Resident employed by a foreign company

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 July 2012 1) Can a resident be employed (employment contract) by a Foreign company which does not have a PE in India or does it have to be Consultancy agreement?

2) If the agreement between the Foreign company and the resident says that it is employment agreement but they do not issue form 16 can the employee claim standard deduction and other allowances under the Income tax act.

3) Can the resident show it as business income even though the agreement states employment since no Form 16 is going to be issued.

4) Can the resident open a foreign currency account in India if the fees are to be received in foreign currency.

5) Are there any exemtions or specific deductions available to the resident for providing consultancy services (not technical) to foreign company.

Please advise.

Amol S Joglekar

Amol S Joglekar (Expert)
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23 July 2012 ans 1 : yes a foreign company can employ a resident. Ans2: Which standard deduction you are referring? Other allowances like transport allowance etc can be claimed Ans3. If it is salary it can not be said to be business income merely on the strength of non issucane of form 16. The concerned foreign country may have some other form for salary certification. Ans4 No A resident can not open foreign currency account. Ans 5. No specific deduction are available.

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CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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15 November 2013 4. A resident can open a foreign currency account in India, however how much money can be kept in foreign currency is subject to RBI guidelines.

Anuj

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