Software Export Invoicing and SOFTEX Filing: Compliance for IT Service Subsidiaries (2026)

Written by the Delhi Legal Company India Entry & FDI Advisory team · Last updated August 2026 · Reviewed against RBI circulars, FEMA export regulations and STPI procedure

Introduction

Your Indian subsidiary bills its overseas parent every month for development work. Nobody thinks of that as an export.

Under FEMA it is one. Software and IT-enabled services supplied from India to a party outside India are an export of services, the value must be declared to the specified authority, and the declaration must be filed within thirty days of the invoice. There is no minimum value, and there is no carve-out for intercompany billing.

Two things follow that catch foreign-owned captives specifically.

The first is a registration nobody expects. A captive development centre in an ordinary office is a Domestic Tariff Area unit — not an STPI unit, not an SEZ unit. It nonetheless has to register with STPI as a non-STP unit, purely so that its declarations can be certified. Groups assume STPI is a scheme you join for benefits. For this purpose it is an authority you register with because there is nowhere else to go.

The second is that the framework is currently moving. RBI has been consolidating export declaration and reporting, and the transition is still rolling out in 2026. Some commentary has already declared SOFTEX dead; practitioners closer to the ground are telling exporters to confirm the current position with their AD bank and STPI centre before filing.

This guide sets out what the obligation is, who it catches, what the transition means, and why the declaration matters far beyond FEMA — because it is what your GST refund depends on.

About this guide

Delhi Legal Company works exclusively with foreign companies establishing and operating in India, and captive IT and services subsidiaries are the single most common structure we see. SOFTEX is the compliance that sits between finance, the bank and STPI, and it is the one that is most often discovered late.

Where a rule is settled we state it. Where the framework is in transition — and here it genuinely is — we say so plainly rather than presenting a settled picture that may not survive the year.

Primary sources: the Reserve Bank of India for FEMA export regulations, EDPMS and the relevant circulars; Software Technology Parks of India for registration and certification procedure; and the SEZ framework where applicable.

1. What SOFTEX is, and why it exists

Under the export regulations, exporters of goods and services are required to declare the value of exports to the specified authority — the Commissioner of Customs in the case of goods, and the Director of STPI or the Commissioner of SEZ in the case of software. RBI requires certification of the value of exports by the specified authority in order to monitor their realisation.

SOFTEX Forms are specifically designed for declaring the value of non-physical software exports, while forms like EDF are used for declaring the value of physical goods exports, including software exported on physical media.

1.1 The logic

Physical goods leaving India pass through Customs, which sees them and certifies their value. Software delivered over a network passes through nothing.

SOFTEX exists to fill that gap. It gives RBI a declared value against which to match the inward remittance, so that export proceeds can be monitored and realisation tracked.

That is why the form matters even when payment is certain and prompt: the system is not checking whether you will be paid, it is recording what you are owed so that the payment can be matched against it.

2. Who has to file

Exporters engaged in the export of audio, video, television and computer software are obliged to file the SOFTEX Form. It applies to all units, including those located in Software Technology Parks, Special Economic Zones, Export Processing Zones and Domestic Tariff Areas.

This includes developers, agencies, BPOs, SaaS providers and designers, where the client is located outside India and pays in foreign currency, and applies whether the exporter operates as a company, partnership, sole proprietorship or individual freelancer.

2.1 There is no value threshold

All software exporters must file the SOFTEX form, valid from 1 October 2013, regardless of the value of the export.

RBI, through a circular issued in September 2013, introduced a revised procedure making SOFTEX filing mandatory for all exporters. This superseded the previous position, under which SOFTEX filing was required only for invoices exceeding USD 25,000.

There is no value threshold: the old USD 25,000 floor was removed in 2013, so software and ITeS exports are reportable regardless of ticket size.

The USD 25,000 exemption is still quoted occasionally. It has not applied since 2013.

2.2 The intercompany point

This is the part that catches foreign-owned groups, and it is worth stating directly.

A captive development centre invoicing its overseas parent is exporting services to a party outside India, paid in foreign currency. The relationship between the parties does not change the character of the transaction under FEMA.

Every monthly invoice to the parent is a software export requiring declaration. A group that has been billing its parent for three years without a single SOFTEX filing has three years of undeclared exports.

This connects directly to the transfer pricing position, because the same invoices carry the cost-plus margin that has to be benchmarked — see transfer pricing for Indian subsidiaries.

3. The non-STP registration nobody expects

This is the practical core of the obligation for a foreign-owned captive.

With respect to units operating otherwise than as STPI or SEZ units — that is, DTA units — RBI has notified STPI as the authority to receive declarations in SOFTEX forms and to certify the value of exports. In order to accept SOFTEX forms and certify values from these units, STPI has required these units to register with them.

Unlike SEZ and STPI units, which have designated authorities in the Development Commissioner and the STPI Director to certify exports, DTA units lack certification authority. To assist exporting units that are not part of the STPI scheme in complying, Software Technology Parks of India introduced services for non-STP units.

3.1 What this means in practice

Unit type	Certifying authority	Registration needed?
STPI unit	STPI Director	Already registered under the STP scheme
SEZ unit	SEZ Development Commissioner	Already registered under the SEZ scheme
DTA unit — an ordinary office	STPI Director	Yes — register as a non-STP unit

A foreign-owned captive in a leased office in Bengaluru, Pune or Gurugram is a DTA unit. It is not in the STP scheme and claims none of its benefits. It must nonetheless register with STPI as a non-STP exporter, because that is the only route to certification.

3.2 Why groups miss it

Many exporters, previously exempt from SOFTEX filing, were unaware of the regulatory change and did not submit SOFTEX forms for their export transactions.

Two compounding reasons for a foreign-owned company.

The name misleads. “Software Technology Parks of India” sounds like a scheme for units located in technology parks. Finance teams reasonably conclude it does not apply to a company in a commercial office building.

Nothing prompts it. Incorporation does not raise it. The bank does not raise it at account opening. The auditor may not raise it. It surfaces when a remittance is queried, or when a GST refund stalls.

3.3 The service charges

Service charges must be paid upfront during contract registration, based on the contract value and export projections for that year. Service charges depend on export turnover and must be paid in advance. If a SOFTEX form is not certified due to incomplete submission, STPI retains 20% of the service charges paid for that year.

Two points. The charge scales with projected export turnover, so it should be budgeted rather than treated as a nominal fee. And the 20% retention on non-certification is a real cost of getting a submission wrong, not a theoretical one.

4. The 2026 transition: where things actually stand

This section is deliberately cautious, because the position is moving.

4.1 What is being reported

Commentary published in early 2026 describes a consolidation of export declaration and reporting, with EDF-based declaration replacing the SOFTEX route and a materially shorter processing cycle.

Under the new regime, AD banks must enter EDF details into EDPMS within five working days of receipt. The system automatically matches declarations with inward remittances and generates electronic Bank Realisation Certificates. This eliminates weeks of STPI processing time. SEZ units still route declarations through the Development Commissioner.

The filing process was notoriously slow. Exporters generated a SOFTEX number from the RBI portal and filled out the form on the STPI portal, submitted it, and after verification — which could take one to two months — the original went to RBI, the duplicate to the exporter’s AD bank, and the triplicate stayed with STPI.

4.2 What practitioners are saying

More recent practitioner guidance is notably more guarded.

Regulations change, and the 2026 transition is still rolling out, so confirm current rules with your AD-1 bank, your STPI centre, a chartered accountant, or the RBI before you file.

And the substantive position on thresholds is being restated as unchanged: there is no value threshold, so software and ITeS exports are reportable regardless of ticket size, as of July 2026.

4.3 Our reading

The direction of travel is clear and the destination is sensible: a single, faster, electronic export declaration and monitoring pipeline, with less manual certification in the middle.

What is not clear, at the date of this guide, is exactly where each category of exporter sits in that transition and from what date. A SEZ unit, a registered STP unit and a non-STP DTA unit are not necessarily moving on the same timetable.

The practical instruction is therefore simple. Do not stop filing on the basis of an article saying the regime has changed. Confirm your specific position with your AD Category-I bank and your jurisdictional STPI centre, and keep filing until you have that confirmation.

The downside of filing under a superseded procedure is administrative. The downside of not filing under a live one is a FEMA contravention.

5. The deadline

File within 30 days of the invoice date, or within 30 days of the month’s last invoice if you consolidate monthly.

The declaration is made in SOFTEX Form not later than 30 days from the date of invoice, or the date of the last invoice raised in a month.

5.1 Monthly consolidation

Where periodic invoices are raised on the same overseas client, a combined SOFTEX Form may be filed for all invoices raised on that client in a calendar month, subject to the last invoice being raised within the period specified for completion of the relevant milestone or contract.

A monthly consolidated SOFTEX in Excel format, as prescribed by RBI, can be submitted for all invoices raised in that month, with a submission deadline of 30 days from the last invoice date of that month.

For a captive billing its parent once a month, this is straightforward. For a company with many overseas clients and rolling invoices, consolidation per client per calendar month is the workable rhythm.

5.2 The documents deadline

The certification of the value of exports by the designated authority will be undertaken after examining the required documents, and the documents sought by that authority are required to be made available by the exporter within a period of 30 days.

So there are two thirty-day clocks: one to file, and one to produce documents when they are asked for. A query that goes unanswered stalls certification, and an uncertified form does not do its job downstream.

6. The process

Step	What happens
1. Register	Register the entity with STPI or the SEZ authority, as an STP or non-STP unit
2. Generate the number	Obtain the SOFTEX number from the RBI portal
3. File	On the STPI portal, entering invoice details, client location, description and currency, and uploading the invoices
4. Certification	The designated authority examines the documents and certifies the value
5. To the bank	Submit the certified form to the AD bank for reconciliation against foreign exchange receipts
6. Reconciliation and closure	The AD bank reconciles the export against the inward remittance in EDPMS and issues a Bank Realisation Certificate

The data submitted through SOFTEX forms is transmitted electronically from STPI or SEZ to RBI and made available in the EDPMS portal, through which bankers can access it to match the inward remittance of export proceeds. A unique number for each SOFTEX form is generated electronically through the facility extended by RBI.

6.1 A supporting document worth preparing properly

The SOFTEX Form is filed on the STPI online portal together with the export invoice or invoices and a Statement of Invoice, for verification and certification by the designated authority.

The description of the software or services matters. A vague description invites a query, and a query costs the certification timeline. Describe what was actually delivered, consistently with the invoice and with the underlying agreement.

7. EDPMS, eBRC, and why this matters downstream

EDPMS is the reason SOFTEX is not merely a form.

EDPMS — the Export Data Processing and Monitoring System launched on 1 March 2014 — remains the underlying monitoring backbone. It tracks every export transaction from declaration through payment realisation to closure.

7.1 The chain

You file the declaration; it is certified
The data reaches EDPMS
Your customer or parent remits
Your AD bank matches the remittance against the declaration in EDPMS
The entry closes, and an electronic Bank Realisation Certificate is generated

7.2 What happens when the declaration is missing

The remittance arrives with nothing to match it to. The entry does not close. Over time the company accumulates unmatched inward remittances and open EDPMS entries.

Non-filing can result in held remittances and issues with banks’ monitoring systems.

This is how most groups discover the problem: a routine remittance is queried by the bank, and the query turns out to be about a compliance nobody knew existed.

7.3 The FIRC point

Worth connecting, because foreign-owned subsidiaries receive two kinds of inward foreign currency and they produce different documents.

Equity capital from the parent is an FDI remittance and produces an FIRC. Export receipts produce an electronic BRC through the EDPMS process. Confusing the two is common, and it matters when assembling an FC-GPR file — see opening a bank account for your Indian subsidiary.

8. The GST connection

This is where non-compliance costs real money rather than attracting a theoretical penalty.

Filing SOFTEX forms facilitates GST refund processing, enhances a company’s credibility, and helps avoid fines and penalties from RBI for non-compliance.

8.1 Why the two are connected

Export of services is zero-rated under GST, and an exporter supplying without payment of tax under a Letter of Undertaking accumulates input tax credit that it claims back as a refund.

For a captive services subsidiary, that refund is not marginal. Input tax credit on rent, professional fees, software subscriptions and equipment accumulates steadily, and the refund is a genuine cash flow item.

Establishing that a supply qualifies as an export of services requires, among other things, evidence that consideration was received in convertible foreign exchange. The realisation trail — declaration, EDPMS matching, bank realisation certificate — is what supports that.

8.2 The practical consequence

A company with unfiled declarations and open EDPMS entries is a company whose realisation trail is incomplete, at exactly the point it needs that trail to support a refund claim.

Groups often quantify the SOFTEX problem as a FEMA penalty risk. The more immediate number is usually the refund that is being delayed.

See GST compliance.

9. Penalties

Failure to file the SOFTEX Form for software exports is a violation of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015. Such non-compliance can result in legal action under Section 13(1) of FEMA, with penalties of up to three times the amount involved in the violation. Additionally, non-compliant entities may be subjected to a continuous penalty of up to ₹5,000 per day after the first day of non-compliance.

9.1 The amount involved is the export value

Three times the amount involved, where the amount involved is the value of the undeclared export, is a very large number for a services company billing its parent monthly.

In practice, penalties at that level are not the usual outcome for a company that comes forward. But the exposure is what it is, and it is a poor thing to discover during diligence.

9.2 Condonation

If the delay is for genuine reasons, the delay may be condoned by the STPI authorities subject to the fulfilment of certain criteria.

This is the practical route for a group that discovers a historical gap. Register, file the outstanding declarations, and seek condonation of the delay, rather than leaving the position open.

Coming forward is materially better than being found, and the alternative is an accumulating exposure with an incomplete realisation trail behind it.

10. Purpose codes

Small, technical, and a recurring source of mismatches.

Purpose codes still matter — P0802 for software consultancy, P0806 for information services, P0807 for off-site software exports.

The purpose code your bank applies to the inward remittance should be consistent with the nature of the export declared. Where they diverge, the EDPMS match is harder and queries follow.

Agree the correct code with your AD bank once, and apply it consistently. It is a five-minute conversation that prevents a recurring reconciliation problem.

11. Two situations, worked through

Scenario A — The captive that never registered

A US group’s Indian development centre in Pune has been billing the parent monthly for four years on a cost-plus basis. The office is a leased commercial floor — a DTA unit. No STPI registration, no SOFTEX filings.

How it surfaced. A GST refund claim was queried, and the realisation trail could not be evidenced to the department’s satisfaction. Separately, the AD bank flagged accumulated unmatched inward remittances in EDPMS.

The position. Four years of undeclared software exports, with an open FEMA exposure and a stalled refund.

The remediation. Register with STPI as a non-STP unit; file the outstanding declarations, consolidated by client and month; seek condonation of the delay; work with the AD bank to close the open EDPMS entries; and then pursue the refund on a complete trail.

The cost of not knowing. Not the penalty, in the end. It was the refund delayed across four years and the professional cost of a four-year reconstruction.

Scenario B — The group that stopped filing on a headline

An Indian subsidiary reads commentary stating that SOFTEX has been replaced and stops filing from the start of the financial year.

The problem. The transition is rolling out, and it is not uniform across unit types or dates. The company did not confirm its own position with its AD bank or its STPI centre before stopping.

The exposure. If its category has not yet moved, it has a live and accruing non-filing default, plus unmatched EDPMS entries building behind it.

The rule. Keep filing until your AD bank and your STPI centre confirm your specific position. Filing under a superseded procedure is administrative overhead; not filing under a live one is a contravention.

12. Twelve mistakes

Assuming intercompany billing is not an export. Invoicing the parent is exporting services to a party outside India.
Assuming STPI applies only to units in technology parks. A DTA unit registers as a non-STP unit precisely because it is not in the scheme.
Relying on the USD 25,000 exemption. Removed in 2013.
Stopping filing on the strength of an article about the 2026 transition, without confirming your own position.
Missing the 30-day deadline from the invoice, or from the last invoice of the month where consolidating.
Ignoring the second 30-day clock for producing documents when the certifying authority asks.
Vague descriptions of the software or services, which invite queries and delay certification.
Inconsistent purpose codes between the declaration and the inward remittance.
Treating the eBRC as a banking formality rather than as the evidence supporting a GST refund.
Letting EDPMS entries accumulate unmatched until the bank queries a routine remittance.
Confusing the FIRC for capital with the realisation certificate for exports.
Leaving a historical gap open rather than registering, filing and seeking condonation.

13. Checklist

Set-up

Unit type established: STPI, SEZ or DTA
Where DTA, registration with the jurisdictional STPI as a non-STP unit completed
Service charges budgeted against projected export turnover
Export contracts registered as required
Purpose code agreed with the AD bank and applied consistently
Letter of Undertaking in place for zero-rated export supply under GST

Every month

All overseas invoices identified, including invoices to group companies
Declarations filed within 30 days of the invoice, or of the month’s last invoice where consolidating per client
Software and service descriptions written to match the invoice and the underlying agreement
Statement of Invoice and supporting invoices uploaded
Certification tracked, and any document query answered within its own 30 days
Certified form provided to the AD bank

Every quarter

EDPMS position reviewed with the AD bank — open entries identified and closed
Realisation certificates obtained and filed against the GST refund workings
Any unrealised export proceeds beyond the permitted period identified
Transition position re-confirmed with the AD bank and STPI centre while the framework is moving

If there is a historical gap

Full list of overseas invoices reconstructed from the ledger, by client and month
Non-STP registration completed if not already held
Outstanding declarations filed
Condonation of delay sought on genuine grounds
Open EDPMS entries worked through with the AD bank
GST refund position revisited once the trail is complete

Billing your parent from India and never heard of SOFTEX?

That is the usual position, and the cost is normally a stalled GST refund rather than a penalty. Tell us how long you have been invoicing overseas and whether you hold an STPI registration and we will tell you what is outstanding, whether condonation is realistic, and how to close the EDPMS entries behind it.

14. Frequently asked questions

Q1. What is SOFTEX filing?

It is the declaration of the value of software and IT-enabled services exported from India, made to the specified authority so that RBI can monitor realisation of the export proceeds. Physical goods are seen and valued by Customs; software delivered over a network is not, and SOFTEX fills that gap.

Q2. Does it apply if we only invoice our own parent company?

Yes. A captive development centre invoicing its overseas parent is supplying services to a party outside India for foreign currency, which is an export under FEMA. The relationship between the parties does not change the character of the transaction, and every invoice requires declaration.

Q3. Is there a minimum value below which we need not file?

No. The USD 25,000 exemption was removed by an RBI circular in September 2013, effective from 1 October 2013, and software and ITeS exports are reportable regardless of ticket size. The old threshold is still occasionally quoted but has not applied for over a decade.

Q4. Who has to file — only STPI and SEZ units?

No. The obligation applies to all units, including those in Software Technology Parks, Special Economic Zones, Export Processing Zones and Domestic Tariff Areas. It covers developers, agencies, BPOs, SaaS providers and designers, whether operating as a company, partnership, proprietorship or individual.

Q5. Our office is an ordinary leased floor. Do we need STPI registration?

Yes, as a non-STP unit. DTA units have no certification authority of their own, and RBI has notified STPI as the authority to receive and certify their declarations. STPI accordingly requires such units to register. You are not joining the STP scheme or claiming its benefits — you are registering so that your declarations can be certified.

Q6. Why do so many companies miss this?

Two reasons. The name suggests a scheme for units in technology parks, so a company in a commercial office building reasonably concludes it does not apply. And nothing prompts it — incorporation does not raise it, the bank does not raise it at account opening, and it typically surfaces when a remittance is queried or a GST refund stalls.

Q7. When is the declaration due?

Within 30 days of the invoice date, or within 30 days of the month’s last invoice where invoices to the same overseas client are consolidated for a calendar month. A separate 30-day period applies to producing documents when the certifying authority asks for them.

Q8. Can we file monthly rather than per invoice?

Yes. Where periodic invoices are raised on the same overseas client, a combined form may be filed covering all invoices raised on that client in a calendar month, subject to the last invoice falling within the period specified for the relevant milestone or contract. The deadline runs from that last invoice.

Q9. Has SOFTEX been abolished in 2026?

The framework is in transition and commentary differs. Reporting in early 2026 describes a consolidated EDF-based declaration replacing SOFTEX with faster electronic processing; more recent practitioner guidance says the transition is still rolling out and advises confirming the current position with your AD bank, STPI centre or RBI before filing.

Q10. Should we stop filing then?

No. Keep filing until your AD Category-I bank and your jurisdictional STPI centre confirm your specific position, because the transition is unlikely to apply uniformly across unit types and dates. Filing under a superseded procedure is administrative overhead; not filing under a live one is a FEMA contravention.

Q11. What is EDPMS and why does it matter?

The Export Data Processing and Monitoring System, launched on 1 March 2014, is the monitoring backbone that tracks every export transaction from declaration through payment realisation to closure. Your declaration reaches EDPMS, your bank matches the inward remittance against it, and the entry closes with an electronic Bank Realisation Certificate.

Q12. What happens if the declaration is missing?

The remittance arrives with nothing to match it to, so the entry does not close and unmatched inward remittances accumulate. Non-filing can result in held remittances and problems with the bank’s monitoring systems, which is how most groups discover the issue — a routine remittance is queried.

Q13. How does this affect our GST refund?

Directly. Export of services is zero-rated, and an exporter supplying under a Letter of Undertaking accumulates input tax credit claimed back as a refund. Establishing that a supply qualifies as an export requires evidence that consideration was received in convertible foreign exchange, and the realisation trail — declaration, EDPMS matching, bank realisation certificate — is what supports that.

Q14. Which costs more, the penalty or the refund delay?

Usually the refund delay. Groups tend to quantify the exposure as a FEMA penalty risk, but for a captive services subsidiary the input tax credit accumulating on rent, professional fees, software and equipment is a real cash flow item, and it is held up at exactly the point the realisation trail is incomplete.

Q15. What is the penalty for not filing?

Non-filing violates the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 and can attract action under Section 13(1) of FEMA, with penalties up to three times the amount involved, plus a continuing penalty of up to ₹5,000 per day after the first day of non-compliance. The amount involved is the value of the undeclared export.

Q16. We have years of unfiled declarations. What do we do?

Register as a non-STP unit if you do not already hold a registration, reconstruct the full list of overseas invoices by client and month, file the outstanding declarations, and seek condonation of the delay — which STPI may grant where the delay was for genuine reasons and certain criteria are met. Then work with the AD bank to close the open EDPMS entries.

Q17. What does STPI registration cost?

Service charges are paid upfront at registration, based on contract value and export projections for the year, and scale with export turnover. Note also that if a form is not certified because the submission was incomplete, STPI retains 20 per cent of the service charges paid for that year — so a defective submission has a direct cost.

Q18. What documents are needed for certification?

The form itself, filed on the STPI portal, together with the export invoices and a Statement of Invoice. The certifying authority examines the documents before certifying the value, and any further documents requested must be made available within 30 days. Vague descriptions of the software or services invite queries and delay certification.

Q19. Do purpose codes matter?

Yes. P0802 covers software consultancy, P0806 information services and P0807 off-site software exports. The code applied by the bank to the inward remittance should be consistent with the nature of the export declared, because divergence makes the EDPMS match harder and generates queries. Agree the correct code with your AD bank once and apply it consistently.

Q20. Is the export realisation certificate the same as an FIRC?

No, and confusing them is common in foreign-owned subsidiaries that receive both. Equity capital from the parent is an FDI remittance producing an FIRC. Export receipts run through the EDPMS process and produce an electronic Bank Realisation Certificate. The distinction matters when assembling an FC-GPR file for a capital infusion.

Q21. Do SEZ units follow the same process?

Not entirely. SEZ units route declarations through the Development Commissioner rather than STPI, and that remains the position under the transition being described for 2026. A group operating both an SEZ unit and a DTA unit is running two processes with two certifying authorities.

Q22. Who should own this internally?

Someone in finance with a monthly rhythm, not a periodic project owner. The obligation recurs every month, has a 30-day deadline, and feeds two downstream processes — EDPMS closure and the GST refund. Groups that treat it as an occasional filing accumulate open entries without noticing.

Talk to us before the bank queries a remittance

Delhi Legal Company works exclusively with foreign companies establishing and operating in India. Non-STP registration, monthly declaration filing, EDPMS reconciliation, GST refunds and the transfer pricing position on the same intercompany invoices — run as one workstream, because they all sit on the same billing.

How we usually start. Tell us how long your Indian entity has been invoicing overseas, whether you hold an STPI registration, and whether any GST refund is outstanding. We come back with what is unfiled, whether condonation is realistic, what it will take to close the EDPMS position, and how to run it monthly from there.

Start the conversation