[Disclaimer: I am not a chartered accountant and am here just to seek help. Please pardon me if I have posted this in the wrong section of the forum and feel free to move it elsewhere.]
Hello.
I am signing up as a contractor for a company based in The Netherlands that will pay me about €3,300 per month (approximately ₹ 25,50,000 per year at the current exchange rate) for being one of the editors of their online publication.
I’ve sought the advice of a couple of chartered accountants and they have both suggested to me that I’ll have to pay both service and income tax, which would bring my total yearly tax up to 32% of my income. Here’s the breakdown:
- Gross Income: ₹ 25,50,000
- Service Tax: ₹ 2,62,650 (10.3%)
- Income Tax: ₹ 5,54,350 (21.7%)
- Total Tax: ₹ 8,17,000 (32%)
- Net Income: ₹ 17,33,000
The contract clearly says that I am not an employee of the company and that I need to send them an itemised invoice at the end of each month to get paid for services rendered during it. I’ll be working for nine hours on every weekday, will get 21 weekdays of paid leave and cannot work for any competing companies while I’m working there.
So, in almost every way, I will be like a salaried employee, except that I will be working from home. And yet, it seems that I have to pay service tax. Is there any way for me to avoid it? Or are there any concessions for people who bring in foreign currency that I could perhaps take advantage of?
Any help you could provide would be greatly appreciated.
Thank you.
CAclubindia
