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Why RBI Simplified its procedure to submit export declaration form ?
RBI now introduced new guidelines and removed the difference between single/bulk submission of forms & large/small exporters to simplified procedure of Softex forms.
See New Procedure here ->> http://stpi-scheme.blogspot.in/2015/11/rbi-simplified-export-declaration_24.html
Reasons and concerns -
See this news :-
MUMBAI: Complying with the RBI's 2013 circular requiring companies to file software-export forms for every transaction is proving to be a nightmare for startups that are now required to submit the form, in four copies, for every transaction.
Earlier, the softex forms were required only for invoices exceeding $25,000. Few startups had a significant level of transactions of that size but when the central bank removed the floor, every software export transaction was targeted.
To file a softex form, a company has to fill in the details of the invoice, along with the contract or statement of work. The form can be downloaded from the RBI website and then four copies have to be made -- one for the Software Technology Parks of India which will certify the transaction, one for RBI, one for the startup's bank that receives the payment and one for the startup.
And in some cases the form, in its current avatar, simply can't be filled, as in the case of a startup selling an application on a Google or Apple Store, which has no contracts or invoices.
"This very frustrating. We have made representations to the RBI to explain to them that this is very onerous for a startup and we want them to restore the threshold because there are micro-transactions that are getting caught. We have asked them if the forms can be aggregated, so it can be filed once a month, or once a quarter. We are waiting for their decision," Ravi Gururaj, chairman of the Nasscom Product Council, told ET. Gururaj added that they were working with several startups and product companies that were facing problems in trying to comply.
RBI did not respond to an email sent on Tuesday seeking inputs for this story.
For startups that want to comply with the rule in its current form, the process is painstaking and adds costs. Just registering with the STPI costs a fee that is based on revenue.
"We have about 400 invoices a month that range in size from $2000-$30,000. I have to create 1600 forms, and each has to be signed. We are also starting a business when you can use our software for $10 a month, and we want thousands of customers. I will have to hire people just to finish these forms and then I will have to buy a truck to deliver them," Abhishek, a founder at a startup that develops applications for customers outside India, said.
He declined to be identified because his business is small and he did not want to offend the STPI or RBI.
A second startup founder said that while he knows about the circular, his bank doesn't.
"They only ask for Softex forms for invoices over $25,000. So, currently, it isn't a problem. But we know we are non-compliant. The problem is that in the current state, we don't know how to even become compliant with it becoming a big problem," Atul, who runs a small IT outsourcing firm, said.
Startups are now caught in a Catch-22 situation. They could either comply with the notification, inflating their costs, or they could postpone complying and face flags in the due diligence process when they try to raise funds.
Experts on Softex forms say that even larger companies are just beginning to comply with the circular that was sent about two years ago.
"We have clients that are just beginning to comply. But in defence of the central bank, they have tried to make the process easier by shifting it online. And they have been understanding and lenient when they see non-compliance. But saying you are ignorant of the rule is not an excuse," Divya Gupta, Director of Tax at consultancy KPMG, said. Gupta added that as yet there was not adequate knowledge about the rule change.
Penalties for not complying with rule come under the Foreign Exchange Management Act, which includes the potential for large fines.
Source : http://articles.economictimes.indiatimes.com/2015-07-23/news/64772830_1_rbi-website-forms-ravi-gururaj
This Blog helps you to have a better understanding of STPI scheme, export of IT & software and software services including Information Technology (IT) enabled services/ Bio- IT And other export promotion scheme of Government of India.
You are requested to join STPI Blog for the latest updates, news, RBI guidelines for exporters, FEMA Regulations and other related information.
Become Follower of Our Blog - http://stpi-scheme.blogspot.com/
Join Facebook Group of STPI -
Why RBI Simplified its procedure to submit export declaration form ?
RBI now introduced new guidelines and removed the difference between single/bulk submission of forms & large/small exporters to simplified procedure of Softex forms.
See New Procedure here ->> http://stpi-scheme.blogspot.in/2015/11/rbi-simplified-export-declaration_24.html
Reasons and concerns -
See this news :-
Startups balk at RBI’s 2013 circular on software-export forms
MUMBAI: Complying with the RBI's 2013 circular requiring companies to file software-export forms for every transaction is proving to be a nightmare for startups that are now required to submit the form, in four copies, for every transaction.
Earlier, the softex forms were required only for invoices exceeding $25,000. Few startups had a significant level of transactions of that size but when the central bank removed the floor, every software export transaction was targeted.
To file a softex form, a company has to fill in the details of the invoice, along with the contract or statement of work. The form can be downloaded from the RBI website and then four copies have to be made -- one for the Software Technology Parks of India which will certify the transaction, one for RBI, one for the startup's bank that receives the payment and one for the startup.
And in some cases the form, in its current avatar, simply can't be filled, as in the case of a startup selling an application on a Google or Apple Store, which has no contracts or invoices.
"This very frustrating. We have made representations to the RBI to explain to them that this is very onerous for a startup and we want them to restore the threshold because there are micro-transactions that are getting caught. We have asked them if the forms can be aggregated, so it can be filed once a month, or once a quarter. We are waiting for their decision," Ravi Gururaj, chairman of the Nasscom Product Council, told ET. Gururaj added that they were working with several startups and product companies that were facing problems in trying to comply.
RBI did not respond to an email sent on Tuesday seeking inputs for this story.
For startups that want to comply with the rule in its current form, the process is painstaking and adds costs. Just registering with the STPI costs a fee that is based on revenue.
"We have about 400 invoices a month that range in size from $2000-$30,000. I have to create 1600 forms, and each has to be signed. We are also starting a business when you can use our software for $10 a month, and we want thousands of customers. I will have to hire people just to finish these forms and then I will have to buy a truck to deliver them," Abhishek, a founder at a startup that develops applications for customers outside India, said.
He declined to be identified because his business is small and he did not want to offend the STPI or RBI.
A second startup founder said that while he knows about the circular, his bank doesn't.
"They only ask for Softex forms for invoices over $25,000. So, currently, it isn't a problem. But we know we are non-compliant. The problem is that in the current state, we don't know how to even become compliant with it becoming a big problem," Atul, who runs a small IT outsourcing firm, said.
Startups are now caught in a Catch-22 situation. They could either comply with the notification, inflating their costs, or they could postpone complying and face flags in the due diligence process when they try to raise funds.
Experts on Softex forms say that even larger companies are just beginning to comply with the circular that was sent about two years ago.
"We have clients that are just beginning to comply. But in defence of the central bank, they have tried to make the process easier by shifting it online. And they have been understanding and lenient when they see non-compliance. But saying you are ignorant of the rule is not an excuse," Divya Gupta, Director of Tax at consultancy KPMG, said. Gupta added that as yet there was not adequate knowledge about the rule change.
Penalties for not complying with rule come under the Foreign Exchange Management Act, which includes the potential for large fines.
Source : http://articles.economictimes.indiatimes.com/2015-07-23/news/64772830_1_rbi-website-forms-ravi-gururaj
This Blog helps you to have a better understanding of STPI scheme, export of IT & software and software services including Information Technology (IT) enabled services/ Bio- IT And other export promotion scheme of Government of India.
You are requested to join STPI Blog for the latest updates, news, RBI guidelines for exporters, FEMA Regulations and other related information.
Become Follower of Our Blog - http://stpi-scheme.blogspot.com/
Join Facebook Group of STPI -
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