• Indian freelancer, German Employer

I am an Indian citizen. I have been into a salaried job till March to June 10 (The salary for that would be approx. 8 lakhs) and supposed to join a new job in Germany from September. Now, my employer in Germany have proposed to start a remote freelancing contract for 2 months so that I can start contributing right now from India. I have queries on the payment and taxes around this situation.

1. Do I need to register myself as a proprietor or I can get into this freelance contract with my name itself?
2. Do I need to open a current account or they can pay me during this remote work in my savings account itself?
3. How will I pay taxes in this situation - salary in India from March to June 10, freelancer getting paid from Germany for next 2 months?
4. Also, since my payment for these 2 months is not going beyond 20 lakhs, I assume I won’t be needing GST registration too.
5. Anything else I need take care of here, to ensure that everything goes smooth as per this freelance agreement?

Thanks.
Asked 20 days ago in GST

Dear Sir/Madam,

 

In reference to your query:

 

1. There is no requirement for you to register as a proprietorship and you can work under your own name.

2. You can receive the remittance in your Savings Account.

3. Since you are an Indian Citizen as on date, your global income would be taxed in India. Also otherwise the freelance income is being earned by you in India only. Normal tax provisions would apply.

4. Yes your assumption is correct, as exemption is provided to service providers from registration in case of receipts below INR 20 Lakhs.

5. Based on the facts available, there does not seem any further complications.

 

Please connect in case of any further queries or detailed clarifications.

 

Thanks & Regards,

CA Aditya Dhanuka.

https://www.linkedin.com/in/aditya-dhanuka-69824451/

Aditya Dhanuka
CA, Kolkata
56 Answers
2 Consultations

5.0 on 5.0

Hi

In this situation you are not required to register under GST. No need for current account.

For payment of Income Tax you will have to disclose both your salary income and freelancing Income in your Income tax return.

Just ensure that whatever you receive through freelancing Income you have an FIRC for such receipts (recommended)

 

Hope this is helpful

Regards

Altamush Zafar
CA, Kanpur
33 Answers

5.0 on 5.0

1. No, registration of proprietorship is not mandatory. You can take the contract in your name. 

2. Since your project will last two months, you can use your savings account. 

4. As mentioned above, this freelancing contract will come in FY 2022-23. If your stay in India will be more than 182 days at the end of the FY, then you will be a resident of India - ROR and your global income will be taxable in India.

Salary up to 31st March 2022 will be taxable in FY 2021-22. 

The tax deducted by the German company will be allowed as a tax credit while filing Income Tax Return in India based on DTAA between India and Germany. 

5. No, GST registration is not mandatory in this case of export of services for FY 2022-23 because your turnover will be less than Rs. 20 Lacs. 

6. Take the tax deduction by your foreign contractor into consideration while filing your taxes in India. 

Puja Sharma
CA, Jaipur
33 Answers

Not rated

1. No Registration is required.

2. You can be paid in saving account.

3. You will be required to pay tax on Indian salary. If you are in India for less than 180 days in FY 2022-23 you will be treated as Non resident.

4. GST Regn will not be required.

5. Nothing as such

 

 

Ruchi Goel Anchal
CA, Gurgaon
501 Answers
10 Consultations

5.0 on 5.0

1. You will file one single ITR. A person can only file 1 Income Tax Return combining all his income earned during a Financial Year. He can revise his ITR if there is an error in the originally filed return. 

You will combine your salary and freelancing income while filing your ITR in FY 2022-23. You will file your return either using Form ITR 3 or Form ITR 4. 

2. If you move to Germany in September 2022, then your taxation will differ depending on your income earned in India and your period of stay. 

3. FIRC will be issued by Authorised Dealer Category I banks in India. It will be issued by the bank, which will receive the foreign remittance in India. You also need an AD Code for the FIRC certificate.

 4. Yes, the advance tax will apply to you if your estimated total tax liability during the FY exceeds Rs. 10,000. The advance tax liability has to be paid after deducting the TDS credits. 

 

Puja Sharma
CA, Jaipur
33 Answers

Not rated

A single ITR will suffice.

Income is taxable under different heads like salary will get taxable under Salary head and freelancing income will get taxable under Income from business or Income from other sources as the case maybe.

If you move outside India then your residential status will be determined and tax will be levied accordingly. In any case income derived from India will be taxable in India.

FIRC can be obtained from the bank where the foreign remittance is being routed through

Assuming you will have to pay tax of more than Rs 10000 advance tax has to be paid on freelancing income since it is taxable in India

Hope this helps

Altamush Zafar
CA, Kanpur
33 Answers

5.0 on 5.0

1. There is no separate registration required for propertiorship. You can get the contract in your individual name.

2. As the contract will be for 2 months only, you can get the proceeds into your saving account. If the contract gets extended, open current account.

3. Income tax is calculated for a financial year i.e. from April to March. Salary income will be shown under salary head and professional income under business head.

4. Raise invoices for 2 months.

 

1. There would be single ITR only for all sources of income.

2. As on 31.03.2023, your residential status would be treated as RNOR. 

3. Contact your banker.

4. Yes

 

For detailed discussion, you may opt for phone consultation.

Vivek Kumar Arora
CA, Delhi
4432 Answers
549 Consultations

5.0 on 5.0

Hi, 

 

1. You don't need registration for propertiorship. You can just obtain Udyog Aadhaar.

2. You can take the amount  into your saving account if its for few months. 

3. You will pay taxes on both salary and freelancer income. If taxes are deducted in Germany you can claim credit of that. 

4. Yes you don't need to obtain GST registration. 

5. There would be single ITR only for all sources of income.

6. If you move to Germany, you will become NR but service provided from India will remain taxable. 

7. You need to pay advance tax if your tax is more than R. 10,000

 

Prerna Peshori
CA, Pune
60 Answers

5.0 on 5.0

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