Heramb (Software Consultant) (25 Points)
03 February 2012Hi,
I do independent software consulting and currently I am doing consulting to a US based company. I do all my work remotely from Pune, India. The company does not have any operations in India. The company makes a monthly remittance to my bank account and does not withhold any taxes. Can anyone explain me the income tax related implications of this? Also please clarify if the service tax applies or not.
Regards,
Heramb
nilesh nandankar
(C.A FINAL C.S EXECUTIVE STUDENT)
(51 Points)
Replied 04 February 2012
DEAR FRIEND,
AS U ARE OUTSOURCING THE SERVICES O/S INDIA. AND IF THAT FOREIGN COMPANY MAKES ANY PAYMENT TO U THEN IT IS EXPORT SERVICE AND IN THAT CASE NO SERVICE TAX LIABILITY ARISES........... ...> AS INCOME ARISES IN INDIA AND ACCRUES IN INDIA.....THEN DEFINITELY U ARE COVERED UNDER INCOMETAX IMPLICATIONS
NILESH NANDANKAR.................
Heramb
(Software Consultant)
(25 Points)
Replied 04 February 2012
Hi Nilesh,
Thanks for the reply. That really helps. Now generally when we receive any payment, the TDS is cut by the party which makes the payment. In this case there is no TDS, so is there any way I can pay the TDS equivalent on the received remittance to the govt of India? Is this necessary? Or can I just treat it as any other income, and pay the income tax the same way that I do, i.e. at the end of the financial year. Please clarify.
Regards,
Heramb
indraneel karumanchi
(student)
(49 Points)
Replied 05 February 2012
Sir as you said service receiver is of a foreign nation and no branch or operations in India and pay is directly from the foreign country it is to be treated as business or profession income and no chance of TDS
service tax is to be paid and you will get the refund of such tax paid
yuvak
(Practising CA)
(144 Points)
Replied 25 February 2012
Hi,
For you, this is NORMAL income. You will be taxed as a 'Professional' on your NET INCOME (receipts less eligible and corresponding expenses).
Since the US company has no Business Presence in India, there is no need for any TDS. Therefore, now you need to calculate your annual tax liability and then pay TAX accordingly (as Advance tax to avoid penal interest). Even otherwise, TDS was only a part mechinism to collect periodic tax for the Government and not a way to help you get away from your obligation to calculate your income tax liability and corresponding tax.
My feel is that you are slightly confused between salary income (where the total taxable income and corresponding tax liability is computed by the employer and TDS deducted) vs your situation as an 'independent professional' - correct me if otherwise.
Service Tax should not be a issue as long as you are able to establish that services are rendered/ utilised outside India (ie Export of Services).
Cheers
vinoth
(BDM)
(26 Points)
Replied 25 May 2012
Hi,
Im running a BPO firm in Andhra Pradesh.My client is mostly US.Im receiving the payments on my Company's current account.Say like 1000$ a week.So about Rs.260000 im receiving as payment monthly from my client.Is there anything i had to pay as a tax.If so how should i calculate and how can i pay?...Please let know asap as im facing a big nerve here.Help me out....
PRITAM JAIN, CA , CS
(Practising CA CS)
(398 Points)
Replied 25 May 2012
Hi Vinoth,
Your query is exactly the same as of Mr. Heramb. And Mr. Nilesh, Mr. Indraneel and Mr. Yuvak has answered brilliantly and in detail.
Briefly I would conclude,
As far as Service Tax is concerened there is no tax on Export of services.
As far as TDS is conerned it is always d duty of Payer to deduct tax. Here ur payer does not have any permanent establishment in India, therefore he is not liable to deduct TDS.
Here Income Tax will be normally calculated by claiming proper expenditure allowed u/s.30 to 37 of the act.
Hope I have cleared ur doubts....
SHIVRATAN TIWARI
(PROFESSOR)
(44 Points)
Replied 08 September 2015
Hi, Im running a company at gujarat.and i receive a contract from a foreign company to give a service in india.Im receiving the payments on my Company's i $ .Is there anything i had to pay as a tax.If so how should i calculate and how can i pay?...like service tax and tds.
CAclubindia
