A.D.(M.A.Series) Circular No.1, 08/01/1999
[Last Circular in 1998 - AD(MA Series) circular No.51 AM(FL Series) circular No.6]

To

All Authorised Dealers in Foreign Exchange
Dear Sirs,

Export of Software in Non-physical form

Attention of authorised dealers is drawn to paragraph 6D.1 of the Exchange Control Manual (ECM) in terms of which export of computer software in non-physical form i.e. direct data transmission through dedicated earth stations/satellite links, should be declared on SOFTEXform. Keeping in view the developments in the field of software and information technology,ithas been decided that, besides computer software, export of Video/TV software and all other types of software products/packages should also be declared on the SOFTEX form, which has been revised in consultation with the Department of Electronics (DOE), Government of India. It has also been decided to modify the existing procedure applicable to export of software.

2. The revised procedure is detailed in the following sub-paragraphs:

(a) Revised SOFTEX form with effect from 1st February 1999 the export of software through dedicated earth stations/satellite links including export of Video/TV Software should be declared on the revised SOFTEX form. Forms would be available to exporters at the Regional Offices of Reserve Bank.

(b) Valuation of software exports

The valuation of export declared on SOFTEX form will be done by the designated official/s of the DOE at the Software Technology Parks of India (STPI). The SOFTEX form of the exporters located outside STPI as also forms in respect of export of Video/TV software will also be certified by the designated official/s at the nearest STPI. DOE have made necessary arrangement for certification/valuation of the Video/TV Software declared on SOFTEX form with the Ministry of Information and Broadcasting, Government of India, once in a week at each STPI.

(c) Disposal of SOFTEX form

(i) After certifying all three copies of the SOFTEX forms the designated DOE official will forward the original directly to the nearest Office of the Exchange Control Department of Reserve Bank. The duplicate will be returned to the exporter and the triplicate will be retained by the DOE for their record.

(ii) Within 21 days, from the date of certification of the SOFTEX form by DOE, the exporter should submit the duplicate copy together with a copy each of the supporting documents to the authorised dealer. The duplicate copy of the form together with documents will be retained by the authorised dealer till full export proceeds have been realised and repatriated and thereafter will be submitted to Reserve Bank, duly certified under cover of an appropriate R Return alongwith a copy/copies of invoice/s.

(iii) After the documents have been negotiated/sent for collection, authorised dealer should report the transaction to Reserve Bank in a fortnightly statement in form ENC under the cover of appropriate R Return. Entries in the ENC statement should be made in chronological order of the transactions as recorded in the internal register (Export Bills Register) of the authorised dealer.

(d) Terms of payment - Invoicing

(i) In respect of long duration contracts involving series of transmissions, the exporter should bill their overseas clients periodically, i.e. at least once a month, or on reaching the "milestone" as provided in the contract entered into with the overseas client and the last invoice/bill should be raised not later than 15 days from the date of completion of the contract. It would be in order for the exporters to submit a combined SOFTEX form for all the invoices raised in a month on a particular client, including advance remittances received.

(ii) In respect of contracts involving only ‘one shot operations’, the invoice/bill should be raised within 15 days from the date of transmission.

(iii) The exporter should submit SOFTEX form to the concerned official of Government of India at STPI for valuation/certification not later than 30 days from the date of invoice/date of last invoice raised in a month, as indicated above.

(iv) The invoices raised on overseas clients as at (i), (ii) and (iii) above will be subject to valuation by the officials of Government of India at STPI of export value declared on relative SOFTEX form [cf. paragraph 2(b) above) and consequent amendment made in the values, if necessary.

(e) Time limit for realisation of export value

The full value of the software exported as declared on the SOFTEX form or as certified by the officials concerned of Government of India, whichever is higher should be realised on due date of payment or within 180 days from the date of invoice, whichever is earlier. in the manner prescribed in Rule 9 of the Foreign Exchange Regulation Rules 1974.

3. The following consequential amendments may be carried out in the Exchange Control Manual:

Volume I

The existing Part D - Export of Computer Software, in Chapter 6 may be substituted by Slip 1.

Volume II

The Form SOFTEX may be substituted by Slip 2.

4. Authorised dealers may bring the contents of this circular to the notice of their constituents concerned.

5. The directions contained in this circular have been issued under Section 73(3) of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and any contravention or non-observance thereof is subject to the penalties prescribed under the Act.

Yours faithfully,
B. MAHESHWARAN
Chief General Manager

Slip 1
[AD/MA 1/1999]

PART D - Export of Software
Declaration of Software Exports
6D.1 Export of software is undertaken in physical form i.e. software prepared on magnetic tapes and paper media as well as in non-physical form i.e. direct transmission abroad through dedicated earth stations/satellite links. As far as export of software in physical form is concerned the procedure relating to declaration of shipments on GR/PP forms, handling of export documents by authorised dealers and other allied matters is the same as applicable to export of other goods. Export of software, in non-physical form including Video/TV software and all other types of software products/packages, should be declared on SOFTEX form. Each set of SOFTEX form comprises three copies marked Original, Duplicate and Triplicate which carry an identical pre-printed serial number. All the three forms in each set should be completed and the entire set submitted for the purpose of valuation together with relevant documents to the officials of Department of Electronics (DOE), Government of India.

6D.2 Valuation of Software Exports/Certification of SOFTEX form

The valuation of export declared on SOFTEX Form will be done by the designated official/s of the DOE at the Software Technology Parks of India (STPI). The SOFTEX forms of the exporters located outside STPI as also forms in respect of export of Video/TV software shall also be certified by the designated official/s at the nearest STPI. DOE have made necessary arrangement for certification/valuation of the Video/TV Software declared on SOFTEX form with the Ministry of Information and Broadcasting, Government of India, once in a week at the STPI.

6D.3 Disposal of SOFTEX forms

(i) After certifying all the three copies of the SOFTEX forms the designated official of Government of India at STPI will forward the original directly to the nearest Office of the Exchange Control Department of Reserve Bank the day it is received or the next day and return the duplicate to the exporter. The triplicate will be retained by the DOE for their record.

(ii) Within 21 days form the date of certification of the SOFTEX form, the exporter should submit the duplicate copy together with a copy of each of the supporting documents to the authorised dealer for negotiation/collection. The duplicate copy of the form together with documents will be retained by the authorised dealer till full export value declared on the form or as certified by the designated officials at STPI, whichever is higher has been realised and repatriated to India and thereafter will be submitted to the Reserve Bank duly certified under cover of an appropriate R Return along with a copy/ies of invoice/s.

(iii) After the documents have been negotiated/sent for collection, authorised dealers should report the transaction to Reserve Bank in a fortnightly statement in form ENC under the cover of appropriate R Return. Entries in the ENC statement should be made in chronological order of the transactions as recorded in the internal register (Export Bills Register) of the authorised dealer.

6D.4 Terms of payment - Invoicing

(i) In respect of long duration contracts involving series of transmissions, the exporter should bill their overseas clients periodically, i.e. at least once a month, or on reaching the "milestone" as provided in the contract entered into with the overseas client and the last invoice/bill should be raised not later than 15 days form the date of completion of the contract. It would be in order for the exporters to submit a combined SOFTEX form for all the invoices raised on a particular overseas client, including advance remittances received in a month.

(ii) In respect of contracts involving only ‘one shot operation’, the invoice/bill should be raised within 15 days from the date of transmission.

(iii) The exporter should submit SOFTEX form to the concerned official of Government of India at STPI for valuation/certification not later than 30 days from the date of invoice/the date of last invoice raised in a month, as indicated above.

(iv) The invoices raised on overseas clients as at (i) to (iii) above will be subject to valuation of export value declared on SOFTEX form by the designated official of Government of India (cf. paragraph 6D.2 above) and consequent amendment made in the invoice value, if necessary.

6D.5 Time limit for realisation of export value

The full value of the software exported as declared on the SOFTEX form or as certified by the official of Government of India at STPI, whichever is higher should be repatriated to India on due date of payment or within 180 days from the date of invoice, whichever is earlier in the manner prescribed in Rule 9 of the Foreign Exchange Regulation Rules, 1974.

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