Treatment of Professional Income

THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN YOUR FRIEDN AND SINGAPORE FIRM.

HENCE IT WILL BE TREATED INCOME FROM BUSINESS OR PROFESSION.

Here few points are important which are following:

1    Firm is cosidering him as a employee or consultant?

2   From where he is receiving income? If he is receiving income from outside India then he will not get Form 16 or 16A as TDS is applicable within India only.

3   If he receiving income from outside India then DTAA and that countries tax law need to be checked.

He is receiving income from outside India (Singapore).

But he is not paying any taxes in Singapore. Will DTAA matter in this case?

First of all his income will be taxable in India as his residential status will be Resident and ordinary resident. It may be possible that any tax may be imposed on his income in Singapore. I did not study taxation policies of Singapore till now so i shall not be able to comment on it right now. I will try to read it today and may be try to comment on it tomorrow.

For Indian income it will be better if he receives this income as consultant because in such a case he can take the benefit of expenses which were incurred by him during the consultancy service.

If possible please mention the amount he received from that firm so that i can provide you more laws which may be applicable. 

He received in all around Rs. 2 Lakh in AY2010-11.

In this case it will be better to show his income as consultancy services. Please provide me one more information did he receive amount in India or in Singapore??

He received in India in Rupees in his SBI account.

If he had received in India then there will be no problem. DTAA and international taxation will not be applicable.