IT Consultant Work - Monthly Income from Malaysia

Tax planning 114 views 3 replies

Pradeep Arya

0 Points Joined May 2022

Hello All,

I have been searching over the Internet for a long time for my questions relating to tax planning and filing.

Situation - I am working as a Software Professional providing software services to a Global Company based in APAC region. My client is a company registered both in India and Malaysia. Recently my contract has been revised upward of 20 Lac per annum. My client company has asked me to register for GST.

Q-1: Do I need to register myself as a Proprietorship for GST?

Situation-2 - My client company will be paying me directly from Malaysia into my India bank account each month. But they will not be deducting any TDS/Income Tax etc. and will pay me a lumpsum amount each month.

Q-2: Do I need to raise a invoice to them with my GST (my GST application is under process)?

Situation-3 - They mentioned to me that under GST 'Software Export Services' are 0% GST, so I don't need to charge them 18% GST on the invoice.

Q-3 (i): Should I issue invoice to them and mention GST as 0% with remarks (Software Export Services)?

Q-3 (ii): Do I need to get any other license/registration from Indian Govt. to show that I am providing 'software export services/consultancy' to a Foreign country client?

Q-3 (iii): Will I be filing a nil GST return each month? (GSTR-1) and (GSTR3B) if I can recall correctly.

Q-3 (iv): After registering for GST, am I able to claim for refund of GST that I have paid on stuff that I purchase for my work-from-home (office setup) i.e. furniture, printer, laptop?

Situation-4 - I am required to file my own income tax at the end of year.

Q-4 (i): What ITR form do I need to use? (ITR-4)?

Q-4 (ii): What deduction can I claim while filing for my ITR?

I would be really grateful to the qualified members of this forum for replying to my above queries.

Thanks in advance

Pradeep

Replies (3)

Vasudevan C P

403 Points Joined January 2018

Hai Pradeep, since u r exporting services based on Software related services, below points to be considered.

1. I assuming u r not employee of Malaysian company. every person shall registered under GST if his aggregate turnover exceeds 20L in a year. as per said contract, your pay is incremented to 20L. Thus from plain reading from your inputs, you don't need to be registered under GST unless the aggregate payment in a Financial year exceeds 20L

2. If you are registered under GST, you are mandatorly required to raise GST invoice on your amount of supplies. Note: You may raise GST invoice only if you got GST No.

3i. Zero rated supplies are those supplies made to any SEZ. Since it's not sez, 18% will be the GST rate

3ii. Not compulsory. But taking Import export code registration will give more identify and purpose on what types of service you are doing and it may helpful in future

3iii. As I pointed out in 3i, you have to show 18% tax invoice in GST returns and claim refund under section 54 for taxes paid.

Supply of software services after paying the IGST, can claim refund of such tax paid on the supplied services. The applicant has to apply for the refund as per the conditions specified under section 54 of the CGST Act

4i, You can file either ITR3 or ITR4. My suggestion would filing ITR4 claiming 44AD benefits

4ii, You can claim deduction as same as normal taxpayer viz LIC premium, ELCC, Housing loan interest and principal, medical insurance premium etc

Mr Pradeep, I hope above will clarify and gives answer to your long searching queries. I am happy to help you out in case of any further query :) please reach out to cavasudevancp @ gmail.com

With best wishes
CA Vasudevan

JJJ

Need help

680 Points Joined November 2021

Originally posted by : Vasudevan C P
	Hai Pradeep, ... With best wishesCA Vasudevan

I think you need to look at your response again.

For even one paisa of sales outside of your state, a GST registration is compulsory. This is clearly not an employment, but a professional income, so GST registration applies.

And of course a full export qualifies for zero rated GST - not just the SEZ. If at all, it would be the reverse.

JJJ

Need help

680 Points Joined November 2021

To answer the original questions:

1. Yes. You do need to register for GST, since you will clearly be crossing your state borders in the provision of your services.

2. If they don't want an invoice, you don't need to send them one. But you will need to file your GST returns, so you will need to have some sort of sales accounting for your GST returns and that's effectively an invoice anyway. However, you don't need to actually print one or file it anywhere.

3i. Correct, in a way. You do need to charge GST in the invoice, but the rate will be 0%. However, to be allowed to do that, you need to apply for an LUT from the GST wallahs. Without the LUT, I believe 0% is not allowed and you will need to charge 18% (pay it out of your own pocket if necessary) and then claim a refund.

3ii. No.

3iii. No. Your GSTR1 will not be a nil return, because you have taxable sales. Only the amount of tax you need to remit is zero. But you can file nil 3B returns (at the same time as your GSTR1). If you don't have regular purchases against which you can claim input tax credit, it will be easier just to do nil 3B returns and then at one time put in the effort to claim the ITC at year end.

3iv. In theory, yes. But from what I have heard (not my own experience) it can get slow and annoying in the absence of physical export proof. But there's no risk or harm or cost in trying.

4. As suggested, it might be easiest to file under presumptive income, with a flat 50% profit and no need to maintain or declare much else. Of course, you may have other sources of income that change the scenario.

Also, it's not a requirement, but it will help in case there are questions at a later date, that you look into getting FIRCs for the payment you get from out of the country. In all likelihood your bank account is in rupees and the income will be converted into rupees at the time of credit, but because it originated in another currency, you can ask your bank to give you regular FIRCs.