Tax Implications on being direct employee of U.S Entity

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Nyadav (Querist)
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05 February 2021 Hi,

Brief on our current structure :

Indian entity registered as subsidary of U.S registered company.
3 employees resident of india are on payroll of Indian Entity working remotely.

Now from April they shutting down indian entity and making all 3 indian resident employees as direct employee of U.S registered company, working remotely from India.

For employees what will be benefits and issues.

One thing they communicated is we will have to handle Taxation of India at
individual level...Just wanted to understand new process...Currently we give investment proofs to indian employer and they deduct tax and file that to govt...Then using that form16 we file our income tax returns .

How all this will change in new employment model in which we are employee of U.S entity ?

Please guide further on this. Right now we have option to object on this proposal if many issues.

Thanks,
NYadav

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 February 2021 Non-resident will not be under an obligation to deduct tax at source from payments made to persons resident in India for professional or other services.
You have to file ITR and pay taxes claim deductions.
You can't object the proposal, otherwise you loose your employment.

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Nyadav

Nyadav (Querist)
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05 February 2021 @SEETHARAMAN sir , thanks much for giving guidance...
as i understand we individually can hire CA who can help us individually to deposite quaterly advance income tax to govt and later in year file the ITR..that seems manageable..

few more questions in new employment option :

a) all deductions hra, conveyance, LTA etc we will still able to claim for tax relief
if U.S company keep them as components of ur annual salary structures ?

b) any impact on getting housing loans etc for this kind of employment

c) any drastic on take home salary in case U.S also deduce taxes from our salaries?

Thanks,
NYadav

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 February 2021 a you can continue to claim all'the deductions.
b No impact.
c DTAA treaty is there relief can be claimed. You will not be taxed in two'countries.

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Nyadav

Nyadav (Querist)
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06 February 2021 @SEETHARAMAN sir , thanks much for giving guidance...
you cleared all our initial concerns..now we have clear positive mind to take it further.

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