01Start with one decision: STPI or SEZ

Every software exporter setting up in India runs into this fork early, and it's worth resolving before you get far into incorporation. STPI (Software Technology Parks of India) and SEZ (Special Economic Zone) status are mutually exclusive — operating inside a notified SEZ automatically rules out STPI benefits, and vice versa. You pick one regime for the entity, not a mix.

  • STPI — you can operate from any office, anywhere. No dedicated zone required.
  • SEZ — you must physically sit inside a notified SEZ zone and report to a Development Commissioner.

02What STPI registration actually gets you

STPI has been the backbone of India's software export framework since 1991, and STPI-registered units still account for roughly half of the country's total software exports today. For most foreign software companies entering India — especially teams under a few hundred people — it's the more practical starting point.

  • Duty-free import of capital goods
  • 100% foreign direct investment permitted
  • Single-window government clearances
  • Bonded warehouse facilities
  • No requirement to sit in a specific zone — lease any Grade A office
  • Dedicated high-speed international data links at STPI centres, useful if you're setting up in a smaller hub where private ISP infrastructure is still catching up
  • Registration typically takes 2–4 weeks, through any of STPI's 60+ centres across India

03What SEZ gets you instead

SEZ status makes more sense at scale, or where the zone's shared infrastructure and customs handling genuinely offset the constraint of operating inside a notified area. It comes with its own compliance layer — a Development Commissioner oversees SEZ units directly, on top of standard corporate filings.

The tax reality check

The income tax holiday most people associate with these schemes no longer applies to new entrants. STPI's Section 10A benefit expired back in 2011. SEZ's Section 10AA holiday closed to units that began operations after 31 March 2020. If you're setting up today, the decision isn't about income tax savings — it's about customs duty, GST treatment, and operational flexibility. GST on IT exports is zero-rated under both regimes, with input tax credit refunds available either way.

04The filing cycle that doesn't stop at registration

Registration is a one-time step. SOFTEX filing is not — it's the recurring compliance workload that continues for as long as you export software from India, regardless of which regime you're under.

  • Every month, exports are declared on a SOFTEX form and certified by STPI or the SEZ Development Commissioner, within 30 days of the month in which the invoice was raised
  • The certified form is what lets your bank reconcile inward foreign remittance under FEMA
  • STPI certification typically takes a matter of days once submitted, assuming documentation is clean
Change to watch

From 1 October 2026, the SOFTEX form is being replaced by a monthly Export Declaration Form under updated FEMA regulations, and authorised dealer banks are being recognised as certifying authorities alongside STPI. In practice, some exporters may be able to get export declarations certified directly through their bank rather than STPI — though if your bank still prefers STPI or SEZ certification, that route may not be fully available yet. Confirm the current process with your bank and STPI centre closer to the transition.

05Sequencing it against incorporation

The approvals that cause the most delay are usually the ones started too late, not the ones that are inherently slow. A practical order of operations:

  • Decide STPI vs SEZ before you finalise office location — it affects where you're allowed to lease
  • File STPI or SEZ registration in parallel with company incorporation, not after — they don't have to be sequential
  • Open the corporate bank account and register for GST once incorporation is confirmed, so SOFTEX-linked remittances have somewhere to land from month one
  • Build your first SOFTEX filing into month-one operations, not as an afterthought once invoices start going out
FactorSTPISEZ
LocationAny office, anywhereMust sit inside notified zone
OversightSTPIDevelopment Commissioner
Registration time2–4 weeksVaries by zone availability
Best fitMost first-time entrantsScale-up, zone-based operations

This guide reflects publicly available regulatory information as of August 2026, including the upcoming SOFTEX-to-EDF transition. STPI, SEZ, and FEMA rules are subject to change, and this isn't a substitute for advice specific to your entity structure. WorkforceWhiz coordinates this filing directly for clients as part of the Legal & Incorporation phase — confirm current requirements before acting on anything here.