India

Introduction

India is a country in South Asia. It is the second most populous country in the world, with a population of 1.38 billion. Bordering Pakistan, China, Nepal, Bhutan, Bangladesh and Myanmar, this is an incredibly diverse part of the world.

India’s two official languages are Hindi and English, though there are around 780 languages spoken in the country, including 22 official languages. There are a number of reasons for so many languages, including the vast array of cultures living in the country, mass migrations throughout history, and the British colonisation of India in 1858. 

India is a historic location with a rich history dating back over five millennia. It is renowned globally for its colourful celebrations and festivals, incredible architecture and progressive schools of thought. From democracy and secularism to human rights and developments in science and technology, India is slowly but steadily emerging as a superpower.

In 2015, it became the fastest growing economy in the world with a 7.5% GDP. Its IT industry is considered one of the best in the world, while it is fast-becoming a leading producer of computer software. The country is also working hard to reduce its energy crisis, and is currently constructing several hydro-power stations.   

With its fascinating history, arts, music, culture and spiritual models, India has a thriving tourism industry. Around 10 million tourists visit the country each year, many to visit famous landmarks including the Taj Mahal, the Lakshamana Temple, Amber Fort and the Sun Temple in Konark. The Tibetan-style Thiksey Monastery, built in 1433, is another monumental piece of architecture that is a top attraction for tourists.

Due to some major projects in telecommunications, infrastructure, agriculture and investment, contracting in India has become increasingly popular. Chesterfield offers customised support when it comes to working in India, including comprehensive Indian payroll and Indian contracting services.

Registry/Registration

All foreigners will need an Employment Visa (E) and work permit to work in India. These can be obtained independently. You will also need a Registration Certificate and Residence Permit. These can be obtained from your local Foreigner’s Registration Office within 14 days of your arrival.

In order to obtain a residence permit you will need:

  • A valid passport
  • A valid visa
  • Four passport-size photos
  • Proof of address
  • Photocopy of the appointment letter
  • Medical certificate
  • Letter guaranteeing financial support

    Visas are issued by the Indian Embassy or Consulate in your home country. There are a number of visa categories including:

  • Business visa

    This is valid for six months, or one or more years with multiple entries, with each visit limited to six months.

  • Employment visa

    This is initially issued for a one-year stay, though can be extended by the Foreigners’ Regional Registration Office (FRRO) in India if the job continues.

  • Entry visa (X-visa)

    This is for family members of foreign nationals taking up employment in India.

  • Residence visa

If you plan on establishing residence and carrying out business in India for a long period of time, then you will need to begin application proceedings through the sponsoring company at least three months in advance.

Income Tax

All individuals with an annual income of INR 250,000 or more, whether self-employed or not, must pay income tax, regardless of the source. Self-employed individuals must be tax compliant and must file their returns correctly. Income tax returns must be filed through an ITR-4 or ITR-4S form. Freelancers can save taxes by claiming business-related expenses, as well as deductions under Section 80C of the Income Tax Act.

New tax rates were introduced in the 2020 Union Budget.

Tax rates as of 2020 are:

  • Up to INR 250,000: 0%
  • INR 250,000 – 500,000: 5%
  • INR 500,000 – 700,500: 10%
  • INR 1,000,000 – 1,200,500: 20%
  • INR 1,200,00 – 1,500,000: 25%
  • INR 1,500,000+: 30%

Domestic rates for associations, partnership firms, local entities/authorities and foreign entities/companies may differ. Chesterfield can help you to navigate local tax laws and India self-employed solutions. Please contact one of our experts for further information.

Social Security

India has a basic social security system catering to a small percentage of the country’s workforce. Social insurance, provident fund and employer liability is not applicable for self-employed individuals.

Employment Rules

The legal framework of India differentiates employees from independent contractors. A prima facie test, or control test, is carried out to determine whether an individual works for an employer or is conducting Indian freelancer services. The Supreme Court in India is responsible for determining the individual’s employment status, and takes into account:

  • Who is the appointing authority
  • Who is the pay master
  • Who can dismiss
  • How long alternative services last
  • The nature of the job (e.g. professional or skilled work)
  • The nature of establishment
  • The right to reject

The Supreme Court even takes into account whether or not an independent contractor uses an employer’s equipment or his/her own.

Banks

India has a huge banking system. Its largest banks are Canara Bank, ICICI Bank, Punjab National Bank and State Bank of India.

Once you arrive in India you will need to open a bank account. Non-resident accounts are available to Non-resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs). If you don’t fall into any of these categories, you’ll need to apply for one of the following bank accounts:

  • Non-Resident External Account (NRE)

    This account allows you to freely make deposits and withdrawals, including international transfers.

  • Non-Resident Ordinary Account (NRO)

    This account is only available for a period of up to six months. It is less flexible than an NRE, and is better suited for longer stays.

  • Foreign Currency Non-Resident Account (FCNR)

    This type of account can only be opened in a foreign currency. This type of account is a fixed deposit which pays regular interest, and is better suited as an investment as opposed to a working account for day-to-day requirements.

    If you are a non-resident and wish to open any of the above accounts, you will need:

  • Proof of identity
  • Proof of address
  • A recent photograph
  • A recent utility bill
  • Bank statements for the last three months
  • Correspondence with a government department or authority or a valid driving license

You can also apply for a non-resident bank account from overseas, which is very easy to do. This can be done online or by filling in and uploading an application form. Please bear in mind maintenance fees, ATM fees and international money transfer fees. Chesterfield can guide you on the most ideal options for your specific needs.

Corporate Structures

Many freelance workers and independent contractors in India use an umbrella company to act as their full-time employer while they maintain their independence as a contractor. Through our umbrella solution, you will be sponsored and provided with a single work permit for multiple contracts in India, whilst maintaining your own contracts, hours and schedules.

Chesterfield can help you to optimise your earnings in India with our comprehensive outsourced admin and tax solutions. Through our umbrella solution, we will ensure you remain fully compliant with India’s tax and immigration laws.

Chesterfield & Contracting in India

India has thousands of expats living there thanks to a fast-growing economy, vast job market, countless opportunities and low cost of living. Working in India as an independent contractor is a highly flexible prospect. Many people prefer the ease and simplicity of this employment status, which offers an excellent work-life balance alongside additional benefits.

Chesterfield provides professional contractor management solutions in India. We operate a number of self-employed schemes and umbrella solutions, all of which are designed to eliminate any administrative complications or burdens. You will be assigned a dedicated member of staff who will take care of your every administrative need. Please contact Chesterfield to speak with a member of our team.