SOFTEX Is dead: India's new export filing system explained
For over two decades, every Indian software exporter — from billion-dollar IT firms to solo freelancers — filed the SOFTEX form to declare overseas earnings. That era ended on January 13, 2026. The Reserve Bank of India officially scrapped the Software Export Declaration Form through notification FEMA 23(R)/2026-RB. A unified Export Declaration Form (EDF) now replaces it under an entirely new FEMA framework effective October 1, 2026.
This is the biggest export compliance overhaul for India's $205 billion software services industry in a generation. STPI certification is no longer mandatory. Banks become the primary compliance authority. Monthly consolidated filings replace transaction-level declarations. Here is everything Indian exporters need to know about the transition.
What was SOFTEX, and why did it exist for 26 years?
When goods leave India physically, customs officers track them through shipping bills at ports. Software sent electronically over the internet leaves no physical trail. That gap created SOFTEX.
India enacted the Foreign Exchange Management Act (FEMA) in 1999. The RBI then issued FEMA Notification 23/2000-RB on May 3, 2000, which created four declaration forms for different export types. Physical goods used the GR form and SDF. Software exported via data links got SOFTEX — essentially a digital shipping bill for invisible exports.
The form served three purposes. It tracked foreign exchange inflows from software exports. It enforced FEMA compliance by ensuring exporters repatriated earnings within stipulated deadlines. It also certified export valuations to prevent illegal fund transfers.
The filing process was notoriously slow. Exporters generated an SOFTEX number from the RBI portal and filled out the form on the STPI portal with invoice details, software descriptions, and buyer information. They submitted it in triplicate tothe STPI or SEZ authorities. After verification — which could take one to two months — the original went to RBI, the duplicate to the exporter's Authorised Dealer (AD) bank, and the triplicate stayed with STPI. The bank then reconciled payments against the SOFTEX in EDPMS and issued a Bank Realisation Certificate. The full cycle from invoice to closure stretched across months.
RBI tweaked the system multiple times. In January 2004, exports below USD 25,000 were exempted from SOFTEX filing. By February 2012, bulk filing arrived for large exporters. Then, in September 2013, RBI reversed course entirely. It removed the USD 25,000 exemption and made SOFTEX mandatory for all software exporters regardless of invoice value. That move hit freelancers and small exporters especially hard.
How RBI replaced SOFTEX with the unified EDF
The death of SOFTEX unfolded over an 18-month regulatory process. On July 2, 2024, the RBI released draft Foreign Exchange Management (Export and Import of Goods and Services) Regulations that propose the elimination of SOFTEX. After public consultations, a revised draft appeared on April 4, 2025. The final notification — FEMA 23(R)/2026-RB — was gazetted on January 13, 2026, with an effective date of October 1, 2026.
The new FEMA 2026 regulations do not just eliminate SOFTEX. They replace 167 existing circulars and supersede the entire 2015 export framework. Software is now defined as a subcategory of "services" within a single explanatory clause. Every export — goods, services, and software — uses a single unified Export Declaration Form.
The critical operational shift involves who certifies declarations. Under the old regime, STPI or SEZ certification was mandatory. Nobody could bypass these bodies. Under the 2026 regulations, AD banks are recognised as "Specified Authority" alongside STPI. Software exporters in the Domestic Tariff Area can now get their EDF certified by their bank alone. This eliminates weeks of STPI processing time. SEZ units still route declarations through the Development Commissioner.
EDPMS — the Export Data Processing and Monitoring System launched on March 1, 2014 — remains the underlying monitoring backbone. It tracks every export transaction from declaration through payment realisation to closure. Under the new regime, AD banks must enter EDF details into EDPMS within five working days of receipt. The system automatically matches declarations with inward remittances and generates electronic Bank Realisation Certificates.
For a detailed breakdown of the new FEMA 2026 compliance requirements for Indian service exporters, see Winvesta's complete guide.
Five key changes every exporter should understand
Consolidated monthly filing delivers the biggest practical improvement. A SaaS company processing 500 invoices monthly to clients across 30 countries previously managed hundreds of SOFTEX entries. Under the new regime, a single EDF per month covers all service and software exports during that calendar month. For invoices of up to ₹1 lakh each to different overseas clients, one consolidated monthly EDF suffices. The filing deadline is 30 days from the end of the relevant month.
Self-declaration closure for small values simplifies reconciliation dramatically. RBI's October 2025 circular allows EDPMS entries valued at ₹10 lakh or less to be closed based on the exporter's self-declaration that payment has been received. Quarterly consolidated declarations are permitted for bulk reconciliation. Banks cannot levy penal charges for regulatory delays on these transactions.
Extended realisation periods give exporters more breathing room. The November 2025 amendment stretched the export realisation deadline from 9 months to 15 months from the invoice date. INR-denominated exports get 18 months. The advance payment shipment period increased from 1 year to 3 years.
Greater bank autonomy means fewer RBI touchpoints for routine approvals. AD banks can now grant extensions for delayed repatriation, approve write-offs, and set internal standard operating procedures — all without seeking RBI permission.
Set-off of export receivables against import payables with the same overseas party or their group companies now constitutes valid realisation of export proceeds. This is a significant simplification for companies running both import and export operations with the same counterparties.
What freelancers and startups must do before October 2026?
The transition creates both opportunity and risk. Freelancers who previously used purpose code P0802 ("software implementation/consultancy not covered in SOFTEX form") to avoid SOFTEX filing face a changed landscape. All service exports now require EDF filing under the 2026 regime. The P0802 workaround disappears.
RBI treats freelance work for overseas clients as export of services with no exceptions and no minimum threshold. Purpose codes still matter — P0802 for software consultancy, P0806 for information services, P0807 for off-site software exports. Exporters must obtain an e-FIRA or FIRC for every payment and maintain documentation for at least six years. FEMA penalties can reach three times the amount involved for serious violations. However, the April 2025 compounding reform capped penalties for procedural lapses at ₹2 lakh.
Understanding how EDPMS works and its benefits for Indian exporters is essential to staying compliant under the new framework.
Startups carry the highest compliance risk during this transition. Industry experts describe years of unreconciled EDPMS entries across India's startup ecosystem as a ticking regulatory problem. Many founders assumethat money arriving in their bank account equals full compliance. It does not.
Every software exporter should complete these steps before October 2026. Audit all pending EDPMS entries and resolve unreconciled records with your AD bank. Coordinate with your bank to understand their new internal SOPs, since implementation will vary. Update internal compliance processes and retrain staff on the unified EDF timeline. Engage a FEMA-specialist chartered accountant — the intersection of forex regulations and export compliance demands specialised expertise. Review your payment platform, because fintech solutions now automate e-FIRA generation and purpose code mapping at far lower cost than legacy platforms.
Challenges that remain unresolved
The reform is welcome, but several concerns persist. Bank readiness is the biggest unknown. The operating process is largely delegated to AD banks. Different banks may interpret and implement rules differently. Industry analysis flagged that if an AD bank still wants STPI to certify declarations, exporters may not be able to bypass the old process entirely. Clarity will come only after banks formally notify their updated procedures.
The software definition under the new regulations is also problematically broad. It covers any computer programme, database, drawing, design, or audio/video signal on any medium other than a physical one. Industry body iSPIRT called this a very ambiguous definition that could create confusion in classifying intangible exports.
There is also an ironic expansion of compliance for non-software service exporters. Previously, service exports other than software required no declaration form at all. Under the 2026 regime, all service exports require EDF filing — introducing new paperwork even as software export paperwork decreases. The exact digital filing method — whether through an online portal, email, or physical submission — is still awaited from the RBI.
India's broader regulatory landscape supports this direction. The government released the draft Digital Trade Facilitation Bill in February 2026. The Export Promotion Mission approved in late 2025 commits ₹25,060 crore over six years to strengthen the export ecosystem. RBI's Payment Aggregator Cross-Border framework formalised compliant payment channels, with a maximum of ₹25 lakh per transaction. These reforms collectively push India toward a streamlined, digital-first export infrastructure.
The October 1, 2026, effective date gives exporters seven months to prepare. That time should go toward auditing EDPMS records, understanding new bank processes, and reconciling every historical export transaction. For millions of Indian freelancers and thousands of startups who have operated in a compliance grey zone, this is both an opportunity and a wake-up call.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
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No FX markups. No GST. Funds in 1 day.
For over two decades, every Indian software exporter — from billion-dollar IT firms to solo freelancers — filed the SOFTEX form to declare overseas earnings. That era ended on January 13, 2026. The Reserve Bank of India officially scrapped the Software Export Declaration Form through notification FEMA 23(R)/2026-RB. A unified Export Declaration Form (EDF) now replaces it under an entirely new FEMA framework effective October 1, 2026.
This is the biggest export compliance overhaul for India's $205 billion software services industry in a generation. STPI certification is no longer mandatory. Banks become the primary compliance authority. Monthly consolidated filings replace transaction-level declarations. Here is everything Indian exporters need to know about the transition.
What was SOFTEX, and why did it exist for 26 years?
When goods leave India physically, customs officers track them through shipping bills at ports. Software sent electronically over the internet leaves no physical trail. That gap created SOFTEX.
India enacted the Foreign Exchange Management Act (FEMA) in 1999. The RBI then issued FEMA Notification 23/2000-RB on May 3, 2000, which created four declaration forms for different export types. Physical goods used the GR form and SDF. Software exported via data links got SOFTEX — essentially a digital shipping bill for invisible exports.
The form served three purposes. It tracked foreign exchange inflows from software exports. It enforced FEMA compliance by ensuring exporters repatriated earnings within stipulated deadlines. It also certified export valuations to prevent illegal fund transfers.
The filing process was notoriously slow. Exporters generated an SOFTEX number from the RBI portal and filled out the form on the STPI portal with invoice details, software descriptions, and buyer information. They submitted it in triplicate tothe STPI or SEZ authorities. After verification — which could take one to two months — the original went to RBI, the duplicate to the exporter's Authorised Dealer (AD) bank, and the triplicate stayed with STPI. The bank then reconciled payments against the SOFTEX in EDPMS and issued a Bank Realisation Certificate. The full cycle from invoice to closure stretched across months.
RBI tweaked the system multiple times. In January 2004, exports below USD 25,000 were exempted from SOFTEX filing. By February 2012, bulk filing arrived for large exporters. Then, in September 2013, RBI reversed course entirely. It removed the USD 25,000 exemption and made SOFTEX mandatory for all software exporters regardless of invoice value. That move hit freelancers and small exporters especially hard.
How RBI replaced SOFTEX with the unified EDF
The death of SOFTEX unfolded over an 18-month regulatory process. On July 2, 2024, the RBI released draft Foreign Exchange Management (Export and Import of Goods and Services) Regulations that propose the elimination of SOFTEX. After public consultations, a revised draft appeared on April 4, 2025. The final notification — FEMA 23(R)/2026-RB — was gazetted on January 13, 2026, with an effective date of October 1, 2026.
The new FEMA 2026 regulations do not just eliminate SOFTEX. They replace 167 existing circulars and supersede the entire 2015 export framework. Software is now defined as a subcategory of "services" within a single explanatory clause. Every export — goods, services, and software — uses a single unified Export Declaration Form.
The critical operational shift involves who certifies declarations. Under the old regime, STPI or SEZ certification was mandatory. Nobody could bypass these bodies. Under the 2026 regulations, AD banks are recognised as "Specified Authority" alongside STPI. Software exporters in the Domestic Tariff Area can now get their EDF certified by their bank alone. This eliminates weeks of STPI processing time. SEZ units still route declarations through the Development Commissioner.
EDPMS — the Export Data Processing and Monitoring System launched on March 1, 2014 — remains the underlying monitoring backbone. It tracks every export transaction from declaration through payment realisation to closure. Under the new regime, AD banks must enter EDF details into EDPMS within five working days of receipt. The system automatically matches declarations with inward remittances and generates electronic Bank Realisation Certificates.
For a detailed breakdown of the new FEMA 2026 compliance requirements for Indian service exporters, see Winvesta's complete guide.
Five key changes every exporter should understand
Consolidated monthly filing delivers the biggest practical improvement. A SaaS company processing 500 invoices monthly to clients across 30 countries previously managed hundreds of SOFTEX entries. Under the new regime, a single EDF per month covers all service and software exports during that calendar month. For invoices of up to ₹1 lakh each to different overseas clients, one consolidated monthly EDF suffices. The filing deadline is 30 days from the end of the relevant month.
Self-declaration closure for small values simplifies reconciliation dramatically. RBI's October 2025 circular allows EDPMS entries valued at ₹10 lakh or less to be closed based on the exporter's self-declaration that payment has been received. Quarterly consolidated declarations are permitted for bulk reconciliation. Banks cannot levy penal charges for regulatory delays on these transactions.
Extended realisation periods give exporters more breathing room. The November 2025 amendment stretched the export realisation deadline from 9 months to 15 months from the invoice date. INR-denominated exports get 18 months. The advance payment shipment period increased from 1 year to 3 years.
Greater bank autonomy means fewer RBI touchpoints for routine approvals. AD banks can now grant extensions for delayed repatriation, approve write-offs, and set internal standard operating procedures — all without seeking RBI permission.
Set-off of export receivables against import payables with the same overseas party or their group companies now constitutes valid realisation of export proceeds. This is a significant simplification for companies running both import and export operations with the same counterparties.
What freelancers and startups must do before October 2026?
The transition creates both opportunity and risk. Freelancers who previously used purpose code P0802 ("software implementation/consultancy not covered in SOFTEX form") to avoid SOFTEX filing face a changed landscape. All service exports now require EDF filing under the 2026 regime. The P0802 workaround disappears.
RBI treats freelance work for overseas clients as export of services with no exceptions and no minimum threshold. Purpose codes still matter — P0802 for software consultancy, P0806 for information services, P0807 for off-site software exports. Exporters must obtain an e-FIRA or FIRC for every payment and maintain documentation for at least six years. FEMA penalties can reach three times the amount involved for serious violations. However, the April 2025 compounding reform capped penalties for procedural lapses at ₹2 lakh.
Understanding how EDPMS works and its benefits for Indian exporters is essential to staying compliant under the new framework.
Startups carry the highest compliance risk during this transition. Industry experts describe years of unreconciled EDPMS entries across India's startup ecosystem as a ticking regulatory problem. Many founders assumethat money arriving in their bank account equals full compliance. It does not.
Every software exporter should complete these steps before October 2026. Audit all pending EDPMS entries and resolve unreconciled records with your AD bank. Coordinate with your bank to understand their new internal SOPs, since implementation will vary. Update internal compliance processes and retrain staff on the unified EDF timeline. Engage a FEMA-specialist chartered accountant — the intersection of forex regulations and export compliance demands specialised expertise. Review your payment platform, because fintech solutions now automate e-FIRA generation and purpose code mapping at far lower cost than legacy platforms.
Challenges that remain unresolved
The reform is welcome, but several concerns persist. Bank readiness is the biggest unknown. The operating process is largely delegated to AD banks. Different banks may interpret and implement rules differently. Industry analysis flagged that if an AD bank still wants STPI to certify declarations, exporters may not be able to bypass the old process entirely. Clarity will come only after banks formally notify their updated procedures.
The software definition under the new regulations is also problematically broad. It covers any computer programme, database, drawing, design, or audio/video signal on any medium other than a physical one. Industry body iSPIRT called this a very ambiguous definition that could create confusion in classifying intangible exports.
There is also an ironic expansion of compliance for non-software service exporters. Previously, service exports other than software required no declaration form at all. Under the 2026 regime, all service exports require EDF filing — introducing new paperwork even as software export paperwork decreases. The exact digital filing method — whether through an online portal, email, or physical submission — is still awaited from the RBI.
India's broader regulatory landscape supports this direction. The government released the draft Digital Trade Facilitation Bill in February 2026. The Export Promotion Mission approved in late 2025 commits ₹25,060 crore over six years to strengthen the export ecosystem. RBI's Payment Aggregator Cross-Border framework formalised compliant payment channels, with a maximum of ₹25 lakh per transaction. These reforms collectively push India toward a streamlined, digital-first export infrastructure.
The October 1, 2026, effective date gives exporters seven months to prepare. That time should go toward auditing EDPMS records, understanding new bank processes, and reconciling every historical export transaction. For millions of Indian freelancers and thousands of startups who have operated in a compliance grey zone, this is both an opportunity and a wake-up call.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.
