USA returned. Independent contractor, software developer, GST registration and taxation

Hi

I assume that now you are receiving a payments as a consultant.

For GST purposes, you will have to take a GST registration if your annual receipts crosses 20 lacs threshold. You need to register within 30 days of crossing the threshold.

Once registered, you may apply for a letter of undertaking and export services without payment of GST.

So, although there is no additional GST to be levied but registration and return filing would be mandatory on crossing the threshold.

We may discuss the issues further.

Apart from GST, income tax would be applicable as per the slab rates. You may avail benefit of presumptive taxation under section 44ADA whereby 50% of your gross receipts shall be considered as income and remaining as expenses.

If your status is of non resident, nothing is to be done. But if you are resident, then you have to show it in ITR in India and claim credit for the taxes paid in USA.

Hello,

Regarding Income Tax, Income Tax is applicable based on the residential status of the assessee for the year. For a resident, his global income would be taxable in India. In your case, assuming that you would be a resident for the year, you can use Sec. 44ADA Presumptive Taxation Scheme for this income. Any taxes paid in the foreign country would be available as a credit against the income tax liability.

Regarding GST, you would be required to get registered under GST if the total receipts exceed the threshold limit of Rs. 20 Lakhs. After registration, you can submit a LUT and supply these export services without payment of GST. Under GST, return filing compliances would be required. 

I hope this answer satisfies your requirements. For a detailed resolution of your query, you can contact us directly or take a phone consultation.

Regards,

CA Hunny Badlani

Hi

Firstly you need share your resident status with us. After that we can assist w.r.t. income tax & gst.

Since this is income from US Company earned in US, in my view it is not liable to GST.

You will be a resident in India based on above information.

If your receipt in this financial year is above Rs. 20 lakh it is suggested to take GST registration and pay taxes in India.

I would suggest you to book phone consultation for better and detailed consultation.

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

Thank you.

1. In my opinion, all the conditions of export of services are met in your case. Receiving consideration in foreign currency is also one of the conditions. 

2. You need to register within 30 days of crossing the threshold of 20 lacs. If you have already crossed, it is advisable to register ASAP.

We may assist you with the compliance and filings.

Dear Sir,

Hope you are doing well !!

-Since it is export of services where consideration is received in foreign currency, it will not be chargeable to GST.

You would be required to get GST registration only if your turnover crosses the limit of RS 20 lakh.

After that, you have two options (Assuming you receive Foreign Currency from your Clients):

First, to apply for LUT for a F.Y. and then supply services without payment of IGST on such services.

Second, supply such services with payment of IGST at 18% without LUT and then later claim the refund of such IGST paid.

-If you are receiving this as a consultant, you may declare this under presumptive taxation under section 44ADA claiming only 50% of the receipts as income.

Professionals who are governed or regulated by an institute or body such as doctors, lawyers, architects, interior designers and others can adopt PTS. For them, 50% of the total receipts during the fiscal will be considered as profit and get taxed accordingly. A professional can voluntarily declare the income at a higher rate than mandatory 50% of the total receipts.

We may assist you in entire procedure.

The taxability of an individual in India depends upon his residential status in India for any particular financial year. 

For the purpose of income tax in India, the income tax laws in India classifies taxable persons as:

1. A resident
2. A resident not ordinarily resident (RNOR)
3. A non-resident (NR)

The taxability differs for each of the above categories of taxpayers. Before we get into taxability, let us first understand how a taxpayer becomes a resident, an RNOR or an NR.

Resident

A taxpayer would qualify as a resident of India if he satisfies one of the following 2 conditions :

1. Stay in India for a year is 182 days or more or
2. Stay in India for the immediately 4 preceding years is 365 days or more and60 days or more in the relevant financial year

In the event an individual leaves India for employment during an FY, he will qualify as a resident of India only if he stays in India for 182 days or more. This otherwise means, condition (b) above of 60 days would not apply to him

Resident Not Ordinarily Resident

If an individual qualifies as a resident, the next step is to determine if he/she is a Resident ordinarily resident (ROR) or an RNOR. He will be a ROR if he meets both of the following conditions:

1. Has been a resident of India in at least 2 out of 10 years immediately previous years and
2. Has stayed in India for at least 730 days in 7 immediately preceding years

Therefore, if any individual fails to satisfy even one of the above conditions, he would be an RNOR.

Non-resident

An individual satisfying neither of the conditions stated in (a) or (b) above would be an NR for the year.

3. Taxability

Resident: A resident will be charged to tax in India on his global income i.e. income earned in India as well as income earned outside India.

NR and RNOR: Their tax liability in India is restricted to the income they earn in India. They need not pay any tax in India on their foreign income.

-Please check your residential status according to above explanations.

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Hi

Your residence status is resident india .

You need to get registered under GST when turnover cross 20 lakh.

It will be covered under export of service no need to charge GST.

- In F.Y. 2019-20, your stay in India is less than 182 days therefore you will be treated as non-resident in India. As the services will be provided from India, income tax will be levied on the taxable income. Since you are NRI for A.Y. 2020-21, benefit of presumptive taxation scheme is not available to you. In F.Y. 2020-21, your residential status would be RNOR.

- In respect to GST, consultation given by CA is correct and receipts is liable to tax @18% . To claim it as export without payment of taxes, receipts should be directly credited in the bank account maintained in India or remit foreign income to NRO account.