• Indian Employee permanently working remotely for German Employer

Hello,

I am an NRI moving to India in January 2023. I will be starting work for a German company, working remotely from India. I plan to work from India itself, meaning that after a period of time I will not be an NRI.

My questions are:

1. Looking at long-term remote work for a German company from India, how should the contract be structured?
2. How should the taxes be calculated for the time I still remain an NRI?
3. How should they be calculated once my NRI status expires?
4. Do I need GST registration?
5. Do I need a current account, or will a savings account suffice?
6. Anything else I need take care of here, to ensure that everything goes smoothly?

Thanks.
Asked 14 days ago in Income Tax

1 When you work from Home, you need to consider whether the income accrues or arises in India.  The nature of your services and mode of delivery of services will determine whether such income is Indian income. Generally such income is income arising in India and you need to pay taxes on such income, whether you are a resident or a non resident. 

If the income can be treated as income earned outside India, then you will be liable to tax on such income only if you are a resident. If you are a Non Resident or Resident but not ordinarily resident, you will not be taxed on such income.

You will of course get the benefit of double taxation relief.

If the contract can be structured in such a way that the income earned from such contract is income earned outside India, then you will not be liable to tax in Indian on such global income as long as you are a Non Resident or a Resident but not ordinarily resident. 

2 The taxes shall be calculated as per tax slabs applicable to you. 

3 You become a resident if you stay in India for 182 days or more in a financial year. However, your status will then become Resident but not ordinarily resident if you have not stayed in India for earlier years. 

4 If your turnover is Rs 20 Lakhs or more, you need GST registration. You may also need a GST Registration if such services are export income, even if the amount is less than Rs 20 lakhs but I am not sure about it. 

5 Current account or savings account does not matter.

6  Depending upon nature of your services, quantum of fee and likelihood of continuity of such services in foreseeable future, you may do it either in your individual name or have a corporate structure. 

Please take a professional help while structuring your contract that addresses commercial and regulatory issues. 

B Vijaya Kumar
CA, Hyderabad
969 Answers
124 Consultations

5.0 on 5.0

1. Considering beneficial for both German company and you, first of all you should not show it as an employer employee relationship as it can lead to various tax difficulties to your employer. Hence, you should create contract in such a manner that you are an independent contractor for the german company.

 

2. For how many time will you be an NRI? Tax will be calculated at the slab rate and depending where did you provide service if you were an employee and the DTAA with that country.

 

3. We can discuss it over call.

 

4. GST registration would be required if you are an independent contractor and have receipts more than 20 lakh INR in a year.

 

5. It is advisable to have a current account.

 

6. We can discuss it over call if you have any other query depending on the actual work you will perform for german company.

 

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

Thank you.

Naman Maloo
CA, Jaipur
4081 Answers
74 Consultations

5.0 on 5.0

1. You can work as an Independent consultant. In such a case income would be taxable under the head Income from profession instead of Salary. In your case, GST and Income tax would be applicable.

2. In India, income and taxes are calculated for the financial year. Your residential status for FY 2022-23 would depend on the no. of days you stayed in India for FY 2022-23 and last ten years preceding FY 2022-23. Under Income tax, scope of total income and tax payable depends on the residential status in the previous year. You can avail benefit presumptive taxation scheme if applicable.

3. Indian income is taxable in all cases irrespective of residential status.

4. If turnover exceeds Rs. 20 lacs in a financial year then you should obtain GST registration within 30 days from the date turnover exceeds Rs. 20 lacs. Under GST it would be treated as an export of services subject to fulfillment of specified conditions.

5. Current Account

6. Collect FIRC from bank and raise proper invoices to the client.

 

For detailed discussion you may obtain a phone consultation

Vivek Kumar Arora
CA, Delhi
4518 Answers
638 Consultations

5.0 on 5.0

Hi

 

1 The employer-employee relationship might have implications for the employer as well as you. The employer can have his income taxable in India as well. Also, the income arising from employment exercised in India would be taxable in India. It is recommended that you operate as independent consultant and enter into an agreement with the foreign company. 

2 The taxes will be at the applicable slab rates. 

3 Residential status is dependent on whether you have been present in India for 182 days or more or for 60 days or more and 365 days in past 4 financial year. Further, it needs to be seen if you have been resident in 2/10 financial years and stayed in India for 730 days or more in 7 previous financial years. If yes, you would be Resident and Ordinary resident. ROR has to offer the global income in India for taxation, whereas a not ordinary resident has to only offer Indian sourced income.  

4 If you operate as independent consultant and your turnover is Rs 20 Lakhs or more, you need GST registration.

6 Current account is preferable if you operate as independent consultant. 

Please reach out for detailed consultation as after understanding nature of operations, we can help you structure better. 

Prerna Peshori
CA, Pune
96 Answers

5.0 on 5.0

1. Make a contract for professional service

 

2. Even if you are NRI once your total stay in India exceed 182 days for a year i.e. from 23-24 income will be taxed in india. For 22-23 you can pay tax in your residence country

 

3. Once NRI status expired global income subject to tax in India

 

4. Yes since you have all overseas income so you should take gst registration and opt for LUT to avoid any payment

 

5. Saving account will suffice

 

6. nothing as of now

Vishrut Rajesh Shah
CA, Ahmedabad
841 Answers
34 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA