FAQ for contractor working for a US company
⚠️ All of this info comes with a disclaimer that we are not experts. Definitely double check with your CA.
You are working as a contractual software developer from India with a company based in the US.
It doesn’t matter if you are a freelancer or a registered Proprietor - you will need to pay the same tax (and GST if liable).
Based on this quora answer, it seems like you don’t need an IEC.
It is not necessary for export of services for freelancers (as these would be general services).
Please have a look at the highlighted text of Sec 7 below:
You don’t need a GST until you hit a INR 20 lakh receipt threshold. Though there might be a recent rule change wherein this limit got to 40 lakhs and is dependent on which state you reside 🤷♂️
If you are earning more than that, get money post GST registration and LUT filing only.
For software exports, you should be able to take advantage of zero rated GST (0% GST) by submitting a letter of undertaking (LUT) to the authorities. - https://taxguru.in/goods-and-service-tax/rating-gst.html
It would be great because a Current Account gets better conversion rates (ask for an EEFC account).
“To give you an idea, a few years ago, I would get the money to my personal (Savings) account, I would pay around Rs. 1.5 - Rs. 2 to the dollar in conversion charges. Now I am charged 50p more than the exchange rate” - @Saurabh
Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorised Dealer Category - I bank i.e. a bank authorized to deal in foreign exchange. It is a facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.
More info here -> https://m.rbi.org.in/Scripts/FAQView.aspx?Id=21
Yes, you will be a contractor and need to do your own taxes. They will make you fill a W8BEN form mostly.
Unfortunately, this is not trivial — so you would definitely need a CA to do this for you 🤷
More details about Presumptive Taxation - https://getmoneyrich.com/presumptive-taxation-44ada/
The general consensus on this group has been: