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Laws - Guide for freelancers in India

Laws - Guide for freelancers in India

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Published by ranjithxavier
A guide to every freelancer of digital works from India who would like to know more about different statutes which may be applicable to them.
A guide to every freelancer of digital works from India who would like to know more about different statutes which may be applicable to them.

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Published by: ranjithxavier on Jan 27, 2009
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02/05/2013

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1
 
FREELANCING
THE DIGITALTRANSFER OF JOB WORKS
RELEVANT STATUTORY PROVISIONS (INDIA)
 Advocate, High Court of Kerala
CAVEAT & DISCLAIMER 
This article pertains to the Indian statutory provisions that may be applicable to the freelance jobs,pertaining to software/literary/artistic domains, procured by freelancers in India from abroad,and transmission of the finished/performed work, in digital format via internet, to the clientabroad, for a consideration.Take note that this article is not an exhaustive commentary on the statutes discussed hereunder.The statutes discussed hereunder may not be an exhaustive list of statutes applicable. The article isprepared in academic interest, and gives only a general overview of the highlights of the statutes which may be applicable. While the author has yearned to be as accurate as possible, the same may not be fully correct ormay not reflect the latest position of the statutes discussed. Note that the views expressed in thearticle are purely the personal views of the author.This article is never a substitute to professional advice and is not intended to be acted upon. Theauthor will not be liable, responsible or answerable under any circumstances in any manner, forany claims on account of the views expressed in the article. The reader is advised to consulthis/her lawyer, chartered accountant or such other professional consultant as she/he deems fit, todiscuss her/his particular issues at hand.This article is free for unlimited copying, printing and distribution without any consideration,provided the each copy or print contains this Caveat & Disclaimer and the whole of the article, inits original form; and credits the author of this article as Ad v. Ranjith Xavier Attokaran. 20
th
day of January, 2009.
 reelancing is the present day’s buzzword. Wikipedia defines a freelancer or freelance worker as a person who pursues a profession without a long-termcommitment to any particular employer. The term "freelance" was firstcoined by Sir Walter Scott (1771–1832) in his well-known historical romanceIvanhoe to describe a "medieval mercenary warrior" (or "free-lance"). These days,most of the freelance jobs are procured and transmitted via internet.In India, currently there is no law specific to the domain of freelancing. There areseveral statues that may be applicable to the freelancing jobs performed here andtransmitted outside India, via internet. This article will attempt to examine the various legal provisions applicable from the perspective of different statutes.
F
 
 
2
 
PERSPECTIVE OF TAX LAWS
INCOME TAX ACT. 1961.
 Any income derived by way of freelancing job is taxable under the provisions of Income Tax Act. 1961.If your annual income derived out of freelancing job alone; or if added to yourother income(s), adds up to exceed the annual limit mentioned in the Income Tax Act, you are duty bound to apply for and obtain a Permanent Account Number(PAN). Obtaining PAN is mandatory also if the total receipts for a year exceeds thelimit for the turn-over mentioned in the Income Tax Act, though the whole of thereceipts may not be “income”.Consult your chartered accountant for more accurate and updated information onthis regard.
SERVICE TAX
Service Tax was introduced by Finance Act, 1994. Sections 64 to 96 of the Finance Act, 1994 deals with Service Tax. Service Tax Rules, 1994 are the rules which areapplicable to the collection of Service Tax.Service tax is levied on specified taxable services and the responsibility of paymentof the tax is cast on the service provider. System of self-assessment of Service TaxReturns by service tax assessees has been introduced with effect from 01.04.2001.The jurisdictional Superintendent of Central Excise is authorized to cross verify thecorrectness of self assessed returns. Tax returns are expected to be filed half yearly.Central Excise officers are authorized to conduct surveys to bring the prospectiveservice tax assessees under the tax net. Directorate of Service Tax at Mumbai oversees the activities at the field level for technical and policy level coordination.From the long list of services on which Service Tax is payable, the list of a few  which may have special relevance to freelancing jobs are given below.
 
Code Clause Service Taxed Date
029 65(105)(zh)Online Information & Data Base Accessor retrieval16-07-2001071 65(105)(zzz)Transport of goods other than waterthrough pipeline or other conduit16-06-2005088 65(105)(zzzq)Support services of business orcommerce01-05-2006101 65(105)(zzzze)Information Technology SoftwareServices16-05-2008Consult your chartered accountant for more accurate and updated information onthis regard.
 
 
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PERSPECTIVE OF FOREX LAWS
FOREIGN EXCHANGE MANAGEMENT ACT, 1999 (FEMA)Definition of Export
Section 2 (i):"Export", with its grammatical variations and cognate expressions, means –(i) the taking out of India to a place outside India any goods,(ii) provision of services from India to any person outside India;
Definition of Import
Section 2(p):"Import", with its grammatical variations and cognate expressions, means bringinginto India any goods or services;
Definition of Service
Section 2(zb):"Service" means service of any description which is made available to potentialusers and includes the provision of facilities in connection with banking, financing,insurance, medical assistance, legal assistance, chit fund, real estate, transport,processing, supply of electrical or other energy, boarding or lodging or both,entertainment, amusement or the purveying of news or other information, butdoes not include the rendering of any service free of charge or under a contract of personal service;”
Definition of Foreign Exchange
Section 2(n):"Foreign exchange" means foreign currency and includes,-(i)
 
deposits, credits and balances payable in any foreign currency,(ii)
 
drafts, travelers cheques, letters of credit or bills of exchange,expressed or drawn in Indian currency but payable in any foreigncurrency,(iii)
 
drafts, travelers cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indiancurrency;

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