r2i forum

Sorry to ask the same question again and again. I gone through few thread but i didnt get the exact answer.

Can I work remotely for a U.S. company while living in India?
I want to work as a consultant for a US company from India.
1. Company is very small and they dont want to open an office here or collaberate with a consultancy here.
2. Can they wire transfer my salary to India ? Is it legal ?
3. Do i need to register myself with some govt department ? Do i need to register myself as a company ?
4. Will i be end up paying tax in both the countries ?
5. Do i need to register myself for service tax ?

Dear Macjack,

Below are the answers to your questions:

1) You can work remotely for a US company while living in India. In this case you need to be aware of the provisions of Section 9 of the India Income tax Act, 1961 which levies the taxes on such type of income. Being a resident of India this income is taxable. Again you do get the benefits of federal withholding, if you have any, against the India tax liablity. Refer Article 2 of the India US DTAA.

2) You can work as a consultant for the US Company and get a 1099 at the end of the year, you need to comply the provision of Section 44AA and Section 44AB of the Act, and file the Audit report signed by a practising Accountant similar to us and submit it with the department for the year which attracts tax audit.

3) The company can transfer the fees directly to your India Bank Account or you can also get the same in the US bank account and then transfer it here.

4) You need to decide on which structure do you want for such services. You can work as a sole propreitor, or form a private limited company. All have their own advantages and disadvantages.

5) As far as taxes are concerned you will be taxes in the country where there is maximum rate. Generally in most cases it ends up to be India and you pay the taxes to the India government. The DTAA also assists in avoiding double taxation. As far as social security and medicare is concerned that will be payable to US in addition to the taxes and hence your total outflow will be (31 % Taxes plus 15% Social Security and Medicate) = 46 %
Though social security and medicare is not considered as taxes.

6) If you going to provide services in Domestic market (i.e within India) then you have the obligation to register yourself with the Service Tax department and file your returns regularly.

We hope most of your questions are cleared. We provide US and India tax filing and planning services and have our office in Pune, Bangalore and US. You can visit us on www.kkassociate.com or send us an email with your questions on [email protected]

Regards,
KKA
US and India tax filers.
www.kkassociate.com

Priyadarshini;651235One additional question. Im a citizen of India in US on H4. Currently working. Say we decide to move back to India my H4 will get revoked. Can my employer still outsource job to me in India? Is it legal to send jobs to India to a single employee even if that employer does not have any offices in India? Thank you for your help!!

Its doable.. if you register a sole-proprietorship company in India and US company contracts with that sole-proprietorship company. It may not be possible for you to continue to be on US company payroll, as employee.

With GST - things have become more complex.
1. With GST law - services that are provided from India (to foreign country) are considered Inter state supplies and IGST is applicable.
2. These are called zero-rated supplies.(i.e. no tax on that). zero rated is different from "exempt" supplies. Exempt supplies are agriculture goods, medical services, advocates services.
3. As it is zero-rated supply -> you still have to pay 18% tax first, get the remittance from US, and then get the 18% tax as refund. Basically, govt is withholding your money, till you prove, you actually got the money from abroad in convertible currency.[ In case you get paid is gold-nuggets, then Govt will not return that 18% tax.]
4. All this paying first and getting refund is adding lots of headache to freelancers and small firms, and affecting cash-flow.
5. Bigger firms with full time accounts department can use something called LUT/Bond. Slightly easier than #3,#4

Just search Twitter for "export Gst" - you will see the problems.

Yes, it is completely legal. Just send a letter to and get clearance from Trump.

Priyadarshini;651235One additional question. Im a citizen of India in US on H4. Currently working. Say we decide to move back to India my H4 will get revoked. Can my employer still outsource job to me in India? Is it legal to send jobs to India to a single employee even if that employer does not have any offices in India? Thank you for your help!!