port obligation and calculation of ;#).

Appro*a% for En'an#e&ent in t'e *a%$e of Capita% "ood(:

"T) units are reDuired to ensure that they operate within the imported 4apital Goods +4G limit as indicatedin the approval letter. Therefore, before this limit is e$hausted, the units are reDuired to apply forenhancement of the 4G limit.

The following procedure is reDuired to be followed for getting the approval for enhancement in the valueof 4apital Goods>

* reDuest letter with relevant form no. 1/;BJ is submitted by the "T) unit.

The unit should have achieved 1BC ;#). In case of units registered before 1st *pril, 1999, et

;# should be K=L Total #$port 2bligationE

?here #$port obligation L 1./ times 4I; value of hardware imported including software M 1./ timesof the annual wage bill

*nd et ;# L Total e$port earnings N ;# outflow +other than 4G

The unit should have submitted its performance report certified by a 4hartered *ccountant as per

format no. 1/;BJ +)roforma I & II.

The %irector thereafter signs the permission of 4G enhancement and the same is issued to the party.

Certifi#ation for Re-Export of i&ported )ood(

The units may ree$port the capital goods for the following reasons as per applicable custom notification>

5e#$port of 4apital Goods on completion of the pro(ect or bond period.

5e#$port of 4apital Goods for 5epair.


13/26

5e#$port of 4apital Goods for 5eplacement.

* reDuest letter is reDuired to be furnished by the unit with sufficient reasons for ree$port alongwithfollowing documents>

o * copy of Import certificate with relevant invoice issued by the "T)I



The %irector signs the 5e#$port Invoice= ist of items and the certificate of 5e#$port which is issued tothe "T) unit.

Goods or parts thereof on being imported and found defective or nonfunctional after use may be ree$ported for repair purpose abroad for which "T)I permission is necessary. The unit has to get a certificatefrom ban if any ;# outflow has taen place or not. ased on this they have to tae a G5 waiver from 5I.

*fter getting the G5 waiver the unit has to approach the customs to finally ree$port the items for repair.?hile importing bac no separate permission is reDuired if the repair is free of cost.

Goods or parts thereof on being imported and found defective or otherwise unfit for use or which havebeen damaged after import may be e$ported, and goods in replacement thereof may be supplied free ofcharge by the foreign supplier as imported against a marinecumerection insurance claim settled by aninsurance company. "uch goods shall be allowed clearance by the 4ustoms authorities without an importlicense provided that>

The shipment of replacement goods is made within A@ months from the date of clearance of the

previously imported goods through the customs or within the guarantee period in the case ofmachine or parts thereof where such period is more than A@ months old.

o remittance shall be allowed e$cept for payment of insurance and freight charges where the

replacement of goods is by foreign suppliers sub(ect to payment of Insurance or freight by theimporter and documentary evidence to this effect is produced at the time of maing the remittance.

APPROVA FOR INDI"ENOUS PURC3ASE CT-40

The following procedure is reDuired to be followed for obtaining approval for purchase of e$cise duty freeindigenous goods by "T) units>

* reDuest letter with three copies of )erforma invoice from the supplier.

The consignment of 4apital Goods should be destined to the "T) unit.

The goods to be procured should be relevant to the items to be manufactured by the unit as per the

approval letter.

Thereafter an approval letter for indigenous purchase is issued to the "T) unit.

MONITORIN" T3E PERFORMANCE OF STP UNITS

The monitoring authority for "T) units is the %irector, "T)I within whose (urisdiction the unit is situated. *llthe information reDuired by the 2ffice of the %G;T etc. is obtained through him.

Guidelines for monitoring of the performance of the units are given in *ppendi$ 16# of the andboo ofprocedures.


14/26

Mont'%1 Pro)re(( Report( MPR(0

*ll "T) units are reDuired to submit -)5s by 1Bth of every month, which can also be done online. It is amandatory reDuirement. 3nits that become irregular in submitting -)5s can be denied services by "T)I.-)5s are reDuired to be submitted as per format no. 1/;1@.

Ann$a% Pro)re(( Report( APR(0

*ll "T) units are reDuired to submit *)5s every year by *pril 1B every year, which can also be done online.This is also a mandatory reDuirement. 3nits that become irregular in submitting *)5s can be deniedservices by "T)I. *)5s are reDuired to be submitted as per format no. 1/;1J.

EXPORT PERFORMANCE OF STP $nit(

The e$port obligation of the "T) units getting registered after *pril 1, 1999 and e$isting units applying fore$pansion of their pro(ects has been modified. Instead of #$port obligation, et ;oreign #$change #arningsas a percentage of e$ports +;#) would be calculated.

;or the 3nits who have got registered before *pril 1, 1999, the #$port obligation would be calculated asfollows>

#$port 2bligation L 1./ times 4I; value of the hardware imported including software M 1./ times of theannual wage bill

In case of units which get registered after *pril 1, 1999, the "cheme stipulates that the minimum #$port2bligations for five years should be 3"% B.A/ -illion or F times the 4I; value of imported capital goods,whichever is higher. -inimum et ;oreign #$change #arning as a percentage of e$ports +;#) should be1BC for "T) units +on annual basis or for / years.

;#) shall be calculated annually and cumulatively for a period of five years from the commencementof commercial production according to the following formula>

NFEP 5 A 6 B x .77 A

?here, ;#) is et foreign e$change earning as a percentage of e$port.

* is the ;2 value of e$ports by "T) unit.

is the sum total of the 4I; value of all imported inputs, the 4I; value of all imported capital goods andthe value of all payments made in foreign e$change by way of commission, royalty, fees, dividends, intereston e$ternal borrowings during the first five year period or any other charges. !Input' means raw materials,intermediates, components, consumables, parts and pacing materials.

otes>

If any input is obtained from another "T) unit, the value of such input shall be included under .

If any capital goods imported duty free is leased from a leasing company, received free of cost

and=or loan basis or transfer the 4I; value of the capital goods shall be included or e$cluded, asthe case may be prorata, under for the period it remains under bond.


15/26

;or annual calculation of net foreign e$change as a percentage of e$ports, imported capital goods

and lump sum payment of foreign technical nowhow fee shall be included under .

"upplies made to bonded warehouses by "T) units are treated as e$ports for the purpose of domesticsales entitlement.

%T* sale against foreign e$change is counted towards ;#)=#), provided the payment is made from##;4 account of the buyer only.

Pro#e(( for Export Certifi#ation:

efore commencement of the pro(ect, "T) units are reDuired to submit a copy of the 4ontract=)urchaseorder with the client abroad.

"T) units are permitted to e$port computer software in following forms>

Through data communication lins

)hysical +floppies, magnetic tapes, 4%s

2n site consultancy

*fter completion of the pro(ect, the "T) units will get the e$ports attested from "T)I in the followingforms>

o "%; form as per format in *ppendi$

T'ro$)' data #o&&$ni#ation %in!(

?hen e$port of software is made through data communication, it will be declared on "2;T# form +whichare available for sale to e$porters through regional offices of 5eserve an and "T)I centres. The form hasto be submitted to the concerned "T)I within A1 days of raising the invoice as per the guidelines of 5I.

In*oi#in)

In respect of long duration contracts involving series of transmissions, the e$porter should bill their

overseas clients periodically i.e. at least once a month, or on reaching the !milestone' as providedin the contract entered into with the overseas client and the last invoice should be raised not laterthan 1/ days from the date of completion of the contract. It would be in order for the e$porters tosubmit a combined "2;T# ;orm for all the invoices raised in a month on a particular client,including advance remittances received.

In respect of contracts involving only Oone shot operations:, the invoice should be raised within 1/

days from the date of transmission.


16/26

The e$porter should submit the "2;T# form to the concerned "T)I for valuation=certification not

later than A1 days from the date of invoice of the last invoice raised in a month.

#ach e$porter would be reDuired to designate a particular branch of an *uthorised %ealer for thepurpose of handling the e$port documents and realisation of the e$port proceeds.

The "T) units are reDuired to submit the following for the declaration of e$port through %ata4ommunication in>

o "2;T# ;orm in triplicate +duly completed.

o Three copies of Invoice.

o * copy of the contract=purchase order with client.

o acup form with proof of datacommunication.

o *ttestation charges in case of non"T) units as per the following>

Invoice value upto 3"% 1BB >5s. 1BB per invoice

Invoice value 3"% 1B1 N 3"% /BB >5s. A/B per invoice

Invoice value 3"% /B1 N 3"% 1BBB >5s. /BB per invoice

Invoice value 3"% 1BB1& above >5s. 1BBB per invoice

Di(po(a% of SOFTEX For&(

*fter approval by the %irector, "T)I, the original attested "2;T# ;orm alongwith Invoice is sent to the#$change 4ontrol %epartment of 5I under whose (urisdiction the e$porter is located and a duplicate copyis given to the e$porter. ?ithin A1 days from the date of certification of the "2;T# form, the e$portershould submit the duplicate copy along with a copy each of the supporting documents to the authoriseddealer. This will be retained by the authorised dealer till further full e$port proceeds have been realised andthereafter will be submitted to 5I duly certified under cover of an appropriate return called 5supplementary

return along with a copy of attested invoice.

Ti&e %i&it for rea%i(ation of export *a%$e

The full value of software e$ported as declared on the "2;T# form should be realised on due date ofpayment or within 18B days form the date of invoice, whichever is earlier.

P'1(i#a% f%oppie(8 &a)neti# tape(8 CD(8 et#90

*ll e$ports by nonpostal channels of computer software prepared on magnetic tape or any other physicalmedia are reDuired to be declared on "%; ;orms along with the invoices and shipping bills. Thesedocuments have to be submitted to "T)I for valuation of the software to be e$ported. *fter valuation all thedocuments and the software have to be submitted to customs for e$ports. The software has to be escorted

by customs from the bonded area to the port of e$port.

The "T) units are reDuired to submit the following for the declaration of the #$port through floppies,magnetic tapes, 4%s etc.>

"%; ;orm in triplicate +duly completed.

Three copies of Invoice.

* copy of the contract=purchase order with client.


17/26

*ttestation charges in case of non"T) units.

*fter approval by the %irector, "T)I attested "%; ;orm alongwith Invoice is sent to 4ustoms and aduplicate copy is given to the party.

On (ite #on($%tan#1:

The unit provides services by deputing the professionals at the client:s site abroad. The declarations forgetting remittances through 5I are given in ;orm * and ;orm .

The units are reDuired to submit ;orm * along with the 4ontract agreement= purchase order before theconsultants of the software developing unit are deputed abroad to provide software consultancy services tooverseas clients.

FORM-A:

* copy of )urchase order= *greement with the client is submitted at "T)I with ;orm* +;ormat no.

1/;B9 in triplicate prior to attestation of ;orm. * number is given for registration of form* against the purchase order= agreement from the

register O;orm*&:. *fter approval by the %irector, one copy of attested form* is given to the unitand one copy will be sent to 5I directly from "T)I.

*fter completion of the pro(ect or as soon as payment in respect of the consultancy services have beenreceived, the e$porter shall submit the reDuired information in ;orm. This is necessary so as to enable"T)I to authenticate figures of e$ports for discharge of e$port obligations.

FORM-B:

;or attestation of ;orm +;ormat o. 1/;1B, the following documents are reDuired>

Three copies of ;orm duly filled up Three copies of Invoice.

4opy of the ;I54s, if foreign currency is already realised.

*fter approval by the %irector, a covering letter with two copies of attested form alongwith invoices aregiven to the party.

oth ;orm * & after attestation from "T)I has to be submitted to the ban +authorised dealer forrealisation of the money.

SAES IN DOMESTIC TARRIF AREA

The entire production of "T) units shall be e$ported sub(ect to the following>

3nless specifically prohibited in the 2), re(ects may be sold in the %T*, on payment of duties as

applicable to sale under para 9.9+b of the )olicy on prior intimation to the customs authorities."uch sales shall be counted against %T* sale entitlement under para 9.9+b of the )olicy. "ale ofre(ects upto /C of ;2 value of e$ports shall not be sub(ect to achievement of ;#).


18/26

"ale in %T* in any mode, including online data communication, shall be permissible upto /BC of

;2 value of e$ports.

DTA Sa%e of Softare t'ro$)' Data Co&&$ni#ation

-.2.; +%5 4ircular o. /@=984us +;.o. FB/=A1B=9J;TT dated A1.J.1998 clarifies that the units can sell

their software through data communication lin as sale of software to %T* through data communication linwithin permissible limit is allowed.

E%i)i+i%it1 for DTA Sa%e(

The "T) "cheme provides for %T* sales depending on the e$port obligation achieved +as per para J.B."T) 3nits are permitted %T* sales upto /BC of ;2 value of e$ports sub(ect to fulfillment of minimume$port obligations. "T) units wishing to sell in %T* are reDuired to apply to "T)I for obtaining %T*entitlement. *fter the %T* entitlement is issued by "T)I, "T) units can do %T* sales in following forms>

)hysical

4onsultancy "ervices

Through %atacommunication lins

T'e fo%%oin) DTA (a%e( +1 STP $nit( are e%i)i+%e for export o+%i)ation +enefit:

"upplies to other "T)=1BBC #o3=#T) unitsE

"upplies in %T* against payment in foreign e$changeE

"upplies in %T* under global tender conditionsE

"upplies eligible for !%eemed #$port' benefit +as per para 1A.B.

Pro#ed$re for )ettin) appro*a% +1 STP $nit( for DTA (a%e(

The "T) units are reDuired to submit the following documents to get approval of "T)I for %T* sales>

* reDuest letter with relevant form no. 1/;B6E

The unit should meet #$port 2bligationE

The unit should have achieved 1BC ;#)E

The unit should have submitted the performance report in format no. 1/;1F +)roformaI certified

by 4hartered *ccountant.

PO;ERS OF APPROVA OF T3E DIRECTOR

*s per -inistry of Industry )ress ote o. 9 of 199J dt. J.J.199J apart from the original powers under the)olicy and andboo, the %irectors have been delegated with the following powers>

Con*er(ion of exi(tin) DTA $nit( into STP $nit(


19/26

#$isting %T* units may also apply for conversion into an "T) unit, but no concession in duties and ta$eswould be available under the scheme for plant, machinery and eDuipment already installed.

?here the unit has>

+i an outstanding e$portcommitment under#)4G "cheme

> To be subsumed in the e$port performance of the unit

+ii2utstanding e$portcommitment under the

*dvance icensing"cheme

> *pply to the *dvance icensing 4ommittee for reducinge$port commitment in proportion to the Duantum of dutyfree material actually utilised for production. The unutilisedmaterial +imported against the *dvance icense shall bepermitted to be carried forward under the "T) "cheme.

The applications, which fulfil the above criteria, should be submitted in the prescribed form as mentionedin para A.1, to the %irectors of "T)s, as the case may be. *ll other proposals should be submitted to the"ecretariat for Industrial *ssistance in %epartment of Industrial )olicy & )romotion, 3dyog havan, ew%elhi. The application form shall be submitted in 1B copies accompanied by 4rossed %emand %raft for 5s.A/BB= drawn in favour of )ay and *ccounts 2fficer, %epartment of Industrial %evelopment, -inistry ofIndustry, payable at the "tate an of India, irman havan, ew %elhi.

The e$isting "T) units may also apply for conversion=merger to #23 unit and viceversa. In such casesfresh application needs to be filed with the %irector, "T)I in the same format as for new "T) units asmentioned in para A.1.The units will continue to remain in bond and avail the permissible e$emption in dutiesand ta$es as applicable under the relevant scheme.

Po(t Appro*a% Matter(

Government is conscious of the fact that the pro(ect parameters need revision during implementation of thepro(ect, necessitating amendments in the approval letters. ;or e$peditious disposal of such cases, powershave been delegated to the %irectors of "T)s for the following types of proposals>

Additiona% i&port of Capita% "ood(:

To allow enhancement in the total value of imported 4G> )rocedure for obtaining approval has beenprovided in )ara @.A.

Atte(tation of %i(t of i&ported C":

To attest the list of imported 4G reDuired for the pro(ect, within the value approved +procedure as prescribedin )ara @.1.1.

C'an)e of %o#ation:

To permit change of location from the place mentioned in the approval letter to another, provided>

there is no other change in terms and conditions of the approvalE

the new location is within the territorial (urisdiction of the %irector "T)IE

the new location also conforms to the locational policy announced by %epartment of Industrial

)olicy and )romotion.

Pro#ed$re for i(($in) Appro*a% for C'an)e of o#ation:


20/26

The following documents are reDuired to be submitted to the "T)I for issuing approval for change oflocation>

* reDuest letter alongwith three copies of floor plan where the operations are proposed to be

shifted. The floor plan should mention the address and dimensions of the new location.

The %irector signs the approval letter for change of location and the same is issued to the unit.

Exten(ion of *a%idit1 of etter of Per&i((ion:

In case of genuine reasons for delay in implementation of the pro(ect, the (urisdictional %irector can e$tendthe validity of 2) by three years beyond the initial validity period, to enable applicant to implement thepro(ect.

Di(po(a%ofo+(o%ete #apita% )ood(:

*s per 4ircular o. @9=ABBB4us dt. AA=/=ABBB +;.o.FB/=FF=ABBB;TT units are allowed to destroy

obsolete capital goods and spares without payment of duty with prior permission of 4ustoms. "uchdestruction shall be carried out in the presence of 4ustoms=4entral #$cise officers. The officers supervisingdestruction may e$ercise due caution to ensure that capital goods are destroyed fully rendering them unfitfor further use and give them certification to that effect. *fter destruction of capital goods, if the remains havescrap value, the same may be cleared by the unit in %T* on payment of duty applicable to scrap.

I&port of offi#e e


21/26

to permit merger of two or more units into one unit provided the units fall within the (urisdiction of the same%irector.

Dire#tor 'a( +een a$t'ori(ed to do *a%$ation of export( de#%ared on SOFTEX for& +1 t'e$nit( a( per RBI A9D9MA Serie(0 Cir#$%ar No94= dated >=9..9.???9

Inter $nit tran(fer @ te&porar1 re&o*a% of "ood(:

"T) units are permitted to supply=transfer goods imported by a unit to another "T) unit after obtainingapproval from "T)I. The inter unit transfer is permissible as per applicable customs notifications. The unitcan apply to "T)I for Inter unit transfer of 4apital Goods for the purpose of shifting for the purpose ofrepair=demonstrationE and shifting from one location to another location.

*s per -.;.+%5 4ircular o. @1=99 +;.o. F1@=16=99;TTdt.FB.6.1999, "T) units may, temporarily taeout of the bonded premises duty free laptop computers and video pro(ection systems for woring upon byauthorised employees provided that the procedure as envisaged in 4ircular o. 1J=984ustoms, dated16.F.1998 is followed.

Pro#ed$re for o+tainin) appro*a% for Inter $nit tran(fer and te&porar1 re&o*a% of "ood(:

* reDuest letter with "hifting Invoice=ist of items is reDuired to be submitted by "T) units.

The shifting should be done to another private bonded warehouse.

If the shifting is for demonstration purpose the "T) unit should submit the following documents>

o 4opy of ill of #ntry.

o 4opy of Import permission with invoice.

o ist of items to be removed along with its relevant details.

In case of transfer of goods if there is any commercial transaction involved, the obligation towards

duty free imports is transferred to the transferee. If there is no commercial transaction involved, thee$port obligation on the imported goods remains with the original importer, but in both the instancesamount eDual to the invoice effecting the transfer is reduced from the approved value of Goods ofthe transferee and the same value is added to the approved value of Goods imported.

The %irector signs the approval letter alongwith ist of items. The original copy of approval letteralongwith the list of items is issued to the "T) units.

Appro*a% for Expan(ion of t'e Operation(:

"T) 3nits reDuesting for e$pansion of the operations are reDuired to submit the following documents +as

applicable>

* reDuest letter alongwith three copies of floor plan where the operations are proposed to be

e$panded.

The floor plan should mention the address and dimensions of the new location.

* performance report in ;ormat no. 1/;1F +)roformaI certified by a 4hartered *ccountant.


22/26

The %irector signs the approval letter for e$pansion of the 2perations and the same is issued to theparty.

RE-IMBURSEMENT OF CENTRA SAES TAX

The %irector "T)I has been empowered to disburse the claims for 4"T. The units are entitled to a fullreimbursement of 4entral "ales Ta$ +4"T paid by them on the purchases made from the %T* for theproduction of goods and services on the following terms and conditions>

The supplies from %T* to "T) units must be utilised for production of goods meant for e$port and

may include raw material, components, consumables, pacing materials, capital goods, spares,material handling eDuipment etc. on which 4"T has been actually paid by the "T) units.

?hile dealing with the application for reimbursement of 4"T, the %irector shall see that the

purchases are essential for the production of goods meant for e$port.

Pro#ed$re for rei&+$r(e&ent of CST

*pplication for 4"T reimbursement is to submitted to concerned "T)I as per the format given at

1/;11.

The reimbursement of 4"T, shall be admissible only to those units who get themselves registered

with the "ales Ta$ *uthorities in terms of "ection J of 4entral "ales Ta$ *ct, 19/6 and furnish aphotostat copy of the same.

5eimbursement is limited to the payment of 4"T against 4;orm only. 4laims shall be admissible

only if payment is made through the separate ban account maintained by "T) unit.

;ollowing documents are reDuired to be enclosed with the application>

o ;ellow 4hartered *ccountant 4ertificate showing details of goods purchased and theirreceipt, as per the format 1/;1A.

o The proof of registration with central sales ta$ authorities.

o * statement of supplies indicating details of invoices 4forms payments etc. duly certified

by ;4*.

o 4ounterfoil of original 4forms issued by the party to the supplier alongwith photostat

copies.

The "T) unit shall also intimate the name of the person who is authorised by them to sign the 4

;orm and furnish three copies of his specimen signature which will be ept in the relevant file of theunit maintained by the "T)I.

The reimbursement will be made on Duarterly basis. o claim for reimbursement will normally be

entertained if not claimed within a period of si$ months from the completion of the Duarter in whichthe claim has arisen. In case of procurement of goods against payment in installments, the 4"Treimbursement claim may be made in the Duarter in which the full payment has been effectedagainst the invoice. In e$ceptional cases, the %irector may consider delayed applications aftersatisfying that the delay was due to genuine reasons.


23/26

2nly one consolidated claim for a Duarter will be admitted for reimbursement of 4"T. If any

supplementary claim is received within the specified time limits, such application shall beconsidered after imposing a cut of P1BC on the entitlement.

*fter approval of the %irector, the case is sent to finance division of the "T)I for preparation of demanddraft in favour of the concerned unit.

DEBONDIN"

*s per )ublic otice no. 1A=ABBB dt. 1/./.ABBB, "T) units may apply for debonding either on theircompletion of the bonding period or on their inability to achieve the #$port 2bligation, or any otherreDuirement. The #$im )olicy vide -.;. +%.5. etter ;.o. FB/=1F6=9A ;TT dt./.6.199A permits the "T)3nits to debond before the normal stipulated period on their inability to achieve e$port obligation, or otherreDuirements sub(ect to the satisfaction of the %irector, "T)I.

"uch debonding shall be sub(ect to payment of 4ustoms and #$cise duties and in accordance with theIndustrial )olicy in force at the time. If the unit has not achieved the e$port obligations under the scheme,the debonding shall also be sub(ect to penalty as may be imposed by the %G;T. 2n debonding the 3nit will

be liable to pay the following>

4ustoms duty on 4apital goods on the depreciated value at the rates prevalent on the date of

debonding> *s per consolidated notification no. 1FF=9@ dt. AA.6.199@ both dated 1/[email protected]@ duty onimported capital goods and raw materials shall be levied at the time of their release from 4ustomsbond at the rate prevalent on that date. The depreciation will also be allowed for calculation of thevalue for levy of duty on such e$it of capital goods.

4ustoms duty on unused imported raw materials and components on the value at the time of

import, at the rate in force on the date of clearance.

In respect of e$cisable goods, e$cise duty to be levied without depreciation on such goods at rates

as on the date of clearance.

The penalty imposed by appropriate authority under the ;oreign Trade +%evelopment &5egulations *ct, 199A for nonfulfillment of the conditions of approval.

In case, a "T) unit is unable to utilie the imported goods including the 4apital Goods +for valid reasonsthe unit shall ree$port or dispose them in %T* on payment of applicable duties and submission of importlicense by the %T* unit. "upply from one "T) unit to another such unit is treated as import under thescheme.

Imported machinery=capital goods, which are obsolete, are disposed off, sub(ect to payment of customsduties on the depreciated value thereof. The depreciation and rate of custom=#$cise duty on the goods areimposed by the custom=e$cise authorities as per the norms applicable at the time of debonding.

Pro#ed$re for De-Bondin) of STP Unit(:

;ollowing documents are submitted by the units alongwith the reDuest of debonding>

o %uly filled up format no.1/;1F +)roforma I, II & III signed and stamped on each page by

the authorised person certified by the 4hartered *ccountant.

o 2riginal Green 4ard= 54-4.


24/26

The %irector, "T)I ensures the following>

o ?hether the unit is meeting e$port obligation= ;#)= -inimum e$port performance or not.

In case the unit is not meeting e$port obligation= ;#)= -inimum e$port performance, thecase is referred to %G;T for nonfulfillment of e$port obligation= ;#)= -inimum e$portperformance.

o ?hether the unit has paid all outstanding dues of "T)I.

*fter the receipt of the above said documents and calculation of e$port obligation=;#)= -inimume$port performance, the %irector gives his approval. This inprinciple permission letter is issued to the unitssub(ect to payment or applicable 4ustoms and #$cise duties.

*fter fulfilling the conditions enclosed in the inprinciple permission of debonding, the party has toapproach "T)I for issuance of final permission for debonding.

The unit is reDuired to submit the following documents for this purpose>

o photocopy of egal 3ndertaing e$ecuted with %G;T as per format in *ppendi$ .

o

)hotocopy of the receipt issued by %G;T in respect of +i above.

o 24 from 4ustoms.

*fter the approval of the %irector a letter of final permission for debonding is issued to the party.

Rate of depre#iation for de+ondin) of Capita% )ood( fro& t'e STP $nit(

It was felt desirable to provide higher depreciation for computers and other capital goods because of therapid obsolescence as compared to other capital goods. ence, vide -.2.;.+%.5, 4ircular o. @9=ABBB4usdt.AA=/=ABBB accelerated depreciation for computers and computer peripherals has been provided i.e.

ma$imum limit of 9BC would be achieved over a period of A years and 9 months.

In view of above the following rate of depreciation is allowed for computers and computer peripherals>

;or every Duarter during 1st year P1BC

;or every Duarter during And year P8C

;or every Duarter during Frd year PJC

;or every Duarter during @th year and onwards P/C

"ub(ect to an overall limit of 9BC.

The period of depreciation would be counted from the date the capital goods have been put into themanufacturing process in the "T) unit upto the date they are sought to be cleared to the %T*. In case of thesecond hand imported capital goods, the depreciation shall be calculated from the value which has been

accepted by the *ssistant 4ommissioner 4ustoms at the time of assessing the ill of #ntry.

The depreciation shall be calculated as per straight line method. owever in case of partial debonding of the computer or other capital goods which are sold at a value higher than that arrived after allowingdepreciation at the above said rates, the transaction value may be taen as the assessable value for thepurpose of calculation of duty.


25/26

DEEMED EXPORTS

;ollowing supplies by "T) units Dualify for deemed e$port in so far as computer software is concerned andwould be treated towards fulfillment of e$port obligation.

"upply of goods against duty free licenses issued under the %uty #$emption "chemeE

"upply of goods to "T)s=#T)sE

"upply of capital goods to holders of licenses under the #)4G scheme sub(ect to the condition that

such supplies will be eligible for benefits as stated in paragraph 6.8 of the policyE

"upply of goods to pro(ects financed by multilateral or bilateral agencies ;unds as notified by the

%epartment of #conomic *ffairs, -inistry of ;inance under international competitive bidding orunder limited tender system in accordance with the procedures of those agencies, where legalagreements provide for tender evaluation without including customs duty.

TAX INCENTIVES FOR STP UNITS


26/26

date for furnishing the return of income under "ection 1F9+1, furnish to the *ssessing 2fficer a declarationin writing that the provision of "ection 1B* may not be made applicable to him for any relevant assessmentyear. owever, for the years, when the benefit of "ection 1B* is not opted for, the benefit of deduction under"ection 8B4 can be claimed.

Re%e*ant Notifi#ation(

Te&porar1 ta!in) o$t of Co&p$ter(

*s per -.;.+%5 4ircular o. 8@=ABBB +;.o. FB/=J9=ABBB;TT dt.16.1B.ABBB, "T) units may,

temporarily tae out of the bonded premises duty free laptop computers and video pro(ectionsystems for woring upon by authorised employees provided that the procedure as envisaged in4ircular o. 1J=984ustoms, dated 16.F.1998 is followed. ;urther, any employee duly authorised bythe "T) unit shall be eligible for the above facility irrespective of his=her Dualifications.

;or IT and IT enabled services, persons authorised by the software units may access the facility

installed in the "T) unit through communication lins.

C$(to&( d$t1 exe&ption for Co&p$ter( and Perip'era%( donated +1 STP $nit(

Procedure for Setting Up Stp Units

Documents

Transcript of Procedure for Setting Up Stp Units