Whats the tax liability of Indian web development Co. doing outsourced work from USA? How to receive money?

Is there any restriction in receiving money from USA in India? How much can I receive for doing software/web development?

What are the applicable taxes on web development company doing work in database driven websites? Do I need to get registered for Service Tax? Or Sales Tax?

How to transfer finished websites to customers in USA? Any export License ir required?

Help is greatly appreciated.

The receipt of payement in excess of the limit prescribed by Reserve bank of India will be subject to procedures etc prescribed vide Master Circular on Export of Goods and Services on the link below:
http://allindiantaxes.com/rbi-master-cir...
There is no service tax on Web development.However, in case any Online data access and retreival services are being provided these are liable to service tax.Click on the link below for taxable services
http://allindiantaxes.com/service-tax-ta...
No export license is required.However,it can be governed by RBI regulations as above.And if the Unit wants to avail income tax sops it may have to work as STPI/SEZ Unit.Refer to www.allindiantaxes.com for details

You will need to look to the US-India tax treaty. Generally the US will impose an income tax on earnings that arise from US businesses; however, in many cases this tax requires a physical presence or "branch" to be in the US. The question then is whether your computer servers can be considered a US presence (or, alternatively, if you are actually in the US for any part of the year).... To answer that you need to look to your operations, to see what activities you conduct here (as set out in the treaty).

Your clients may have to withhold applicable taxes from payments to you in some circumstances (again, read the treaty).

As for a sales tax, these laws vary from state to state. Generally you do not have to pay these taxes to states as long as your operations are 100% online (the federal government has imposed a moratorium on internet taxes).

The best solution is to hire a US accountant to tell you exactly what you need to do. You can probably find someone do provide this service for next to nothing.



Kreig Mitchell
www.irstaxtrouble.com
www.irstaxtrouble.com/blog.htm

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