Hi,
I am a green card holder and planning to return to India. I work for a company that does not have any operations in India. I have two questions:
(1) Can I work for my firm remotely from India? Where will I be paying taxes?
(2) Does this have any legal implications for my firm if they continue to pay me in USD just like they do right now? Do they need to pay taxes in India?
Thanks for your help.
Work remotely for US firm in India when firm has no Indian operations
Work remotely for US firm in India when firm has no Indian operations
I recently R2I'ed to India . While in the US I had my own S Corp and consulted for a few US clients thru my S Corp.
Now that I am in India and continue to provide my services to US clients I was considering closing the S Corp and starting a Pvt Ltd firm in India that would directly bill US client. US client seems to be ok with this but they have sent me a IRS form W8-BEN and mentioned that there would be a 30% tax withholding for payments to Indian company unless the tax treaty specifies an exemption or lower rate of withholding .
I was going thru the treaty and the technical explanation on IRS between India and US but its language is beyond me. So I was wondering if anyone could advice me on this topic as to whether W/H tax applies or not and if it does what would be the rate and other related issues in terms of getting a refund from US or claiming credit in India ?
My services are in the field of SAP consulting .
Another business model some people have suggested is to revoke the S Corp status in US and convert it to a C Corp so I and Company in US are not related anymore. C Corp would primarily be used for Billing but not have not operations as such. Since payments are to US C Corp it would not go thru any withholding on the payments . I would also have a Pvt Ltd company in India that would then Bill the C Corp for services being rendered from India. Indian company will pay taxes in India and C Corp in US. And I as a Individual would report my global income to IRS in US since I am GC holder.
The C Corp / Indian Company model was the advice from CA/CPA expert in B'lore but when I talked to another firm they adviced against it since C Corp is kind of a Shell company in US and could get in trouble there.
I would really appreciate if any experts could provide some feedback on the above issues or if anyone working remotely directly for US clients from India who has adopted any of the above models or possibly something different could comment on this.
Thanks
Now that I am in India and continue to provide my services to US clients I was considering closing the S Corp and starting a Pvt Ltd firm in India that would directly bill US client. US client seems to be ok with this but they have sent me a IRS form W8-BEN and mentioned that there would be a 30% tax withholding for payments to Indian company unless the tax treaty specifies an exemption or lower rate of withholding .
I was going thru the treaty and the technical explanation on IRS between India and US but its language is beyond me. So I was wondering if anyone could advice me on this topic as to whether W/H tax applies or not and if it does what would be the rate and other related issues in terms of getting a refund from US or claiming credit in India ?
My services are in the field of SAP consulting .
Another business model some people have suggested is to revoke the S Corp status in US and convert it to a C Corp so I and Company in US are not related anymore. C Corp would primarily be used for Billing but not have not operations as such. Since payments are to US C Corp it would not go thru any withholding on the payments . I would also have a Pvt Ltd company in India that would then Bill the C Corp for services being rendered from India. Indian company will pay taxes in India and C Corp in US. And I as a Individual would report my global income to IRS in US since I am GC holder.
The C Corp / Indian Company model was the advice from CA/CPA expert in B'lore but when I talked to another firm they adviced against it since C Corp is kind of a Shell company in US and could get in trouble there.
I would really appreciate if any experts could provide some feedback on the above issues or if anyone working remotely directly for US clients from India who has adopted any of the above models or possibly something different could comment on this.
Thanks