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I am a US citizen residing in the US. I have a consultant

I am a US citizen...
I am a US citizen residing in the US. I have a consultant agreement in place with a company in India for whom I am doing work for on a work for hire basis, independent contractor. My consulting agreement stipulates that I am responsible for any and all tax liabilities in the US. On my last invoice to the company that was paid, 15% was deducted and sent to the tax authorities in India. Is this a mandatory requirement in India, even for non-resident, non-citizen, work for hire contractors? I need a definitive answer on this as the company's CFO tells me this is now required to be done before his bank will wire money to me in payment for my work invoices.
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Answered in 1 hour by:
10/1/2009
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,134
Experience: Taxes, Immigration, Labor Relations
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Hi - that is correct - in India - fees for technical services paid to residents of the US are subject of mandatory withholding at the source of income

i. during first five years of the agreement

- 15 per cent if the payer is Government or specified organisation ;

- 20 per cent in other cases ;

ii. subsequent years, 15% in all cases

See for reference - http://law.incometaxindia.gov.in/Directtaxlaws/dtrr2005/R10.htm

 

Let me know if you need any help.

 

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Customer reply replied 8 years ago

Hi LEV,

 

Thanks for your research. I'm not a techie. I'm providing business development services -- sales and marketing -- and not providing any technical services. I'm basically serving current customers as well as developing new ones. All technical services and production for digitization of content is done in India. All I'm doing is brokering the deal. Does that still fit into their definition of "technical" for US citizens who are contracted to find and develop new customers.? Thanks.

Hi,

you do provide some service - and receive a compensation for that.

tax authorities will not investigate what exactly service you provide.

Any payment for services is considered as for technical services unless you are selling a tangible goods.

Please pay attention that withholding is different based on your residency.

 

See for reference - http://www.incometaxindia.gov.in/publications/9_Income_Tax_For_NRI/Chapter008.asp

Fees for technical services' means any consideration for the rendering of any managerial, technical or consultancy services, whether such consideration is paid in lump sum or in any other manner. It also includes consideration for providing services of technical or other personnel as part of their service contract. It, however, does not include consideration for any construction, assembly, mining or like projects undertaken by the recipient or consideration which would be income of recipient chargeable under the head 'salary by virtue of the existence of employer-employee relationship between the parties.

Let me know if you need any help.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,134
Experience: Taxes, Immigration, Labor Relations
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