I am currently under H-1B(I485 Pending) and my employer is sending me on a designation to work in India for a period of 1-2 years in April 2010 . They are planning to keep me in US payroll. With this background, I have following questions-
1. What will be my US tax position ? Once I start paying taxes in India, can I ask my US employer to stop witholding taxes to avoid Dual taxation?
2. Also, once I move, when should I start paying taxes to GOI? If I am paying taxes at both the countries, which country do I get refund from?
3. I also understand, that there is a requirement on the part of my company to deduct Indian tax at source. My company has subsidiaries in India, but I will be getting paid through US office only. I am not sure if my employer would be willing to do all these things for me. Can I pay the indian taxes on my own without involving them?
4. Are there any other complications/rules that I should be aware of?
5. Also, If I have an option, is it better to get transferred to the Indian office of the company to avoid all these hassles?
Thank you in advance to all the experts here. You are doing a great job for the R2iers.
RK
R2I with same employer under US Payroll
R2I with same employer under US Payroll
How about doing a search on the forum before posting ??
R2I with same employer under US Payroll
ramakr78 - Did you find the answers to your questions? I am in the same position as you and have the same questions.
R2I with same employer under US Payroll
Hey ramakr78 or s_m,
Did you find any answers to your questions?
Please let us know how you proceeded....
Did you find any answers to your questions?
Please let us know how you proceeded....
R2I with same employer under US Payroll
You can work independently from India for your employer if they don't have any presence in India. I have ended up same thing and have my own sole proprietorship firm and working from home. I invoice them every month and they remit the amount into my business account. I have also working with a CA here to get the advise for tax related matters. I will be paying taxes to GOI after next March and will be paying no service tax as this is the export service. You also need to get IEC code (from Foreign Ministry) for you sole proprietorship firm in order to prove that you're exporting services. There are few quite steps you need to work on for this process apart from your regular R2I settle down process. Good Luck!
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direstraits88
- Posts: 746
- Joined: Sun Feb 18, 2007 2:10 am
R2I with same employer under US Payroll
Not sure if your HR is involved in this yet. Legally, your H1 is no longer valid once you get transferred to India. Your H1 petition has a work location requirement. So you cannot be in their US payroll anymore though your GC process can continue.
If this is a large MNC, then they usually play by the rule book.
If this is a large MNC, then they usually play by the rule book.
R2I with same employer under US Payroll
Hi mrthiru,
Thank you very much for your reply. Finally I am able to find one person who is doing this. As per your reply, it appears that you have been exporting your service for the last 8 months etc and next march you need to pay tax to GOI and you are not sure about the exact procedure for tax preperation and discussing this with your CA.
May I know your phone number or email id? I would like to know more details of how to start this sole proprietorship firm? What are the requirements? How long it takes?
I really appreciate your help. Please,..
Thank you very much for your reply. Finally I am able to find one person who is doing this. As per your reply, it appears that you have been exporting your service for the last 8 months etc and next march you need to pay tax to GOI and you are not sure about the exact procedure for tax preperation and discussing this with your CA.
May I know your phone number or email id? I would like to know more details of how to start this sole proprietorship firm? What are the requirements? How long it takes?
I really appreciate your help. Please,..
-
returning_indian
- Posts: 2322
- Joined: Thu May 06, 2010 12:56 am
R2I with same employer under US Payroll
mrthiru;354613You can work independently from India for your employer if they don't have any presence in India. I have ended up same thing and have my own sole proprietorship firm and working from home. I invoice them every month and they remit the amount into my business account. I have also working with a CA here to get the advise for tax related matters. I will be paying taxes to GOI after next March and will be paying no service tax as this is the export service. You also need to get IEC code (from Foreign Ministry) for you sole proprietorship firm in order to prove that you're exporting services. There are few quite steps you need to work on for this process apart from your regular R2I settle down process. Good Luck!It will be really helpful for lot of us (maybe in future) to learn about the steps involved in this process. Since you have already done it, detail explanation will help. Thanks.
R2I with same employer under US Payroll
Hi mrthiru,
If you please describe the process here, that will be appreciated. Also, Why you thought that
you need to pay to GOI after 12 months of exporting the service.
Please enlighten us.
If you please describe the process here, that will be appreciated. Also, Why you thought that
you need to pay to GOI after 12 months of exporting the service.
Please enlighten us.
R2I with same employer under US Payroll
I was like you guys beginning of this year, looking for answers on this topic. Thanks to our seniors those replied my posts in regards to this at that time. They gave me a starting point!
Like Upendra said, I'm not done yet at this point. I have a plan to post my R2I diary as well as my experience with this Sole Proprietor firm set up as an another thread after I complete my first IT return and passed one year of R2I. Meanwhile I can give you some details that what I have done so far.
1. US Employer agreed for my Independent Contracting service from India for a hourly rate and asked me to pick one of their vendor to work with. My US employer don't have any operation in India and they normally don't sign any contract with out-of-USA companies.
2. I picked a Vendor who agreed to take very little from my hourly rate and do the payment gateway kind of help for me.
3. Before my departure from US, I have confirmed that my Vendor and Employer signed the contract.
4. I came to India and took one month break and used that break to do the next few steps apart from my R2I settle down things.
5. Have a Master Consulting Agreement drafted between my firm and my employer's Vendor firm. As they're small in nature, they asked me to do this (same thing what they have with my US employer, we changed few wordings) and we both signed and kept it for our records. This is one of the address proof I used at the bank.
6. Applied PAN and got it in 3-4 weeks time.
7. Got the Airtel Internet connection and set up a small office at my home. I was glad to see the amazing speed, to work with my VM Ware machine at my employer side. This was my biggest worry and I was happy after I saw my workstation coming up in a minute from my home in India.
8. Opened a Current Account with a Nationalized Bank on my Sole Proprietorship firm name with my home address. Check with your bank for the required docs. Primarily they ask your address proof and an ID proof, also a proof that you have the company in the address.
9. You need to have Rubber Stamp done with your company name and address that needed when you go to the bank as well as in the next step. This can be done by a local Rubber Stamp guy within a day. Go for ExMark that don't need an Ink Pad. Also make sure you have letter head done with your company name if possible with a logo on a A4 size papers.
10. Applied IEC at DGFT office at Chennai and got it in 3 days. More details http://dgftcom.nic.in/
11. When I was working on steps 8 -10, actually I have started my work . Sent me my 1st invoice on my own format and 1st remittance received in a month. You need to mention the IEC code on your invoice.
12. For each month, now I'm collecting a FIRC (Foreign Inward Remittance Certificate) against my each month invoice that needed for my tax/audit purpose as per my auditor advise. You need to submit a letter on your company letter head to the bank manager and they will give you in 3-4 weeks time frame.
13. Anything you buy related to office work (Furniture like Sofa, TV, Desk, Chairs), get the receipt on your company name. Also the Taxi receipts. You can claim these expenses while filing your return to minimize the taxes.
Here I'm now. I will update more if I have missed anything. If you ask any more detailed information on each step which needs more specific details and may reveal my identity like location of branch etc, I can only answer thru PMs. Otherwise I will answer on this thread itself.
If anyone done the same or similar and filed returns, reading this, please drop your comments or suggestions as it will be helpful for everyone.
Like Upendra said, I'm not done yet at this point. I have a plan to post my R2I diary as well as my experience with this Sole Proprietor firm set up as an another thread after I complete my first IT return and passed one year of R2I. Meanwhile I can give you some details that what I have done so far.
1. US Employer agreed for my Independent Contracting service from India for a hourly rate and asked me to pick one of their vendor to work with. My US employer don't have any operation in India and they normally don't sign any contract with out-of-USA companies.
2. I picked a Vendor who agreed to take very little from my hourly rate and do the payment gateway kind of help for me.
3. Before my departure from US, I have confirmed that my Vendor and Employer signed the contract.
4. I came to India and took one month break and used that break to do the next few steps apart from my R2I settle down things.
5. Have a Master Consulting Agreement drafted between my firm and my employer's Vendor firm. As they're small in nature, they asked me to do this (same thing what they have with my US employer, we changed few wordings) and we both signed and kept it for our records. This is one of the address proof I used at the bank.
6. Applied PAN and got it in 3-4 weeks time.
7. Got the Airtel Internet connection and set up a small office at my home. I was glad to see the amazing speed, to work with my VM Ware machine at my employer side. This was my biggest worry and I was happy after I saw my workstation coming up in a minute from my home in India.
8. Opened a Current Account with a Nationalized Bank on my Sole Proprietorship firm name with my home address. Check with your bank for the required docs. Primarily they ask your address proof and an ID proof, also a proof that you have the company in the address.
9. You need to have Rubber Stamp done with your company name and address that needed when you go to the bank as well as in the next step. This can be done by a local Rubber Stamp guy within a day. Go for ExMark that don't need an Ink Pad. Also make sure you have letter head done with your company name if possible with a logo on a A4 size papers.
10. Applied IEC at DGFT office at Chennai and got it in 3 days. More details http://dgftcom.nic.in/
11. When I was working on steps 8 -10, actually I have started my work . Sent me my 1st invoice on my own format and 1st remittance received in a month. You need to mention the IEC code on your invoice.
12. For each month, now I'm collecting a FIRC (Foreign Inward Remittance Certificate) against my each month invoice that needed for my tax/audit purpose as per my auditor advise. You need to submit a letter on your company letter head to the bank manager and they will give you in 3-4 weeks time frame.
13. Anything you buy related to office work (Furniture like Sofa, TV, Desk, Chairs), get the receipt on your company name. Also the Taxi receipts. You can claim these expenses while filing your return to minimize the taxes.
Here I'm now. I will update more if I have missed anything. If you ask any more detailed information on each step which needs more specific details and may reveal my identity like location of branch etc, I can only answer thru PMs. Otherwise I will answer on this thread itself.
If anyone done the same or similar and filed returns, reading this, please drop your comments or suggestions as it will be helpful for everyone.