STP Scheme The Software Technology Park (STP) scheme is a 100% export oriented scheme for the development

and export of computer software & services using data communication links or in the form of physical media including the export of professional services. The major attraction of this scheme is single point contact service to the STP units. The customer premises in India is connected to their client located abroad by gateway which is located at STPIs Centres through a radio link ,using either point to point or point (CDMA) to multi point radio (TDMA) Link. This facilitates any company operating in India or abroad connected to Internet, and to access SoftNET. Today all major software exporters in India are customers of Softnet (STPI-Datacom). We aim at making India the most preferred country in the world for all types of software resources and services. The concept of STP Scheme was evolved in 1991 and enunciated the following objectives:

To establish and manage infrastructure resources such as Data Communication facilities, Core Computer facilities, Built-up space and other common amenities. To provide single window statutory services such as Project approvals, import certification software valuation and certification of exports for software exporters. To promote development and export of software services through technology assessments, market analyses, market segmentation and marketing support. To train professionals and to encourage design and development in the field of software technology and software engineering.

STP Scheme Benefits & Highlights

Approvals are given under single window clearance scheme. 100% Income Tax Holiday as per section 10A of the IT Act. 100% Customs duty exemption on imports Equipment can also be imported on loan or lease basis. A company can set up STP unit anywhere in India. 100% Foreign Equity is permitted and approved by jurisdictional Director of STPI. All the imports of Hardware & Software in the STP units are completely duty free. All relevant equipment/goods including second hand equipment can be imported (except prohibited items) Unit shall be a positive net foreign exchange earner. Net Foreign Exchange Earnings (NFE) shall be calculated cumulatively in blocks of five years, starting from the commencement of production

Use of computer system for commercial training purposes is permissible subject to the condition that no computer terminals are installed outside the STP premises. Green card enabling priority treatment for Government clearances / other services. The sales in the Domestic Tariff Area (DTA) shall be permissible up to 50% of the export in value terms. STP units are exempted from payment of corporate income tax up to 2010. (For assessment year 2003-2004 10 % of profit will be taxed). The capital goods purchased from the Domestic Tariff Area (DTA) are entitled for benefits like exemption of excise Duty & reimbursement of Central Sales Tax (CST). Capital invested by Foreign Entrepreneurs, Know-How Fees, Royalty, Dividend etc., can be freely repatriated after payment of Income Taxes due on them, if any. Repartition of foreign currency for payments can be freely done. Software units may also use the computer system for training purpose (including commercial training).

Additional Benefits according to different State Government IT Policy.

Sales Tax Exemption Stamp duty Wavier. Electricity duty exemption. Octroi / Entry Duty Exemption Property Tax on par with Residential Premises Additional FSI

EOU scheme The EOU scheme was introduced in the year 1980 vide Ministry of Commerce resolution dated 31 st December 1980. The purpose of the scheme was basically to boost exports by creating additional production capacity. The EOU scheme is, at present, governed by the provisions of Export and Import (EXIM) Policy, 19972002. Under this scheme, the units undertaking to export their entire production of goods are allowed to be set up. The EOUs can export all products except prohibited items of exports in ITC (HS). Under the EOU scheme, the units are allowed to import or procure locally without payment of duty all types of goods including capital goods, raw materials, components, packing materials, consumables, spares and various other specified categories of equipments including material handling equipments, required for export production or in connection therewith. However, the goods prohibited for import are not permitted. In the case of EOUs engaged in agriculture, animal husbandry, floriculture, horticulture, pisciculture, viticulture, poultry, sericulture and granite quarrying, only specified categories of goods mentioned in the relevant notification have been permitted to be imported duty-free. Benefits under EOU Scheme

Units are exempted from payment of Income Tax upto the year 2010. All the imports to units are customs duty free. Exemption from Central Excise Duty for the procurement of Capital Goods and Raw Materials from domestic market. Units are entitled to sell the product in local market upto 50% of the products exported in value terms. 100% of foreign equity is permissible. Reimbursement of Cenral Sales Tax pad on domestic purchases. Full Freedom for sub-contracting. Exemption from the payment of Electricuty duty. EOU unit can be set up at any of over 300 places all over India The unit can import capital goods, raw materials, consumables, packing material, spares etc. without payment of customs duty. Similarly, these can be procured indigenously without payment of excise duty. Second hand capital goods can also be imported. They have to achieve positive NFE (Net Foreign Exchange Earnings). Minimum investment in plant and machinery and building is Rs 100 lakhs for EOU. This should be before commencement of commercial production.

Fast Track Clearance Scheme (FTCS) for clearances of imported consignments for EOU. Generally, all final production should be exported, except rejects upto prescribed limit. Sale within India should be on payment of excise duty. The duty which will be equal to normal customs duty which would be payable on such goods, if imported. However, in certain cases, excise duty payable will be only 50%/30% of normal customs duty payable on such goods if imported into India . Sub-contracting of production outside on job work basis is permissible after obtaining necessary permission on annual basis Job work for exports is permitted Samples can be sold / given free within prescribed limit Unutilized raw material can be disposed of on payment of applicable duties The unit can exit (de-bond) with permission of Development Commissioner, on payment of applicable duties. Central Sales Tax (CST) paid on purchases is refundable (but not local tax). Prescribed percentage of foreign exchange earnings can be retained in EEFC account in foreign exchange. 100% foreign equity is permissible, except in a few cases. Supplies made to EOU by Indian supplier are deemed exports and supplier is entitled to benefits of deemed export. Restrictions under Companies Act on managerial remuneration are not applicable. No restrictions on External Commercial Borrowings.