Is Softex a mandatory filing for Technology and SaaS companies?

This is applicable to:

IT services
● Design;
● Software as a Service (SaaS);
● Development of software;
● Implementation;
● Reengineering; and
● Deployment of software.

ITES services
● Business process outsourcing (BPO);
● Knowledge process outsourcing (KPO);
● Data procurement; and
● Call centers.

Types of software export

Software export can be divided into offline (physical) forms and online forms. Physical forms of software include software exported through CD, DVD and other physical sources. In this day, the use of software through physical forms is outdated. Predominantly online forms of software include virtual and data communication links. SaaS companies in India export software in an online form.

Softex: Mandatory or Not?

SaaS Companies that export software have to comply with the requirement of filing Softex. This requirement is made mandatory as per the:

● RBI Circular of 2015 for all software companies that carry out software export to file Softex. The link to the RBI circular is available here.
● Zero rates supply: Export of services are zero-rated supply on GST. In the past, we have seen the GST department asking for Softex along with the Letter of Undertaking, Invoices and Foreign Inward Remittances to prove the export of services.

To summarize it appears to us that though there is no regulation which makes Softex filing mandatory for SaaS and Technology companies, it’s highly recommended to file Softex reporting the online sale of services or subscriptions, to prove the export of services and thereby ensuring compliance with respect to the RBI circular and to ensure continued zero rates supply.