I am a limited company registered in the UK. Recently, we plan to conduct some business with freelancers in India. May I ask whether it is feasible to accept invoices from India?

In India, individuals can provide services and issue invoices even if they are not registered as a company, provided their annual income does not exceed 20 lakh (approximately 2 million Indian rupees). I would like to know whether we can also accept invoices issued by these individuals (i.e., those without a registered company).

From a compliance perspective, a UK company accepting invoices from overseas individuals needs to consider the following points:

  • Tax treatment:The UK company needs to determine, in accordance with UK tax law, whether the expenditure is deductible before tax. Usually, it must ensure that the services are genuine, the price is fair, and complete documentation is retained.
  • Cross-border withholding tax:If paying service fees to individuals in India, Indian withholding tax (TDS) or withholding obligations under the UK-India tax treaty may be involved. It is advisable to consult a tax advisor.
  • Invoice validity:Invoices issued by individuals in India should contain necessary information (such as name, address, description of services, amount, date, etc.), but no company registration number is required.
  • Anti-money laundering and sanctions:It is necessary to verify the identity of the other party to ensure that no sanctioned entities or individuals are involved.

In summary, accepting invoices from individuals in India is legally feasible, but it is essential to ensure compliance with the tax regulations of both countries and to conduct due diligence.