Service tax / income tax / etc for software export by freela

Hi, I want to start software freelancing and export softwares which I would develop for overseas market.

My queries are:

1. Do I have to start a firm or I can take up freelancing projects as an individual directly?

2. What are the service tax and income tax implications if I start a firm and if I do this as an individual freelancer respectively?

3. If I buy services from other service providers online ( i have a designer who develops the screens on my behalf in Hungary), can I show this as an expense and deduct it from my final income? What all documents I must furnish and how?

4. Which would be best for me - starting a firm or do this individually if I want to save on some tax?

5. What all I can do or cannot do if I do not start a firm?

6. Do I have to register myself as an exporter in this case? 

Any help in this regards will be highly appreciated. 

Regards

Kriti
 

The export of services specifies that as long as the recepient if outside India and the amounts are recived in convertible foreign currency, there is no liability. However for services availed from outside India under sec. 66A under reverse charge you wouldhave topay the ST, consequently would require to be registered.  Exporters are eligible for the ST refund , however unless amounts are substantial, the refund may not be worth it as itis time consuming and cost of resolving ishigh.