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Say I am an Indian citizen and residing in India and earning through online freelancing software programming in US dollars. Which government do I pay taxes to? Do I pay some taxes to Indian government because I am residing in India and availing its infrastructure like roads,water,public transportation etc etc. Or do I pay some taxes to US government because my earning is coming from their country. Or, am I liable to pay taxes to both the governments?

Thanks,

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You will need to pay taxes in India. If you're an Indian resident, it doesn't matter if you're earning income locally or from abroad, you owe the Indian government taxes.

  • +1. It does matter though as to where the services are performed amongst other things. – Dheer Feb 20 '11 at 13:50
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You would not owe any US taxes because you are not a US citizen and your freelancing business does not have a US presence (physical office or incorporated in the US).

More than likely you would owe taxes in India but I don't know how taxes are structured there.

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Most countries employ income taxes that are burdened upon it's residents. To you, as a freelancer, that would mean that you will have to report all of your income to the government and make a tax payment, which is done annually, once per year in most tax revenue systems. There are two obvious ways you can do that:

  • Most countries have laws where personal bank accounts are accessible to revenue agencies; if you collocate all of your earnings to an Indian bank account, that could automatically go towards calculating your income tax.

  • If you have any non-residential bank accounts, that is bank accounts that you have open around the world in other countries as a non-native resident, most likely where your freelance earnings are accumulated, you'll usually supply the revenue from those bank accounts when doing your annual income reports and it will get calculated into your income tax.

  • This seems more about how to pay taxes than who to pay them to. – TripeHound Nov 27 '18 at 16:07

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