Company providing employees for a fee

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Nithin (Querist)
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22 November 2015 Hello,

I am an IT consultant, and my client is in the US. I helped him recruit a few people here in India and I manage them, but he pays everyone (them and me) directly as individual consultants.

He has plans to add more developers, so I registered a Private Limited company recently (as its easy to interview, give offers, etc).
He says he will only pay salaries of everyone, so the company is in No profit, No loss stage, so no additional tax is applicable.

My question now is:

Is it better to raise invoices as Employee 1 Salary, Employee 2 Salary etc? Or is it better to raise 1 invoice saying Software Development services?

Which one is better in terms of tax saving?

Is it fine if we just run the company with No profit no loss, or should we show some profit (may be what he pays me as salary), and pay tax for it?

Any help would be appreciated. Thanks a lot!!

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 November 2015 Ask every one to raise consultancy invoice in their names and send it to US client, let them receive payment directly from your US client.
For your services raise invoice in the name of the company and take salary from the company.

Nithin

Nithin (Querist)
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22 November 2015 Yes sir, but employees are not happy because it's difficult if they quit our organization and join elsewhere as there won't be any payslips etc. Even if we want to hire new employees, they are only willing to join if the company is registered. They think its a risk to work as a freelancer and not an employee.

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