• Can a sole proprietorship receive money from foreign clients into a foreign bank account ?

Can an individual freelancer (registered as a sole proprietorship) receive money from foreign clients into a foreign bank account in foreign currency, while being a resident of India?

Currently, I make software for foreign clients via online freelancing (UpWork.com). I want to register as a sole proprietor in India. My clients are more comfortable in sending money to a foreign bank account.

Can I receive money in that foreign bank account, spend money directly from that account (in and outside India), and keep the money there, while I submit taxes in India?


Do I need to pay GST on my services? My total revenue will be less than 20 lacs per annum, and all of my clients are from foreign countries.

Will be paying the same tax as an individual, and even as a sole propietorship?
Asked 5 years ago in Income Tax

Hi,

 

Please refer the replies in line below:

 

- Yes, you can receive money into foreign bank account from your clients outside India.

- You can spend that money kept in foreign account but to use/withdraw it in India you would mostly need an NRO/NRE account in India.

- Tax returns are something which have to be done very carefully so that the designed business structure does not get into scrutiny as the sole proprietor is a part of unorganized sector.

- If the revenue is less than 20 Lakhs, then you do no need registration under GST. 

- Tax return will be clubbed with your individual tax return. yes the tax calculation will be done according to the slab rates applicable to individuals.

 

Thanks

Damini

Damini Agarwal
CA, Bangalore
405 Answers
31 Consultations

5.0 on 5.0

Hi,

 

- Yes you can receive money into foreign account but you have to repatriate such amount into India as you are resident in India. Open resident foreign currency account with the authorized dealer i.e. banks in India. 

- There is no registration required for sole proprietorship in India. The only requirement is that you should have PAN and current account for the business transactions. 

- Till Rs. 20 lace turnover, you are not required to obtain GST registration. 

- Income tax will be applicable on the slab rate as you are sole proprietor. There is no difference between the individual and sole proprietor. 

 

Thanks

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

Yes you can receive the amount into your foreign bank account and use it. But I would recommend you to receive money in Indian bank accounts because it may create problem in GST when you cross 20 lakh mark.

Since your turnover is below 20 lakh you dont need to register under GST and in Income tax you are not required to separately register as sole proprietor your PAN card is enough.

No as mentioned above you need to pay income tax just as individual.

Feel free to contact if you need any assistance.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

1.Yes, you can receive the money in foreign bank account.

However, you need to repatriate the same in NRO/NRE account in India.

 

2.  Yes, you can register as a sole proprietor.

 

3. Yes, you can spend the money outside India directly from that account.

 

For India-you need to repatriate the same in NRO/NRE account in India.

 

4. No, you are not required to get GST registration.

 

5 . Yes, you need to pay the taxes as per your slab rate even as a sole proprietorship.

 

 

 

 

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Hello,

 

Yes, you can receive money in your foreign bank account and use it.

There is no specific registration for a sole proprietorship. All you need to have is a PAN, GST (if liable to get registered), Shop & Establishment Registration, Udhyog Aadhar/ MSME registration. That's it.

Since your total receipts would be less than Rs. 20 Lacs, you don't need GST registration.

Individual and Sole Proprietorship is the same thing as per the Income Tax, taxed at slab rates.

 

I hope this answer satisfies your requirement.

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Madhya Pradesh
2608 Answers
16 Consultations

5.0 on 5.0

1.Firstly it is not advisable for a resident Indian to receive money on foreign bank account as their are concerns over the use of that money and that money has to be brought back into India in specific time frame. 

 

2. You don't need to register for GST if your services falls under export of services. It is necessary to receive money in foreign currency and have FIRC for each payment.

 

3. Lastly, you,will as an individual will have to pay income tax on the profit earned from these services 

 

Lakshita Bhandari
CA, Mumbai
5687 Answers
908 Consultations

5.0 on 5.0

Hi

 

Yes ,you can receive money in Foreign bank accounts,but you have to repatriate it to India.

No separate registration for sole proprietorship required.Individual PAN and Aadhar card required.Get registered under shop and establishment act only.

 Gst registration not required till 20 lacs turnover.

Sole prop and Individual is not a  separate entity in Income tax.Pay tax as per slab applicable on you.All your global income will be taxable here.

 

 

Hope it helps

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

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