Gst in case of payroll processing

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Director
45 Points Joined November 2017

I have a client abroad who wants to initiate a contract with me to hire a freelancer based in a third country. This is a case of payroll processing, only that the freelancer in question is not in India. So there are two payments involved:

1. Client payment to me: This includes the freelancer fees I am supposed to pass on, a small fees for me for arranging this and applicable GST @ 18%

2. My payment to the freelancer abroad: His fees 

 

I have two questions in this context:

1. In the first payment from client to my company, will GST be applicable to the entire transaction or just to my fees?

2. In the second transaction, has there been any change/clarity around reverse charge mechanism when it comes to import of services (that is the case applicable here when I hire the freelancer)

Please advise.

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On 01 November 2017 at 15:35 Report
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gst is applicable on whole income cost -  first question 

and for second when u paid for unregister person

then rcm apply 

 

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On 01 November 2017 at 15:40
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Tax Professional and in Service
1795 Points Joined June 2009

1) You need to charge GST on invoice if you dont have Letter of Undertaking

2) You need to pay GST under reverse charge as Import of service from non taxable territory.

Thanks and Regards,

Manoj B. Gavali

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On 01 November 2017 at 15:54
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Director
45 Points Joined November 2017

@ Amit, Manish - Thank you for the quick reply. Much appreciated.

 

A couple of follow-up questions:

1. Can I submit the letter of undertaking online or do I need to physically submit the document?

2. In the case of payment to the freelancer(based in Australia), will I have to deduct TDS @ 10%?

a. Is this covered under double taxation avoidance treaty between India and Australia?

b. If yes, then do i still need to deduce 10% and deposit with Government of India and the freelancer claims credit?

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On 01 November 2017 at 17:08


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