Urgent: salary drawn from uk based employer - queries and co

Tax queries 498 views 3 replies

SM

Prefer not to disclose

25 Points Posted on 18 September 2011

Hi,

I have some queries around the taxation and also seek some legal understanding on the below queries.

I am an Indian based in India and have got an offer from a UK based recruitment firm to work as an employee for the UK arm. The entity is not registered in India and the finance deptt. of the firm has sent me a breakup of compensation with all the regular features of an Indian compensation viz. HRA, Medical, Telephone allowance etc. Also, the employer has told me that the salary would be credited monthly in INR to my Indian bank accounts. Now I have the following queries:

1. How is it that a UK based firm, not registered in India, for which I am going to be an India based employee, credit INR compensation to me. I have limited understanding around the same, I wish to know if this works under the legal framework and how?

2. Although, the compensation is broken up under various heads as Basic, HRA, Medical, Telephone allowance etc. the employer has stated that I'll have to bear and pay the taxes on my own and that there's no provision of TDS.

a) Being paid by a UK employer, not registered in India, where no TDS is applicable, will I get any benefits of HRA deductions and other deductions like 80 c etc?

b) In case of no TDS, where I'll have to pay the IT myself, how and at what frequency would I be required to pay the taxes?

c) If I am not going to get the regular deductions as mentioned in (a), then is there a way to get the comp. restructured in a way which is tax-efficient for me?

I am struggling to find proper answers of the same on the net etc. and therefore seek expert opinions/ advice on the above.

Thanks,

Replies (3)

CA Siddhartha Bhardwaj

Proprietor at Siddhartha Bhardwaj & Asso

33456 Points Posted on 19 September 2011

1. The firm will transfer salary to your account through NEFT/RTGS.

2. a. Yes, you will be eligible for all the benefits and deductions. The situs (location) of the recipient is important and not the situs of the payer. In other words, the person who is subject to Income Tax, in this case, you, should be in India. Accordingly you will get all the beneifts and also deductions u/s 80C.

b. You will have to pay advance tax in three instalments. By 15th September, 15th December and 15th March. The balance, if any, will have to be paid by way of self assessment tax.

If you require further clarification, you can contact me on:

sidcoolguy007 @ gmail.com

9719144360

SM

Prefer not to disclose

25 Points Posted on 19 September 2011

Hi Siddharth,

Thanks for the reply. This is excellent help for me.

I have one more question on top of your answer. You mentioned that quarterly advance tax needs to be paid for the situation that's mentioned above. What section/ sub-section of tax is applicable in this instance?

Thanks.