I sell digital products ie domain names owned by me via marketplaces currently, I want to set up my own store soon. For this, I want to register an LLC in the USA where I am the sole owner/member. I am an Indian resident. 1. Assuming profits and losses of the LLC pass through to its owners, how do I pay taxes? Do I have to pay in India or in the US? 2. Assume my turnover is above $25000(~20Lacs) for the year with my store, do I have to get GSTIN to run this business and charge IGST to customers on my marketplace because I'm a resident of India? 3. I also freelance as a software consultant and earn between 12-18Lacs per year in INR, currently, I'm using 44ADA to report this income, can I continue doing this and treat the income from the above store as income from the non-presumtive profession?
1. No you will not have to pay taxes in India if you pay taxes in US for US LLC.
2. No, no GST will be charged on products since it will be considered as Export. ( Provided you take GST & register yourself for LUT bond)
3. Yes indeed, such income can be shown as income on which tax has already been paid in US & you wont be required to pay taxes on such income in India.
Let me ask this same question differently, break it down, GST question, I have an LLC in the US of A, which is the legal entity for my digital store, I sell a product for $1000 to a customer, I'm not sure how Indian GST would apply here in this case as I am selling as a US entity? Does GST even apply? I'm guessing the US would have its own sales tax rules for us to follow. Income tax question, I'm the sole member of the LLC, and a non-US resident, the LLC is not taxed, the tax is passed through and I would pay tax I assume to the US govt on the $1000, and then when bringing the past tax money to my Indian bank account I would have to say I already paid the tax in US, Am I right? Other income question, Apart from running this US LLC as a business and having income from it, I also have a professional income from software freelancing, I don't earn more than 1L per month from it, on ITR, how do I show both these sources of Income, for my freelancing, I already show it as 44ADA on ITR-4 The way I look at it is, freelancing is professional income and my store is business income, two separate streams. Thanks
- GST would not be applicable as supplier and recipient is outside India.
- As your individual residential status will be ROR, global income will be taxable. If US LLC and member is same and having single tax payer identification number then you can obtain credit of taxes paid in US. If LLC is having different tax payer identification number and tax is paid on such number then no credit of taxes would be available. US LLC is a legal entity different from owners.
- As you are a sole member of US LLC running business and taxes will be paid through pass through taxation, it may be treated as business income in your hands in India and you can avail the benefit of presumptive taxation scheme u/s 44AD.
We may discuss the issues in detail over phone.
Hi
LLC is a separate legal entity. There would be no GST requirements in India if LLC is not operating in India.
You can continue claiming 44ADA ok your professional income.
LLC won't be taxed on India. However, when money is brought to India out of the profits of the LLC, tax planning would be required.
