There are two similar questions have been asked before:
- Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India?
- Indian citizen wants to work as a freelancer for Europe. How to pay tax in India?
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?