Income tax information

460 views 4 replies

ZIAUL HAQUE

Others

26 Points Joined August 2013

Hello All,

My problem is not different from other tax payers. I have so many discussion with multiple CAs and didn't get proper response.

Problem:

Currently I am working for a Indian company with regular per month salary. Few months back one of my friend from US offered a job for their company. He is working there and they don't have offshore office in INDIA. It is negotiated that I would be working for them from here in INDIA and payment would be USD 40 per hour. Their company would be looking for the options for this engagement.

Recently I got confirmed from them that I would be working for a Indian company and this Indian company has subsidary office in US.

This Indian company agreed that my engagement could be either Independent contractor for them or Full time regular employee. The salary would be paid as INR and current exchange (Date 30th - 3rd of Month) would be considered for exchange rate.

Approx Monthly Data:

Total Hours: 160
Hourly Rate: USD 40

Total Monthly = USD 6400 (Sixty four Thousand Only)
Exchange Rate = 63.60

Total Monthly INR = 407040 (Four lakh Seven Thousand Forty Only)

Queries:

1. What would be best option in this scenerio? Shall I go for Indepedent contractor / Employee?
2. Looking minimum tax deductions

Thank you.

Regards,
Ziaul Haque

Replies (4)

Mihir

Wealth Manager

5293 Points Joined December 2008

If you become an independent contractor, your income shall be chargeable to business and profession. If you become a salaried employee, then your income shall be chargeable to salaries. It also depends on other factors such as any other income such as income from interest or rent. Accordingly you can make a decision because if you are paid professional fees, then 10% TDS deduction shall be made from the payment. And if salary is paid, then TDS shall be deducted as per your tax slab after factoring in your investments u/s 80C to 80U. So there is scope of small amount of TDS deduction in case salary is paid.

ZIAUL HAQUE

Others

26 Points Joined August 2013

Thank you Mr Mihir. Could you please elaborate it with some figure? Then it would be easy for me decide further.

Mihir

Wealth Manager

5293 Points Joined December 2008

If you are paid professional fees, the company is liable to deduct 10% TDS.

If you are paid salary, the company shall deduct TDS as per your tax slab and also declaration given by you on your investments to minimize tax, which could be less than 10% TDS deduction.

Your question is regarding minimal TDS deduction, so in salary you can expect lesser TDS deduction provided you have availed deductions u/s 80C to 80U.

ZIAUL HAQUE

Others

26 Points Joined August 2013

Originally posted by : Mihir
	If you become an independent contractor, your income shall be chargeable to business and profession. If you become a salaried employee, then your income shall be chargeable to salaries. It also depends on other factors such as any other income such as income from interest or rent. Accordingly you can make a decision because if you are paid professional fees, then 10% TDS deduction shall be made from the payment. And if salary is paid, then TDS shall be deducted as per your tax slab after factoring in your investments u/s 80C to 80U. So there is scope of small amount of TDS deduction in case salary is paid.

Please check my first query and My indian company giving me another payment option because of USD-INR exchange rate. US company will directly credited my INR base saving account in India. Will it be benefited me? Or I need to pay more taxes here in India.

Regards,

Ziaul