Employment on behalf of a Foreign company

This query is : Resolved

CA Shashikant Lonikar (Querist)
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28 January 2011 A foreign company (FC) planning to set up operations in India. Wish to appoint few India experts to work in India. Indian subsidiary is yet to be formed by the FC.

1.Can the FC transfer salary of people employed in India to work for the FC through bank transfer?
2. What will be the status of TDS on this salary?
3.Who will file the quarterly/annual return for salary on behalf of the FC.
4. Further if the FC appoints these people as consultatnts, in that case what will be the status of Income tax?
Thanks

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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29 January 2011 1.FC cannot be transfered the salary directly in employee account by foriegn company,Company has to establish office/Branch/PE /Subsidiary for this.

2. TDS has to be deducted while making the payment of salary.

3. Indian office/Branch/PE /Subsidiary , who ever making the payment will file the return.

4. If consultant is appointed directly by foreign compnay, Tax has to be paid by consultant , NO TDS is applicable in this case.

CA Shashikant Lonikar

CA Shashikant Lonikar (Querist)
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29 January 2011 Dear Shailesh,
What if the FC pays salary in foreign country after deduction of tax at source as per the coutries rate of tax and the employee bring that salary to India.
What the employee is suppose to do for this with respect to Income tax and his return.
Thanks

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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29 January 2011 If the services by employees are being rendered in India then the liability of TDS shall be on the foreign company.

Also I differ on the answers given above. My viewpoints are as follows:-
1.Yes, after deduction of TDS.
2.That needs to be deducted.
3.Any professional appointed by Foreign company can do that job.
4.Exemption from TDS is only provided to payments to lawyers and Chartered Accountants

Anuj
9810106211

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