Legal Question in Business Law in India

Hello.

The context: I am a Freelance Artist from India, I work from my home studio. I do paintings for foreign book publishers etc. I work traditionally, with a brush on paper, but most of the times I only send an electronic scan to the clients. Rarely I send the original paintings via courier. I do not have any Indian clients. I use a different surname, than my legal surname, for my artist self. And I get money via PayPal or by cheque in foreign currencies.

Questions:

1. I want to know if and how I should be paying taxes etc?

2. Sometimes clients send a cheque to my pen-name. Banks don't accept it. My second question is if I should register myself as a company or not, to get monies and pay the taxes etc using that name?

3. Is there anything legal I should be concerned about in a freelancing job like that of mine?

Kindly advice.

Thanks.


Asked on 2/14/15, 4:10 am

1 Answer from Attorneys
Fca Prashant Chavan Expert Edge LLP

14.02.2015

Dear Sir / Madam,

Answers :

1. Section 80RR of the Income-tax Act, 1961, provides that an individual resident in India, being an author, playwright, artiste, musician, actor or sportsman (including an athlete) who derives income in exercise of his profession from the Government of a foreign State or any person not resident in India shall be entitled to a deduction from his income of (i) 50% of such income, or (ii) 75% of such income as is brought into India in accordance with the Foreign Exchange Regulation Act, 1973, and rules made thereunder whichever is higher. You should assess your Annual Income from Profession and all Other Sources based upon realization of monies by PayPal or by cheques in foreign currencies, and apply the above deductions to ascertain whether any Income Tax (IT) is payable thereon. You ought to be having a PAN Card to facilitate filing of your IT Return and paying tax online;

2. What's more important than whether clients send you cheques from overseas in your original name or your pseudonym (pen-name) is the fact whether you have ultimately realized the money or not from your overseas clients. You remain liable to pay income tax on your realized income less all permissible deductions from your annual income;

3. No, other than the above, I do not foresee any other legal hurdles or implications.

Regards,

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Answered on 2/14/15, 8:15 am


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