To,
The STP/ EHTP Units/ Industry Associations
Sub:Review of STP/EHTP schemes.
Sir,
You will be happy to learn that Government of India have had under consideration, question of reviewing the existing policies to make the STP/EHTP schemes more relevant in the present context incorporating necessary modifications and additions from past experience, streamlining the procedure in approval, extension / renewal of proposals of software developers, service providers and infrastructure service provider to make STP/EHTP schemes growth engines for software, IT and IT enabled services as well as electronic hardware and manufacturing with an integrated view of domestic as well as export market.
In view of the above, an IMSC sub-group has been created for suggesting modifications and additions to the STP/EHTP schemes. The IMSC sub-group has proposed to obtain the views of industry and industry associations on various aspects relating to STP/ EHTP schemes. A questionnaire has therefore been prepared which can be accessed online for providing your responses through the link :203.190.136.92/stpiquestionnaire.
Some suggestive changes are also attached herewith, wherein those existing provisions of Foreign Trade Policy, Handbook of Procedure, customs circulars have been shown against which suggestive changes have been proposed. Further, some new inclusions have been suggested for making STP/EHTP schemes attractive to the industries. Your comments on the same are requested by a return mail.
It need not be mentioned that your responses to the questionnaire and suggestive changes only can generate a genuine requirement of the modifications and additions. You are therefore sincerely requested to respond to the questionnaire and suggestive changes within 27th of October, 2012, so that further action as per the timeline of the IMSC sub-group could be completed. It may be mentioned here that the IMSC sub-group also proposed to have open house discussion with you after getting your responses. Once the locations and dates are fixed we would seek for your kind participation in the open houses.
Yours sincerely,
Director,
STPIMaharshtra
Suggestive changes in FTP/HBoP/Customs & Central Excise/Service Tax Notifications for modification of STP/EHTP Schemes
- Suggestive changes in FTP
Existing Provision / Suggestive Changes
1. Trading & Warehousing:
As per Para 6.1 of FTP, Trading & Warehousing of goods are not allowed under STP/EHTP Scheme. / Trading and warehousingactivities by EHTP units for export purposes may be included.
2.DTA Sales:
As per Para 6.8 (a) (b) STP/EHTP Unit may sell goods & services up to 50% FOB value of export on payment of concessional duties. / STP/EHTP Unit may be allowed to sell goods and services without limit in the Domestic Tariff Area on payment of applicable duties.
3.CST Reimbursement:
As per Para 6.11 of FTP, EHTP / STP units shall beentitled for Reimbursement of Central Sales Tax (CST) on goods manufactured in India
As per Appendix 14-I-I of HBoP/FTP“The supplies from DTA to EOU/EHTP/STP units must be utilised by them for production of goods/services” / The CST reimbursement on supplies from
DTA to STP/EHTP may be allowed when the supplies are utilized by the units
for and in relation to production of
goods/services
- Suggestions for changes in Hand Book of Procedures, FTP
Existing Provision / Suggestive Changes
1.Import / Domestic Procurement of Goods duty free:
As per Para 6.5.1 of HBoP, specific goods are allowed for Import / Domestic Procurement by STP/EHTP units / All items relevant to operation of STP/EHTP units may be allowed for duty free import/ Domestic Procurement.
In case of any doubt as to whether any goods or
services are required by the STP/EHTP unit/ or
not, it may be decided by the Jurisdictional
Director, Software Technology Parks of India.
2.Work from Home:
As per Para 6.7.4 of HBoP, for IT and IT enabled services, persons authorized bysoftware units may access facility installed in EOU / EHTP /STP unit through communication links. / STP/EHTP units may be allowed off-site
employees who may access facility installed in
STP/EHTP unit through communication links
to work from home/ anywhere/ outside the
authorized STP/EHTP unit premises provided
the resultant exports take place only from
premises of the STP/EHTP unit.
3.Use of Computer for Training Purposes:
Use of duty free Computers in STP/EHTP for training purpose (Including Commercial Training) is allowed as per Para no 6.19.3 of Hand Book of Procedure, FTP. / Use of all duty free equipment in STP/EHTP for training purpose may be allowed subject to the condition that no duty free equipment will be installed outside the STP/EHTP unit.
4.Distinct Identity for STP/EHTP Unit:
As per Para 6.30 of HBoP, If an industrial enterprise is operating both as a domestic unit
as well as an EOU / EHTP / STP / BTP unit, it shall have two distinct identities with separate accounts including separate bank accounts. / If an industrial enterprise is operating both as a domestic unitas well as an EOU / EHTP / STP / BTP unit, it shall have twodistinct identities.
- Suggestions for changes in Customs &Central Excise Notifications
Existing Provision / Suggestive Changes
1.Provision of Customs Bonding:
An STP/EHTP Unit for the purpose of availing duty free facility area under section 25 of the Custom Act 1962 will be a duty free and bonded under section 58 of the Custom Act 1962. / Ini
“Soft Bonding” based on self-declaration may be allowed instead of existing Physical Bonding making STP /EHTP operation simple and hassles free.
2.Import / Domestic Procurement of Goods duty freeunder Customs notification 52/2003 and CE notification 22/2003
An STP/EHTP unit may import and/or procure from DTA goods and services without payment of duty as specified under Customs notification 52/2003 Dtd. 31.03.2003 and Central Excise notification 22/2003 Dtd. 31.03.2003. / Duty free Import/ Domestic Procurementof all items relevant to operation of STP/EHTP units may be allowed instead of specified items.
3. Import of Goods duty free by Pvt. IT Parks under Customs notification 153/93 and amended:
Import of only specified Infrastructure equipments under Custom notification 153/93 (Main) is allowed for Infrastructure Service Provider/Pvt. IT Park to be used by STP units only. / Duty free Import/ Domestic Procurement of all items relevant to operation of Infrastructure Service Provider/ IT Park units may be allowed instead of specified items.
- Suggestive new provisions in FTP/HBoP/Customs &Central Excise Notifications/Service Tax
Suggestive new provisions / Notification which will attract suggestive changes
1. Inclusion of new IT Services:
Following new IT Services are proposed to be include under STP Scheme:
Testing & Integration, Disaster Recovery, Knowledge Process Outsourcing (KPO), Business Process Management (BPM), Knowledge Process Management (KPM) / Changes envisaged in FTP and Appendix of HBoP
2.Clubbing of NFE:
Export of an STP/ EHTP unit operating from Tier-II/Tier-IIIlocations may be clubbed with FOB value of exports of STP/ EHTP unit of same entity/owner operating in Tier-I city for the purpose of meeting Export Obligations/Positive NFE of STP/ EHTP unit of Tier-II/Tier-III locations / Changes envisaged in FTP&HBoP
3.Extending the NFE time period toencourage
R & D :
STP/EHTP Units may be encouraged to R&D projects to absorb the imported knowhow. STP/EHTP units engaged in R& D activities may be permitted to meet the NFE/Export Obligation within maximum period of 10 years. / Changes envisaged in FTP& Customs Notification
4.Venture Funding:
Provision may be made for supporting Financial Institutions
(FIs) evolving dynamic norms for risk financing and making Venture Capital available for Software, IT and IT Enabled Services as well as Electronic Hardware and Manufacturing. / Inclusion envisaged in Modified STP /EHTP Scheme
5.CENVAT Credit/Refund of Service Tax:
The exemption/refund/credit of Service Tax may be provided on all items relevant to operation of STP/EHTP units.
In case of any doubt as to whether any goods or services are required by the STP/EHTP unit/ ornot, it may be decided by the Jurisdictional Director, Software Technology Parks of India. / Change envisaged in Service Tax Notification/Circular and in Appendix of Hand Book of Procedures, FTP.
6.Adjudication under FEMA:
The Jurisdictional Director, Software Technology Parks of India may be authorised by Reserve Bank of India to adjudicate under FEMA regarding Export Certification / Change envisaged in FEMA/RBI.
7.Applicability of procedure to
Infrastructure Service Provider/IT Park :
Applicability of procedure to STP/EHTP Units on import or procurement of goods and services, may be mutatis-mutandis applicable to the Infrastructure Service Provider/IT Park / Provision is to be made in Hand Book of Procedures, FTP.
8.Minimum Processing area:
Minimum 50% of the total approved area of Infrastructure Service Provider/IT Park will betreated as processing area and earmarked and utilized for STP/EHTP units for Software, IT and IT enabled services as well as Electronic Hardware and Manufacturing. / Provision is to be made in FTP.
9.Creating DR facility by IT Park:
The Infrastructure Service Provider/IT Park may
import or procure from Domestic Tariff Area, all
types of goods and services, without payment of
duty, taxes or cess for creating a Disaster
Management & Recovery Centre subject to
condition that minimum of50% of the DR facility
shall be used by STP/EHTP units. / Provision is to be made in FTP and Customs & Central Excise Notification
10.Infrastructure Service Provider/IT Park :
Private Infrastructure Service Provider/IT
Park may be encouraged to create
infrastructure facilities and other amenities
to be used by the entrepreneurs for
Software, IT and IT Enabled Services as well
as Electronic Hardware and Manufacturing. / Changes proposed in FTP to include Private Infrastructure Service Provider/IT Park which will be uses by both STP & EHTP.
11.Domestic Procurement of goods duty free by IT Park:
The exemption of duty, taxes or cess shall also apply to goods procured from DTA by Private Infrastructure Facility/IT Park duly approved by IMSC. / Provision is to be made in Central Excise Notification.
12.Relieving from NFE provision for STPI & IT Park:
STPI Complex or Private Infrastructure
facility/IT Park being not directly involved
with export activity shall be relived from
export obligation. / Provision is to be made in FTP and Customs Notification.