05 March 2019
An Indian individual is employed as a contractual employee by a Non Governmental Organization registered in USA (NGO is not registered in India and do not maintain any book of accounts in India). The NGO works in the field of environment conservation. The individual provides the services sitting in India and is paid in US dollars. The employer does not deduct any tax. Please answer the following questions: 1. Is the individual required to pay income tax in India as per the regular tax slabs (5%, 20% and 30%)? 2. Which ITR form is required to be filled? 3. Is GST applicable on the total income?
05 March 2019
The employer is not deducting any tax. Thus, it appears that the employer is treating the recipient as "service provider" and not as employee. The amount shall be taxable as business income in India. No GST is required to be paid as it is export of services, however GST procedures are required to be followed.
05 March 2019
Dear Sir, thank you for the reply. Since I don't have a financial background, I would request answers for the following two follow-up questions as well: 1. By taxable as business income, are you referring that the income tax needs to be filed on a presumptive basis (ITR 4)? 2. Can you please also explain briefly what GST procedures need to be followed?
05 March 2019
- Yes. ITR-3 or ITR-4, if you are paying Income Tax on presumptive basis. - Export under GST is zero rated supply. Export can be effected either on payment of GST and refund thereof; or under LUT without payment of GST. If export income is less than 20 lakhs, no procedure is required to be followed. Otherwise, one need to follow LUT procedure for export without payment of GST.
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