Special Economic Zones A Conduit For Economic Growth?

Special Economic Zones A Conduit For Economic Growth

Special Economic Zones (SEZ) are considered to be a channel for economic growth as they don’t charge taxes and have different business and commercial laws mostly to encourage investment and create employment. Apart from these, SEZ has better administration and thereby increasing the ease of doing business. 

A Special Economic Zone is a territory or enclave within the national borders of a nation with more liberal economic laws than the rest is known as a special economic zone. In India, there are many functional SEZs which includes Santa Cruz (Maharashtra), Cochin (Kerala), Kandla and Surat (Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra pradesh), Falta (West Bengal) and Noida (Uttar Pradesh) in India.

SEZ policy was announced in 2000 for the very first time, in order to overcome the obstacles faced by the business.The parliament passed the Special Economic Zones Act in 2005 after many consultations and deliberations. The Act came into existence in 2006 alongside the SEZ rules. However, SEZs’were operational in India under the foreign trade policy from 2000 to 2006.

Objectives of the SEZ Act are to create additional economic activity, to boost the exports of goods and services, to generate employment and to boost domestic and foreign investment.

SEZ Online New Functionalities

Functionalities accessible on the SEZ Online framework are explored and changed more regularly. New functionalities are included in the framework in view of the data sources and prerequisites obtained from different user groups/ DC Offices/ Instructions from MOCI/RBI/DGCI&S. The NDML team’s understanding of existing practices and procedures in this area guided the development of these functionalities, and efforts are made to provide system features that meet the technical and procedural requirements.

Exports registered under STP (Software Technology Park) and SEZ (Special Economic Zone) must file a SOFTEX  form to value the software exports done by the exporter. Softex forms should be submitted by companies SEZ unit wise.

Softex filing as per RBI guidelines

Softex forms are required to be filed for submission of details of software export transactions as per RBI notified procedures. RBI has vide its circular No. 43 dated 13th September 2013 revised the format of Softex forms. Further RBI has also introduced the facility of filing of bulk Softex forms for units with large numbers of transactions. These changes have been made with the objective of receipt of electronic data of approved software export transactions from online filing systems directly.

In case of eligible units, the revised format enables clubbing of multiple Softex transactions in a single form. SEZ Online system will now support Units filing single Softex as well as Units filing bulk Softex transactions.  In addition, the SEZ Online system is undergoing data exchange testing with the RBI; once the system is implemented, data can be provided to the RBI frequently. According to the Reserve Bank of India, order organizations need to record Softex structures for programming sends out surpassing $25000 in esteem and Softex structures should be documented in somewhere around 30 days of the date of receipt.

These Softex structures are to be submitted against the expert agreement outfitted by the company to the respective DC office and for submission of the agreement module gist of the Agreement is created in the framework.

Roles and functionalities in SEZ online system 

Following users are involved in the processing of Softex transaction : 

  • From Unit
  • Unit Maker
  • Unit Approver
  • From DC Office
  • DC Initiator
  • DC Verifier
  • DC Approver

Preparation of Softex form in SEZ Online System

A “Maker-Checker” concept has been incorporated into the SEZ Online system at the unit’s end for Softex preparation. The Softex document is to be fixed by the ‘Unit Maker’ user. The Unit Maker prepares a Softex request and submits it to the Unit Approver user, who verifies/checks the correctness of the request before submitting it to the Development Commissioner’s office.

Documents for Softex filing

Following are important attachments for Softex filing

1, Covering Annexure

2, Export Invoice

3, RBI Softex Letter

4, Statement of Invoice

5, Bank UP Form

6, Datacom Bill 

How To Generate Softex Number

From the official website of the RBI, Softex numbers need to be generated. Each Softex number is unique. Visit to https://rbi.org.in/scripts/EDF_UserDetails.aspx to fill in the necessary details.

  1. Name of company
  2. IEC code Number
  3. Address of company
  4. Contact details
  5. Type of Export
  6. Mode of export
  7. Form No
  8. Number of forms

Due date for filing Softex Form

RBI issued, Exchange control manual for Filing Softex Form.According to Paragraph 6D, the Softex form must be submitted 30 days after the date of the invoice or the last invoice issued within a month. Within 30 days of raising the export invoice Softex form needs to be submitted to the STPI  Department. Invoice date is the criteria for deciding Softex form date.

Content of Softex form

Softex form is having a major content in regard to export invoice and client details and so on. Below are the contents of the Softex Submission

  1. Period of Softex
  2. Softex number
  3. AD code
  4. Details of authorized signatory
  5. Name of client
  6. Address of client
  7. Details of export value
  8. Import Export Code number
  9. Statement of Invoice
  1. Back up form

Penalty for not filing Softex

If physical exports are not filed and exports proceed, the remittance received is treated as ‘General services’ or not as an export proceed. Moreover, the Bank could likewise freeze an account, on the off chance that SOFTEX structures are not documented on time.

Frequently Asked Questions (FAQs)

1. Why do SOFTEX Forms need to be filed ?

Ans. The form is filed for the certification of export value of the Software by the competent authority.

2. Is SOFTEX Form mandatory ?

Ans. The Softex Form for the aforementioned export must be submitted by any company that exports IT/ITES via “Data Communication Links.”

3. What is the penalty for the late filing of Softex form ?

Ans. INR 5,000 for every day after the first day during which the repudiation proceeds.

4. Who is required to file SOFTEX ?

Ans. Exporters. I.e, both IT and ITS registered under Software Technology Park (STP) and Special Economic Zone (SEZ) must file SOFTEX form with the STPI or SEZ division.

5. What does SOFTEX stand for ?

Ans. Software Export Declaration