Fellow Indians, I have a suggestion for you all. DO NOT bring your money home by any false procedures. Remember you are handling foreign transactions and aint no joke. Follow a shortcut procedure and you might fall into violation of FEMA act which is NON-BAILABLE. And if you dont get what I am saying its time to read some stuff for yourself - http://www.indiaitlaw.com/softexplaw.htm Remember one thing - If you do not have a IEC number you are doing foreign services ILLEGALY. No exceptions. DO NOT! again I say DO NOT! use XOOM.COM for transfering your funds. First of all you should know what are the methods you should NOT use for transfers - 1. Western Union 2. Money Gram 3. XOOM.COM 4. Cash2India 5. Any ATM Debit card These methods are mainly done for NRI Indians who want to send funds to their relatives or loved ones to India fast. They are meant for PERSONAL money transfer only and *NOT* for any business deals. Always remember one basic thing - Whatever Funds you are bringing in it should hit your business bank account first. If you are doing business in your own name then the funds should come right to your savings bank account. No exceptions. Whatever bank it may be but it must be a bank. The 2 legal ways that you can use are - Wire your money to your bank account. Bring a check (eg. Paypal Check) and deposit it to your account. And when your bank account gets funds from foreign banks remember they are reported to RBI as a bank's policy. RBI -> Reserve Bank of India. So, keep your IEC code number handy and try to submit the softex forms (if you are into serious business you must!) To get the IEC code you have to visit the Office of the Director General, Foreign Trade in your city. You have to buy a form for application of IEC code. To submit the form you will need 2 mandatory things 1. PAN card 2. Your Banker's Ceritificate ( The format you will get in the application form). Your Bank will certify your account in their letterhead. It takes around 15-20 days to get the code if everything is ok. The difference between Wire/Check and WU,Cash2India is very simple. As I said earlier a legal money enters your bank account first and does not fall cash in your hand. WU etc all deliver you cash which means ... the RBI has actually no trace of it. Wire and check will never give you cash. They will be credited to your bank account which means that is a legal money and you have to pay the taxes for it. To increase the potential of your business do everything through your bank account and not via cash. You may have to wait for a few days to get funds or may loose some fees but I tell you the legal side is worth it. Now most people think that PayPal sends check to you in Indian currency, but please understand that PayPal is just your source of fund, still it is a foreign transaction.So at the end of the year put all the Xerox copies of the received checks and take out a print out of your all year long paypal statement. File them up. Proceed to STPI, fill out a Softex form and submit it. Done. The IEC code is needed when you submit the softex form and believe me its not so comlicated as you are thinking. Moreover you will get Tax exemption on foreign revenue. Its true we do not get enough time to do all this but official formalities to keep ourselves completely legal and clean. Just remember one basic thing if you DO NOT have a IEC number you are not elligible to give * any * foreign service or consultation or anything. If you are doing it you are doing it unofficially and if you want to keep it unofficial you can always keep it. I do know a lot of guys who work like this and has been working like this for years... well i have mentioned the rules and regulations andit now depends entirely on you what will you do. I have been working on this post and stuff, for a long time now. this post was made by a friend in another forum! So read on! I had a talk with STPI and here is the news (you all get excited) 1. The IEC number is MUST for just anyone!!! 2. Softex forms are to be deposited only if your Invoice Amount exceeds 25000 USD for a single project. If your invoice amount is below 25000 USD it is NOT MANDATORY to submit. Regarding payment options they only mentioned that Bank Wire is the safest and most trusted method. here is a list of STPI offices and I will recommend everyone to contact over telephone and get the info and put them here... http://www.stph.net/contact/ocenters.html Ok, one more thing, if you are into serious business like me and your invoice amount goes above 25000 USD, then fill the softex form and register your UNIT with STPI and get a green card (thats what they call it), once you have done that you can enjoy a tax holiday! Cost for IEC code - Rs 1000.00 Cost of Softex - Nil So, the moral of the story is, its better to follow the rules then to say a "sorry" later. Hope it helps, Do rep me if it really did Regards, Abhishek
Good post, Abhishek. I am not Indian, but that sounds like good advice. From the other end of things, is there a way to check a person/company to see if they have an IEC number, or if it is valid? I have a project I am considering outsourcing later, once I have the basics set up, and would prefer to know I am dealing with someone legit - here or there.
Well unfortunately this cannot be done, IEC aka Import Export Code sort off gives a company or an individual a right to Import/Export Foreign Exchange Goods or Services and doesn't prove to be an identity or something. If you are really interested in Outsourcing a Project I would like you to take the following point into consideration! The Company/Individual's Portfolio If you go via a Freelance site, then their reviews and ratings Their history of sticking to the timeframe If they claim to be a company, enquire if they are registered. How long have they been into business The quality of the bid/quote that you receive from them, as I have seen people bid on SEO projetcs for 50$ within a timeframe of 7 days, this is practically impossible! but webmasters somehow give them the project and legit bidders like me lose the work Lastly stay away from Company/Individuals who flood your PM/mail boxes offering services or offering to do better work or something along the likes The above guidlines should help you while outsourcing your project! Thanks, Abhishek
Everyone cannot afford a CA! And individuals absolutely cannot! India is a paradise of outsourced work! And here it gets done at a dirt price without hampering the quality! So unfortunately we have to worry about these things Abhishek
This Rs 1000 for the IEC code is a one time payment ? Would one need to pay tax after getting the IEC code even for a project as low as $100 ? Also, do these rules apply to freelancers as well ? Or only to registered firms ?
Thanks for the gr8 info abhisekh. I normally get paid by paypal only. But till date i have asked my clients 2 times to pay me by xoom as i wanted the money instantly and didnt want to get fraud money from the new clients. Will see to it that i never use xoom again. Thanks
Abhishek, First of all, a very good post, thanks for sharing. Now, tell me did you make this post just to get few Rep points? or to contribute to DP? If you take my advice, Never, I repeat, Never ever ask for rep, If people will find your post useful they will rep you.
Yes 1000Rs, is only for the form that you fill and give ...it requires you to have a PAN Card too!!! If you have an IEC, you can pay your taxes and become a respected freelancer You can Pay the taxes on an average ....by filing in the returns ... I am only 16., but owing to the work I do , I have an IEC in the name of my mother, and also file the tax returns regularly! Dude Indian authorities are known to change their minds, one order comes and they may start hunting for people without IEC and all! So better be safe than sorry! In India IT Jobs, are exempted from Service Tax, but Income Tax does apply on every individual! So start getting your IECs! Abhishek
That was just a joke bro , notice the " " after it !!! My Post was in the Pure sense of contribution to DP! I have Posted this on other forums too! and it's just a contribution to the community! Sorry! and Thanks! Abhishek
some good info here, Abhishek You mentioned are you sure on this? I don't think this is the case as there is some ambiguity here it seems
No they are, Recently Call Centres were included, but then again the Service Tax was raised to 12% but IT job weren't included! Abhishek
Thanks mate, This info is very vital, considering the fact that authorities can even goto the extent of banning you from providing any further services! So please DONOT... I repeat DONOT ignore this! Abhishek
wow , very interesting post! Its amazing to hear that India has the bureocracy (spelling) like we do in the USA. I think it was a really good and helpful post to your fellow countrymen .. Good Job Sir