Saturday, April 23, 2011

Legal Considerations while employing a foreign national

Legal Considerations while employing a foreign national

While employing a foreigner in the company in the capacity of a director or an employee due care should be taken. The following are the important considerations that should be taken:

Under Immigration Rules:

  • Foreign National has to obtain "employment Visa,” otherwise he is not eligible to work in any company in India. (For obtaining "employment Visa, the company has to issue offer letter, give an undertaking .....etc)  Any company is also not supposed to employ any foreign national without valid "employment Visa"

  • If his stay in India is for more than 180 days, he has to get himself registered before 180 days with concerned Registration Officer (FRO) (Normally it is in nearest police station)

  • While him going back to his country permanently, he has to inform the FRO and you have to give an under taking

Under FEMA:

If he is working as an employee, the company can make payment 100% in INR. If he insists the payment in foreign currency, then the company is allowed to make payment in foreign currency up to 75% and balance in INR subject to deduction of proper taxes on salary. (FEMA Notification no.13 & 21 dated May 2000 and Master circular no.4 dated 1st July 2009) 

Income Tax:

  • If you are paying him as "consultancy fee", you need to deduct tax as applicable for individual’s u/s195 (TDS Section 194J of Income Tax Act 1961 is not applicable for non-residents). 

  • If it is being paid as "Salary" then you need to deduct tax u/s 192 of Income Tax Act 1961

Labour Laws:

The provisions of PF, Contract Labour Act, ESI, are applicable to foreign national also

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2 comments:

Adam said...

Dear Mr. Pandey,
i require your inputs for one of our team member from poland. She joined us through a graduate exchange programme. She worked with us as trainees for one year. As her visa business visa was about to expire so she went back to poland to get an employment visa for a salary of rs 40,000/ month. however her visa got rejected. even she has renewed her passport so the rejection stamp is on a frseh passport. can you guide us how to get her on board with our organisation.
regards

CSDEVESH PANDEY said...

Mr Adam,

Please Give Me your email and also let me know that what is your country
Are you from India, i mean to say whether she was working in India or somewhere else.