Income tax on my online drop-shipping business (India)
Please consult a tax advisor.   You may be voilating the FEMA [Foreign Exchange Management Act] and can land into trouble.  Further what you are doing can land up into various other acts as illegal including AML.   Further if there is income generated by Indian citizen in India, he is still liable to pay tax, irrespective of whether you get the funds back into India. Edit: AML is Anti Money Laundering. Your transaction is sure to raise AML triggers as it looks like converting Black Money to White in round about way. Once the triggers are raised, RBI division will investigate further to verify what you are doing. If you are able to prove that this is a valid transaction, you would be OK on AML front. How will Income Tax Know? - If they don't know does not mean you are not liable for tax. - Any suspicious transactions would get investigated and sooner or later Income Tax would know about it and can cause a serious problem. - It is irrelevant where you have kept the money, if you have earned something, its taxable. For it not to be taxable you need to conduct this business differently.  Please consult a tax adviser who will advice you on the tax-ability of this type of transaction. I find that there are two violation of law , prima facie , if someone earns money by depositing in the online account and then not reporting it ( including in his total income for the year ) and not bringing in India. Income Tax Act violation 1. It is simply comcealment liable for penalty & prosecution under I.T.Act. 2. You should know that anyone who is resident of India as per income Tax Act and having taxable income ( gross total income exceeding exemption limit) will have to fill up the column in his/her income tax return whether  Previously these column were not in the Income Tax Return. So , now anyone who is liable to file return of Income can be tried for false return if he has hiddne assets aborad. 2. FEMA violation RBI  permits remittance under Liberalized Remittance Scheme. However this scheme can not be used for certain purpose . It is important to examine whether RBI prohibits use of remittance for any entity or business you have described. You can read following FAQ on RBI site Q. 30. What are the prohibited items under the Scheme? Ans.  The remittance facility under the Scheme is not available for   the following: i) Remittance for any purpose specifically prohibited under Schedule-I   (like purchase of lottery tickets/sweep stakes, proscribed magazines,   etc.) or any item restricted under Schedule II of Foreign Exchange   Management (Current Account Transactions) Rules, 2000; ii) Remittance from India for margins or margin calls to overseas   exchanges / overseas counter-party; iii) Remittances for purchase of FCCBs issued by Indian companies in   the overseas secondary market; iv)  Remittance for trading in foreign exchange abroad; v) Remittance by a resident individual for setting up a company   abroad; vi) Remittances directly or indirectly to Bhutan, Nepal, Mauritius and   Pakistan; vii) Remittances directly or indirectly to countries identified by the   Financial Action Task Force (FATF) as “non co-operative countries and   territories”, from time to time; and viii) Remittances directly or indirectly to those individuals and   entities identified as posing significant risk of committing acts of   terrorism as advised separately by the Reserve Bank to the banks. You will have to examine , if the remittance was NOT done for purpose not allowed by RBI under LRS . If you clear this , you can say there is no violation and your violation is restricted to I.T.Act only.
Tax is due in India as you offered services from India.  So whether the International Client pays via Credit Card, Bank Transfer, Paypal or any other means is not relevant. Even if the International Client pays you in a account outside India; it is still taxable in India. Do I pay tax to the US and then also pay it in India for my income, or   does my American partner, who holds 15% of the monthly income, pay tax   in the US for his income? Of course you do, what kind of question is this? You have income earned in the US by a US entity, and the entity is taxed. Since LLC is a disregarded entity - the tax shifts to you personally. You should file form 1040NR. You should also talk to a tax professional who's proficient in the Indo-US tax treaty, since it may affect your situation. Australian Goods and Services Tax is charged on the sale amount. Whatever internal accounting you do before billing the customer is of no interest to the Australian Tax Office. "AFAIK, there are two kinds of taxes your web freelancing income may be subject to in Quebec: On the income taxes:  The net income you realize from your web freelancing activities would be considered taxable income.  Assuming you are not operating as an incorporated business, you would need to declare the freelancing income on both your federal and provincial tax returns.  You should be able to deduct certain costs related to your business – for instance, if you paid for software, hosting, domain name registration, etc.  That is, only the profit from your business would be subject to income tax.  With income and expenses arising from self-employment, you may want to use a professional to file your taxes. On the sales taxes: You may also need to charge federal GST and provincial QST (Quebec Sales Tax) on your services:  You must enroll and charge GST and QST once you exceed the ""small supplier"" revenue threshold of $30,000 measured over four consecutive quarters.  (You can still choose to enroll for GST/QST before you reach that amount, but over that amount enrollment becomes mandatory.  Some businesses enroll before the threshold is reached so they can claim input tax credits for tax paid on expenses, but then there's more paperwork – one reason to perhaps avoid enrolling until necessary.) In Quebec, the Ministère du Revenu du Québec administers both GST (on behalf of the federal government) as well as provincial QST.  Be sure to also check out their informative booklet, Should I Register with Revenu Quebec? (PDF).  See also General Information Concerning the QST and the GST/HST (PDF)." This is how a consulting engagement in India works. If you are registered for Service Tax and have a service tax number, no tax is deducted at source and you have to pay 12.36% to service tax department during filing (once a quarter). If you do not have Service tax number i.e. not registered for service tax, the company is liable to deduct 10% at source and give the same to Income Tax Dept. and give you a Form-16 at the end of the financial year. If you fall in 10% tax bracket, no further tax liability, if you are in 30%, 20% more needs to be paid to Income Tax Dept.(calculate for 20% tax bracket). The tax slabs given above are fine. If you fail to pay the remainder tax (if applicable) Income Tax Dept. will send you a demand notice, politely asking you to pay at the end of the FY. I would suggest you talk to a CA, as there are implications of advance tax (on your consulting income) to be paid once a quarter. The data provided in your question is irrelevant. The data that you provided in the comments (that you're physically present in the US while doing the work) is the only relevant information needed to answer your question. You will need to pay taxes in the US for the earnings. The company invoicing the US client will also need to pay taxes in the US for its earnings from these invoices. You can transfer between bank accounts and deposit whatever you want anywhere you want, no-one cares (with respect to the US taxes, check with Indian tax accountant about Indian requirements). If you are tax-resident in the US, then you must report income from sources within and without the United States.  Your foreign income generally must be reported to the IRS.  You will generally be eligible for a credit for foreign income taxes paid, via Form 1116. The question of the stock transfer is more complicated, but revolves around the beneficial owner.  If the stocks are yours but held by your brother, it is possible that you are the beneficial owner and you will have to report any income. There is no tax for bringing the money into the US.  As a US tax resident, you are already subject to income tax on the gain from the sale in India.  However, if the investment is held by a separate entity in India, which is not a US domestic entity or tax resident, then there is a separate analysis.  Paying a dividend to you of the sale proceeds (or part of the proceeds) would be taxable.  Your sale of the entity containing the investments would be taxable.  There are look-through provisions if the entity is insufficiently foreign (de facto US, such as a Subpart-F CFC).  There are ways to structure that transaction that are not taxable, such as making it a bona fide loan (which is enforceable and you must pay back on reasonable terms).  But if you are holding property directly, not through a foreign separate entity, then the sale triggers US tax; the transfer into the US is not meaningful for your taxes, except for reporting foreign accounts. Please review Publication 519 for general information on taxation of resident aliens. I have some more inputs to investigate: India has dual tax avoidance treaty signed with european countries so that NRIs dont pay tax in both countries. Please check if India has some agreement with Swiss Also for freelance job that is delivered from India, u need to make sure where you have to pay taxes as you are still in India so the term NRI will not hold good here. Also, if Swiss company is paying tax there, and you are  a freelancer from India(resident in india) how to tax filing /rate etc has to be investigated. Also, can you apply for tax back from swiss( a portion of tax paid can be refunded eg: in Germany) but I dont know if this is true for Freelancers and also for people out side SWISS. Bip It's income. It's almost certainly subject to income tax. As miscellaneous income, if nothing else. (That's what hobby income usually falls under.) If you kept careful records of the cost of developing the app, you might be able to offset those against the income... again, as with hobby income. Tax Deducted at source is applicable to Employee / Employer [contract employee] relations ... it was also made applicable for cases where an Indian company pays for software products [like MS Word etc] as the product is not sold, but is licensed and is treated as Royalty [unlike sale of a consumer product, that you have, say car] ... Hence it depends on how your contract is worded with your India clients, best is have it as a service agreement. Although services are also taxed, however your contract should clearly specify that any tax in India would be borne by your Indian Client ... Cross Country taxation is an advanced area, you will not find good advice free :) "As you are earning an income by working in India, you are required to pay tax in India. If you contract is of freelance, then the income earned by you has to be self declared and taxes paid accordingly. There are some expenses one can claim, a CA should be able to guide you.   Not sure why the Swiss comapny is paying taxes?. Are they depositing this with Income Tax, India, do they have a TAN Number. If yes, then you don't need to pay tax. But you need to get a statement from your company showing the tax paid on behalf of you. You can also verify the tax paid on your behalf via ""http://incometaxindia.gov.in/26ASTaxCreditStatement.asp"" you cna register. Alternatively if you have a Bank Account in India with a PAN card on their records, most Banks provide a link to directly see" If the items you sold are items you previously bought for a higher price, the money you get selling them is not income, as you are taking a loss. However, you cannot deduct such losses. If you sell anything for more than what you paid for, the difference is a gain and is taxable. See this IRS web site for the explanation: https://www.irs.gov/businesses/small-businesses-self-employed/tax-tips-for-online-auction-sellers From what I understand this is what you can do : You need to raise an invoice to your brother's company in USA Your brother makes a payment into your Indian company's bank account using wire transfer straight into a bank account in your company's name. Your brother wont have to pay taxes on the money that he pays you against an invoice as it would be an expense and would not be considered as profit for tax purposes. Once you have the money you can then file your income tax returns after deducting your own expenses etc in India. I hope this helps. I'm not sure I am fully understanding the nuance of your question, but based on your answer in the comments you and your business are not separate legal entities. So your income is the full $70K, there is no distinct business to have income. If you clarify your question to include why you want to know this I might be able to give a more meaningful answer for your situation. "You can file an LLC yourself in most states, although it might be helpful to use a service if you're not sure what to do to ensure it is correct.  I filed my LLC here in Colorado online with the Secretary of State's office, which provided the fill-in-the-blank forms and made it easy. In the U.S., taxation of an LLC is ""pass-through"", meaning the LLC itself does not have any tax liability.  Taxes are based on what you take out of the LLC as distributions to yourself, so you pay personal income tax on that. There are many good books on how to form and then operate an LLC, and I personally like NoLo (link to their web site) because they cater to novices. As for hiring people in India, I can't speak to that, so hopefully someone else can answer that specific topic. As for what you need to know about how to run it, I'll refer back to the NoLo books and web site."