• Moving from US to India and working as a professional consultant for the same company

I’m planning to move from NY to Gurugram and continuing working for the same US employer but on a contract. I’m on H1B and once I move to India it will be as an Indian Citizen. 

I want to know what kind of firm/corporation/LLP should I setup in India so as to minimize my tax liabilities in India. Would setting up a firm overseas in some of the lower tax countries help? What other deductions are available?

I’m looking to hire a CA, who is an expert in US and India taxation and help my case. There is also a possibility of me moving back to the US after 3-5 years once I get my green card.
Asked 11 days ago in Income Tax

Hi

 

We may assist you with the same. It is advisable to have a one to one conversation to discuss all the variants and entity structuring for tax planning.

Lakshita Bhandari
CA, Mumbai
5475 Answers
551 Consultations

5.0 on 5.0

- Income in India and in other nations is taxable on the basis of the residential status of the taxpayer. In your case, compensation package will remain same but instead of an employee and employer relationship, it will be independent personal professional services. It appears that after 3-5 years you will again work as an employee of same US employer.

 

As it would be a personal professional services, forming a company/LLP/firm is not a good option. In your case , percentage of professional expenses will vary between 20 - 30% only and not more than that. It would be better to work as a sole proprietor.

 

Under sole propertiorship, you are required to open a current account and obtain GST registration. In other forms of business, there are more formalities compared to sole propertiorship. In case of company/LLP, you have to register with MCA and file annual and regular compliances with MCA which is an extra compliance in terms of cost and paper work. In case of sole propertiorship, there is no need of separate registration with any regulatory body.

 

Also under sole propertiorship, slab rate tax structure is applicable and investment options are available under Income Tax. Income of LLP/firm/company is taxable at flat rate of 30%. Also in case of company/LLP, statutory Audit is applicable.

 

- Under GST, if professional receipts exceeds INR 20 lacs during the Financial Year (i.e. April - March), you are compulsory required to obtain GST registration. Services provided by you to US company will be treated as export of services which is treated as zero-rated services. You can export without payment of taxes if consideration would be received in convertible foreign exchange currency and apply for LUT before raising first invoice. Obtain FIRC from your bank all inward remittances.

 

- Under Income tax, Net profit is taxable. You have to maintain proper books of accounts and get them audited. Assuming your receipts would be more than INR 50 lacs in a year.

 

- Under Income tax, Income is taxable on the residential status. Even if you form a company outside India, ultimately you have to withdraw funds from the company which is taxable in your hands in India. 

 

For more discussion on it, we may discuss it over a call.

 

Vivek Kumar Arora
CA, Delhi
4079 Answers
346 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

-As your nature of services is such that a sole proprietorship can do and does not require corporate presence so you can start as a proprietor and gradually as you flourish shift to a corporate structure.

 

-If you are working as sole proprietor (which is better then company) then income tax would be calculated on slab basis and not on flat rate i.e. 30%.

 

-Taxability in India depends on residential status in India, source of income and place of receipt of income.

 

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

Also, after getting GST registration, You won't be required to pay any GST provided you would be having LUT for export of services.

 

We may assist you in entire procedure.

 

It is advisable to take a phone consultation for detailed discussion.

 

 

 

 

Payal Chhajed
CA, Mumbai
5084 Answers
157 Consultations

5.0 on 5.0

We should discuss it more over a call rather than here as I will get to know more details and turnover and about your expansion etc.

We can discuss all the possibility.

 

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
3798 Answers
45 Consultations

5.0 on 5.0

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