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Professional Income or Salary

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Javed Memon

Tax Practitioner

354 Points Posted on 15 March 2021

Respected Sir

I am Providing IT Services to Canadian Company and this Company s Not Registered in India .

As Per My Employment agreement letter..

You will receive a base salary of $18,000 USD per year. For the first six (6) months of

employment, you will be paid as a contractor with equal payments wired to your bank account

on the 1st and 15th of each month. After the six (6) month period, you will be hired as andemployee of xxxxxxxx and tax rules of employment will apply.

My Question is Can I Considered this Salary is As Professional Services u/s 44 Ada ? And File ITR 4 Return or Considerd as Pure Salary Income ?

Replies (3)

Quick Summary

This discussion explores the tax implications for an Indian resident providing IT services to a Canadian company. The individual receives a USD salary, initially as a contractor for six months, then as an employee. The core question is whether this income can be declared under Section 44ADA (presumptive taxation for professionals) or if it should be treated as regular salary income, considering the services are rendered outside India but the recipient is an Indian resident.

CA. Sourav Sarkar

Chartered Accountant

16188 Points Posted on 15 March 2021

But the salary is deemed and accrued outside india

Income from salary will be considered to arise in India if your services are rendered in India. So even though you may be an NRI, but if your salary is paid towards services provided by you in India, it shall be taxed in India immaterial of where you are receiving the income. In case your employer is Government of India and you are the citizen of India, income from salary, if your service is rendered outside India is also taxed in India. Note that income of Diplomats, Ambassadors are exempt from tax.