Hi Harry
I assume you are working from India and not visiting USA.
Your salary income from USA shall be taxable in India only.
I am working as a Software contract employee for an USA firm and I am being paid salary every 15 days, which gets credited into my Indian bank account. What are the tax liabilities for me and what all things I need to do to get tax exemption? Thanks, Harry
Hi Harry
I assume you are working from India and not visiting USA.
Your salary income from USA shall be taxable in India only.
Thanks for your swift responses. Let me be clear. I am independently working as a contract SW test engineer, directly with a USA based firm. I got this opportunity through a common contact. After interviewing me they issued an appointment letter as a contract employee, which gets renewed yearly (hopefully if work is there). Every 15 days I get paid hourly basis (8 hours a day) in USD($), which gets deposited into my local bank account in form of INR, through Paypal or Transferwise. US client does not deduct any taxes at his end. Now my questions are: 1. Will the income earned by me comes under taxable income in India? 2. If it is taxable income, what all taxes are applicable? 3. What should I do to get tax exemption? Thanks in advance. Regards, Harry
1. Yes. It is taxable in India.
2. Income tax, for sure. GST registration may also be applicable. The contract of employment needs to be reviewed properly. If it's salary, no GST.
3. This would depend on the quantum of earnings; basic deductions being chapter VIA deductions like 80C, 80D etc.
Hi Harry,
1. Yes, the income which you earn will be taxable in India.
2. You are liable to pay income tax in India on such income.
3. You can claim the benefit of section 44ADA, whereby only 50% of your income will be considered as your profit. On this 50%, you can claim deduction of section 80C, 80CC, etc. i.e. of payment of life insurance, repayment of principal of home loan, payment of medical insurance, etc. The net amount after this deduction, is your taxable income, on which you will pay taxes as per the slab rate.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
Hi Harry,
Assuming you are an Indian resident, you have to pay income tax in India for the profit made from these activities (I.e. money received from us company less expenses incurred in connection with providing testing services).
Assuming your salary is less than 20 lacs per annum, GST is not applicable in your case.
Hello Harry,
1. Yes, the income earned from the US Firm will surely be taxed in India. we don't let a single rupee go untaxed :P
2. Income Tax will depend on which slab rate do you fall.
3. You can invest a part of the money in Investments which are covered u/s 80C, 80D etc in order to save a part of your tax.
Plus also claim a part of the money for regular expenses for meeting your work requirements.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Sorry about delay in contacting you again... If I am claiming benefit of section 44ADA, I would like to know whether from the 50% profit, can I claim deduction of section 80C, 80CC, etc. i.e. of payment of life insurance, repayment of principal of home loan, payment of medical insurance, etc.The net amount after this deduction, would be my taxable income, on which I need to pay taxes as per the slab rate.. My question is from the explanation provided by Ms. Keerthiga. According to her, I can claim the benefit of section 44ADA, whereby only 50% of my income will be considered as your profit. On this 50%, I can claim deduction of section 80C, 80CC, etc. i.e. of payment of life insurance, repayment of principal of home loan, payment of medical insurance, etc. The net amount after this deduction, would be my taxable income, on which I need to pay taxes as per the slab rate. Please clarify and confirm. Much appreciate your support.