There are two similar questions have been asked before:

These two threads have helped me to understand a lot of things. Though I have a few other questions.

I am an Indian Citizen and a salaried employee of an Indian company and I work there as a software developer. My tax is managed by the same company and I receive my salary per month after necessary tax deduction.

Recently I have got an opportunity of freelancing for a US-based startup. They are going to pay me my wages per hour basis in US Dollar. And they are going to transfer the money directly to a bank account. I project that I could earn around 8 lakh (800,000 INR) per annum from this freelancing. They are not going to deduct any TDS.

Followings are my questions:

  • Is freelancing considered as consultancy?
  • If it is considered as consultancy then is this type of income falls into the category for service tax?
  • I am the one man army. Do I need to form a company and obtain a trade license?
  • Can I show this extra income while filling my taxes in the section "Income from other sources" and pay necessary extra taxes?
  • How can I pay these extra taxes and reference them while filling my tax return?
  • When the company is going to wire the money they need to provide a "Reason for transfer".
    • Is there any impact on the clearance of the money by the bank and/or tax filing for the given reason?
    • What reason is best suitable for my scenario?
  • The work order and the invoice that is going to be exchanged between us can be a soft-copy of a Word/PDF Document?
    • Do these documents need to be digitally signed?
    • Do these documents are mandatory at all?

Please advise.

closed as too broad by Pete B., Nathan L, JoeTaxpayer Feb 8 at 11:40

Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer. Avoid asking multiple distinct questions at once. See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help center, please edit the question.