Hello,
I am a IT Recruiter and working at my home in India for a USA consulting firm. I am getting my salary directly in my account and annual gross receipt in more than INR 4 lac. What would be my tax liabilities in India ? Is there any service tax and any other tax ?
As you are employed by the USA company, there is no service tax on the remuneration.
For purpose of income tax act, you being an employee will be deemed to be the Permanent Establishment of the Foreigner in India and liable to pay the taxes on the foreigner's income accrued in India as per Income Tax act for the foreigner and comply with the provisions for him. As you are resident in India, he is liable to deduct TDS on your salary. You are by law responsible for it. Therefore you apply for a PAN and TAN on his behalf as a representative assessee and you comply with the TDS procedure on his behalf. It is better you make them apply for PAN and TAN and you do the procedure. However, there should be no income accruing to them in India by your actions. Read section 9 of Income Tax Act or Section 5 of India USA DTAA.
Even if you are an agent being a dependent agent excercising sufficient authority on behalf of the foreigner, then also you will be deemed to be the PE of the foreigner. In order not to be PE, you have to be an independent agent like a GSA or a broker. However, if you work exclusively for almost exclusively for this foreigner, you will not be considered an independent agent. The only circumstances in which a dependent agent or employee will not be considered PE is if his activities is restricted to purchase of goods from India. If manpower is 'goods' then you have no problem.
Normally if someonce is giving the services for manpower recruitment as managerial or technical service (called included services), then it is a professional receipt that will be taxed in USA at 15%. You will have to claim relief under the DTAA against the lower of the amounts of tax deducted by US Government or the Tax on your receipt payable in India, whichever is lower. I think you read the DTAA with USA as that will be most beneficial to assessee in your circumstances. It is available under International Taxation in incometaxindia.gov.in. However, there may be service tax and you will have to qualify for Export of Service Rules if you are agent and not an employee.
Hi Sunil,
Thanks for your reply. Can I have your contact no.? I want to speak with you. Also let me know the best time to reach you..
CAclubindia
