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How does an IT contractor provide consulting services from India to a UK Client?

  1. Do we need to open a IT Services Private Limited Company in India or are there other options, also helpful on how much it would cost and the timescale

  2. What are the taxes associated that will need to be paid when raising an invoice from the Indian company to the UK Client?

  3. Can the invoice be in Pounds?

  4. Is it a possibility to receive the invoice payment to an UK Bank account?

  5. If I plan to work as an independent contractor then how will the UK Client provide a contract ?

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  1. No one does not need to register a company. It can be done as individual as well.
  2. If you are transacting as company, there would be few taxes, please consult a CA.
  3. Yes.
  4. Yes.
  5. Contact can be to individual as well. Quite a few people do it as individuals
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  • What if you have 2 people working for the UK Client then will having a company be the tax efficient way ? The client might not issue 2 different contracts, rather its just one contract (or a statement of work)
    – Rajesh
    Jul 2 '20 at 16:43
  • A limited liability company needs at least 3 director, plus you have to pay company taxes as well as your income taxes... essentially double taxation... however there are benefits in terms of depreciation etc. Consult a CA for specifics.
    – Dheer
    Jul 2 '20 at 16:54
  • Dheer, thanks for your response. If an expat (foreign national) stay in india and then take up contracts while in india? If you are aware of any cases and best way for this to be implemented?
    – Rajesh
    Jul 8 '20 at 15:30
  • @Rajesh It is complicated and best to consult a professional CA. An expat can work in India with right visa categories. An expat residing in India and working outside gets complicated.
    – Dheer
    Jul 9 '20 at 3:36
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Registering a company in India is a worse nightmare you can have so forget about it unless you really need it. You can easily work as freelancer and work with clients all over the world without messing around with the painful Indian bureaucracy and the corrupt system.

Invoice and receiving money is easy part. You can send invoice in £ and receive money in any bank account anywhere in the world as long as your bank allows to receive money from the UK. You can have contract between UK client and you as an individual.

Regarding your question for 2 contractors. You can have just one contract with the UK company and then deal with other contractors among yourselves. Don't give complex situation to the client.

Having a Pvt Ltd company is always tax efficient anywhere in the world however running it is messy in countries like India hence you would be avoiding it unless it becomes necessary. You should be thinking of setting up company if your business has grown enough and you need to get employees on board. If you are raking in, let's say, more than Rs 1 crore per annum then you should better consider setting up a ltd company provided you have future.

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