Nri income tax for independent contractors

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Guest

Hi, 

I work as an Independent Software Contractor and I have a client in U.S. I receive monthly remittances in bank a/c here and I pay the tax online (as the company doesn't deduct any TDS, being in US). I will leave India in October to join one of the companies full time and hence become an NRI. But there are still some remittances which will come for the next 3 months for the work I had done while I am in India.

So, is it ok if I give them my NRE bank a/c and get those remittances in it. As the company won't deduct any tax for those remittances and NRE accounts are tax free, where am I really paying the tax for those income.

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On 15 August 2013 at 23:19 Report
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Practicing Charatered Accountant
125 Points Posted on 16 August 2013

hi..

you wont be allowed to credit fun s to your NRE Ac. Because Only foreign funds can be credited to NRE Account and not Indian Funds. 

You will have to give NRO Ac details only.

Further do note that NRE Account is not tax free. Any interest on NRE Deposit is tax free. So if any income which is generated through investment from NRE Funds would be taxable in normal course and wont be tax exmept.

Once you receive funds in NRO Ac you may easily transfer the same to your NRE Ac by fulfilling certain documents and obtaining a CA Certificate.

Do write if case you have furhter queries

CA Khushboo Dodhia Vora

 

1 Reply
On 16 August 2013 at 11:59
Guest

Thanks a lot for the info Khusboo.

However, the funds I am talking about are foreign funds. The situation is "One of my client in U.S will be transferring funds in December for the work I am doing now." Hence if the funds are transferred to my NRE a/c,  will it be taxed in India ?

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On 16 August 2013 at 13:29
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Practicing Charatered Accountant
125 Points Posted on 16 August 2013

Hi.. 

To your further queries, I would like to state as below:

Irrespective of the fact that whether you are considered as Resident or not, the said income would be taxable in India because you are providing services from India and hence it would be considered as income accrued in India and hence taxable in India.

 

1 Reply
On 16 August 2013 at 13:58
Guest

Will I be able to show it under DTAA ?
What is the procedure of showing it under DTAA ?

 

 

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On 16 August 2013 at 14:02

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