Legal and Tax compliance
2 years ago
We have an IT company in the UK (just about a year now).
We have 3/4 employees in the UK and about 10 employees in India working in different places (work from home).
We have issued employment letters to the employees.
We do not have an office in India so far but would be thinking once the current situation turns to be normal.
The salary of the Indian employees comes from a UK Bank (via some Service Provider).
What are Tax implications for the employees - thou I understand that the employees while filling their IT returns will take care of their taxation-related aspects in India.
Do we have to do anything at our end to do?
As the employer is in the UK, does the company has anything to make do with the regulations, compliances towards this.
Also, should we ask the UK company to deduct any tax as per their laws before remitting to the individual Indian Banks?
Ayantika Mondal @ Prime Legal
Responded 2 years ago
Income tax rules, the Foreign Exchange Management Act, the Goods and Service Tax Act, the Employees Provident Fund, Employees State Insurance, and other rules must all be followed by a foreign firm operating in India. Before engaging in any additional business operations involving personnel based in India, you should speak with a legal practitioner to ensure that the company complies with all of the aforementioned laws.
Thank you very much.
A foreign company has to comply with a number of laws in India for example Income tax Laws the Foreign Exchange Management Act, the Goods, and Service Tax Act, the Employees Provident Fund, Employees State Insurance, etc. Before considering any other business operations with employees that are resident in India therefore you should consult a legal professional to ensure that the company is in compliance with all the laws above.
Thank you.
please consult chartered accountant.
For foreign companies there is a provision to open Branch Office (BO) or Liaison Office (LO) or Project Office in India and then start operation and pay the salaries to the employees to avoid all these complications.
At the same time you will have to ensure that you are taking care of all the UK laws and compliance before remitting the funds to India.
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