I am freelancing to UK clients from India and get paid in pounds. Please could someone suggest a suitable setup for this. I know I have to pay taxes in India , which I am fine with. Can I raise invoice as an individual and get paid in Indian Bank account ? Should I include VAT in the invoice ?
You can raise invoices as individual and get paid in an Indian Bank Account. You would need to check with your client in UK if he is comfortable with this. Normally on cross border payments, when you are quoting for your work, its best to add that any tax obligation of this transaction in UK will be borne by UK company and any tax obligation in India by you. This way you would not be worried about other taxes.
Even as a free lancer individual , you can deduct cetrain items as expenses[for example phone calls to UK company, purchase of a Laptop etc]. Consult an accountant and he would help you. Ofcouse you have to pay tax yourself in advance.
If the amounts start to become large or there are partners whom you have to pay, then it would become advisable to register a company.
There are various way to get paid:
1. If you have credit card, you can use it to open a PayPal account.
You can invoice the client and client can pay you using their Credit Card or their PayPal account. Later you should transfer the amount to you bank account.
2. Your client can directly transfer to you account, in this case you need to tell you account details with bank's SWIFT code to you client.
3. There is few other services available where your client can pay using Credit Card and other methods and you get final payment in India's bank account. They charge some fee for their service. Please beware that there some fraud services available so you should trust wisely.
Whatever way you choose, the money comes to your account and you need to calculate your income and pay tax accordingly. You should consult Income Tax consultant and they can do Income Tax Return calculation for you.