This page is for the person receiving the money rather than the company sending it. You are on a contractor agreement with a US or European employer, paid through Deel or by bank transfer, and nobody has explained what you owe in India. There is a straightforward answer, and one condition in the GST rules that catches a lot of people.
If you are resident in India, this income is taxable here whether or not it ever touches an Indian company. It is professional or business income, so expenses are deductible — or a presumptive scheme can be used instead of books.
No employer is withholding for you, so the tax is your job, in quarterly instalments. Interest for missing them is the most common avoidable cost we see on these returns.
Services to a foreign client are zero-rated, but registration is still required once your aggregate turnover crosses the threshold — and being zero-rated is not the same as being outside GST.
A supply does not qualify as an export where the supplier and recipient are merely establishments of the same person. People setting up a shell abroad to bill themselves walk into this.
Fixed hours, sole client, their systems and their direction looks like employment in substance. That matters for you, and it matters more for the company paying you — it can create a taxable presence in India for them.
On contractor agreements with overseas companies.
Invoicing one or two foreign clients.
Where the employer has not set up here yet.
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💬 Get my quote →Yes, if you are resident in India. Indian residents are taxed on worldwide income, and where the money comes from does not change that — money paid into an Indian bank account by a foreign company is fully taxable here. It is normally professional or business income rather than salary, which actually works in your favour: genuine expenses are deductible, and a presumptive scheme may let you skip detailed books. What you lose is employer withholding, so you have to pay advance tax yourself in quarterly instalments.
Once your aggregate turnover crosses the threshold — ₹20 lakh in most states, ₹10 lakh in the special category states — yes, even though the supply itself is zero-rated. This is the thing that catches people: zero-rated does not mean outside the system. Registering lets you file a letter of undertaking and export without paying the tax up front, which is far better for cash flow than paying it and reclaiming it. Below the threshold no registration is required, though some people register voluntarily because foreign clients ask for a tax registration number.
Five conditions have to hold: you are in India, the recipient is outside India, the place of supply is outside India, the payment comes in convertible foreign exchange, and — the one people miss — the supplier and the recipient are not merely establishments of the same person. That last condition is why someone who incorporates a company abroad and invoices it from India can find the supply is not an export at all. Keep the inward remittance certificates from your bank; they are the evidence that the payment came in foreign currency.
It is lawful and very common, and the risk is mostly about what you are actually getting. As a contractor you have no provident fund, no gratuity, no employees state insurance and no statutory notice period, and you carry your own tax compliance — so the rate should be higher than an equivalent salary, not the same. Check whether you are engaged as a contractor or through a full employer-of-record arrangement, because those are different things with different protections. And if the engagement looks like employment in substance, that is a live issue for the company paying you as much as for you.
It is a US form on which you certify that you are not a US person, so that your client is not required to withhold US tax at the default rate and can apply the India-US treaty where relevant. Services you perform physically outside the United States are generally not US-source income, so in most cases nothing should be withheld once the form is on file. It is a US document rather than an Indian one, so it does nothing for your Indian position — you still pay Indian tax on the income. Sign it; it is routine.
Often, and it is usually the right answer for a one-person operation. Specified professionals with receipts within the prescribed limit can declare a fixed proportion of receipts as income; a business can use the broader presumptive scheme, at a lower rate where receipts come digitally, which they do when you are paid from abroad. Whether software or consultancy work counts as a specified profession or as a business is a point worth settling for your facts rather than assuming, because the rate and the limits differ. Either way it removes the audit and the bookkeeping for most people at this scale.
When it needs something an arrangement cannot give it: sponsoring a visa, holding a licence or an importer-exporter code, invoicing Indian customers, recovering GST, owning assets, or granting equity on its own cap table. And when the numbers turn — because an employer-of-record margin is normally a percentage of pay, a small team of well-paid people can cost more in margin than a company costs to run. There is a calculator on this site for that, and it is a fair thing to send to your manager.
It can, and it is worth them knowing before it becomes a notice rather than after. If people in India are habitually concluding contracts or securing orders for a foreign company, that company may be treated as having a taxable presence here, with an Indian return to file and Indian tax on the profit attributable to it. Engineering and support work carries much less of this risk than sales does. Changing who issues the payslip does not change the analysis, because it follows what is actually being done.
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