Receiving US Dollar and Making payment in USD

Dear Seniors,

We are a 100 % EOU, STPI and Software Development company located in Bangalore.

We are selling now custom based internet products and sell to US, UK, Australia, Ireland etc,

Now we plan to launch a product oriented business. We develop a product and sell/hire many people all over the word. For that we may have to pay some professional or marketing charges to many people abroad.

My doubt how we can make the payments to these kind of service provider in their currency? and what is the procedure for that for a STPI Unit? What kind of documentation required for that? We expect the inward remittance as law as $10 per month from a person/company for the service, how the STPI billing and FIRC can be filed? What all documentation required to make foreign payment in such cased? We expect many payment through credit cards which Bank is providing the good gateway for this kind of Business?

Some people advised us making a US Seperate legal entity or subcidiary is better on this regard, how difficult it would be?

Thanks in advance

Renjith

You have to comply with the customs rules and procedures for Export of Software that you may deliver through internet. there is no restriction on this. You can receive your inward remittance without any limit by SWIFT / FEDWIRE / CHIPS to the Account that your bank maintains in USA with a USA Bank for USD remittances. Ask your bank for SWIFT Code, ABA Routing, CHIPS UID and bank Name and Account Number. Your remitter can send Money to that account and indicate your name and account number with your Bank as the Beneficiary account.

For making payment of technical fees or commission to agents, all these fees are of the nature of Technical Services. If your agreement is made after 1/6/2005 and approved by Central Government then the rate of TDS u/s 195 is 10% If the payee is a non company or a company. Central Government Approval is deemed to be granted if the remittance against the agreement is as per the industrial policy in force. In case ther is no PAN you have to deduct 20%.

If your payees are in USA, you can use the provisions of Article 12 - Royalties and fees for included services in Indo USA DTAA that restricts TDS to 15% on such payments subsequent to 5 taxable years after the convention has had effect (in 1990). Then you do not need the Central Government approval. However, if there is No PAN, you have to deduct 20% after crediting the payee or payment whichever earlier and Payee will have to obtain PAN, File a return and get refund. They will also get relief for tax suffered in India against the tax on the same income that will be taxed to the in USA. To make the payment you have to prduce your agreement to CA and obtain from him Form 15CB. Then you have to generate the Form 15CA online with tin.nsdl.com and sign on the printout. Submit the 15CB and 15CA to Bank alongwith copy of agreement, Form A2 and remittance details (Bank Account details) of Beneficiary.