How To Pay Foreign Contractors In India

June 7, 2021

Salary to foreign employees in India is given in the Indian rupee. The independent contractor payment schedule is defined by the payment terms and rights. The average Indian independent contractor salary is $46,576. Hiring an independent contractor in India depends on Provisions of Independent Contractor Agreement in India. Paying wages to an independent contractor working remotely from India a US company tax occurs through various remittance services of the country. These companies charge a specific amount for delivering Indian contractor pays and paying 1099 employees of India.

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Independent contractor payroll taxes for India:

Independent contractor payroll for India has a monthly payroll frequency with 12% employer taxes in Indian Rupee. Paying independent contractors in India is done through various remittance services such as Wise International Payment, PayPal, Instarem, etc. Paying independent contractors in cash also occurs in India to avoid payroll and the company’s taxes. Paying independent contractors hourly in India has also gained popularity because a large number of software developers working remotely from the country usually use the English language for dealings rather than their native language.

Paying overseas freelancers:

Freelancers or 1099 employees working overseas can be paid after the job is completed. However, some projects may demand 50% of the payment before starting the job to buy necessary supplies. Payments for large projects may be given divided into various portions at different times. This is also done through various remittance services.

Paying internationally without a fee:

There are several options to get paid internationally without a fee. For example, Google Pay provides an opportunity of transferring the amount from the client’s bank account to your account. The amount is directly transferred to your bank account by this method. On the other hand, payments via checks are also free but may take a longer duration for processing.

Income taxes for working remotely:

Employees working remotely from India or any state have to file and pay income taxes of states where the employee lives. Sometimes, tax laws demand to file two different tax return files for the two states. Whereas, working remotely from India on US payroll is not allowed until a candidate has US work visas such as L1 or H1B for a tenure of 1 to 5 months. After the visa extension, most freelancers and independent contractors work as software developers and IT professionals from India.

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Average contractor and software developer salary:

India’s currency is the Indian rupee and the average salary of a software developer in India is 503,717 (INR) per year. However, the average monthly salary of an Indian employee is 31,900 (INR). The salary structure range from 8,080 (INR) being the lowest to 143,000 (INR) being the highest in general there. The contractors make almost 26,887 (INR) monthly. Sometimes, contractors are paid more because of more taxes contractors have to pay.

The exchange rate of USD to the Indian rupee is 72.91 (INR). Working as an independent contractor in India for US companies has become a common practice these days because the country has produced a large number of talented software developers. Indian independent contractor salary for a software developer is $48,918 on an average per year. Also, outsourcing trends have been increased because of lower costs and high returns. The independent contractors are fluent to speak English due to which language differences are also lowered.

Indian contractor upfront:

Paying 1099 employees, Indian contractors, and paying independent contractors hourly in India is a crucial task. The contractor pays of the country are usually sent through various remittance services who charge for sending Indian independent contractor salaries. The contractor upfront in India should be paid for a maximum of 33% of the total cost upfront. Also, independent contractor payroll for India includes self-employment taxes which are deducted from the contractor pays. 

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Following are some remittance services that work for paying 1099 employees, paying international clients, and paying independent contractors hourly in India.

Wise International Payment:

Wise International Payment is the least expensive method to send money to India because it supports 45+ state currencies. The Indian rupee is one of them. Fast transfers in up to 2 days of contractor pays can be done through the channel along with low remittance cost i.e. $13.01 (0.65% conversion fee). The service provides a high level of security and accepts credit and debit cards. The tool called Wise Batch Payment helps foreign countries to pay multiple salaries in India in one go. 

The company’s application has made International payments more convenient. However, the recipient can not track the transaction statuses.

OFX:

OFX helps to pay internationally without a fee. However, a mark-up is made on the exchange rates through which they earn money. The mark-up depends on the amount to transfer and the transfer history with OFX. For example, a 0.4-2.5% mark-up is added if transfer rates range from $8-$50

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The service provides a batch payment tool along with an easily accessible application through which transactions are made easier. The service is available 24 hours throughout the week and can set up recurring payments. However, the minimum transfer is $2000. Delivery occurs in 1-5 days.

PayPal:

PayPal is a renowned money transferring company to pay remote workers in India. The company fee is comparatively higher than other remittance services in India. However, the method is faster, reliable, and provides a high level of security. Because of its excess number of facilities, a large number of 1099 employees and overseas contractors are already using the service to get paid from international clients.

The transfer fee for $95 is $20 with a $75 exchange rate mark-up. The contractor pays can be delivered on the same day along with Mass Payment Tool for paying employee cash legally in India.

Instarem:

Indian contractor pays are also given through Instarem. Ait provides a cheap solution for paying independent contractor salaries because of the low exchange rate mark-up and 0.5% transaction fee. It does not allow card payments but the facilities of mobile application and mass payment are available.

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Direct deposit:

Paying independent contractors through direct deposit is another frequently used method. After choosing the bank checks are required to process Pay to the Order of drop-down arrow. After selecting the option for independent contractors transfer date is entered. The amount is entered and the Pay Online method is verified.

Xoom:

Xoom is a user-friendly service based in California for fast money transfers without a fee. The process of signing in and paying contractor salaries is convenient if compared to other remittance services. Xoom also provides free transfers over $1000 if banks are used as the sending medium. Furthermore, the remittance cost is very low locked-in exchange rates. 

Money transfers can be tracked through the company’s application. $20 gift card is given to the referrals as well. However, complaints of delays and cancellation of the payments have also been observed.

Remitly:

Remitly is a cost-effective, and safe method of sending foreign independent contractor pays in India. It also provides transfers over $1000 without a fee. Economy transfer service deposits contractor pays within 3-5 days. However, Express transfer supports instant delivery. The fee for transfers below $1000 is $3.99 and a 3% remittance fee is charged on card payments. The company also provides promotional packages for new customers.

RIA:

RIA is considered one of the largest remittance networks that operate in almost 150 countries. RIA is easy to use and provides free transfers through banks. The contractor pays are delivered in almost 3 days with good customer service. The service is safe for money transfers and provides 1-month of free debit card transfers. However, credit card payments are relatively expensive. RIA has an extensive security check which takes up to one month. Therefore, RIA is not recommended for emergency transfers.

Western Union:

Western Union is another method for money transfers, bill orders, and bank transfers. Price Estimator Tool of Western Union helps to calculate remittance fees. Foreign contractor salaries can be received in minutes to days through Western Union. Similar to Xoom the application helps in the simplification of money transfers. Agents are present all over the country that makes cash payments and pickups convenient.

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Spending $2 will help users to earn 1 point through the My WU program. Negative reviews have also been observed about delayed money transfers, poor customer support, and cancellation of transactions.

Transfast:

As the name indicates, Transfast offers faster transactions with competitive exchange rates. The transfer fee is impressively low along with a high degree of safety and security. The deposits occur instantly to major banks of India such as Axis, Kotak Mahindra, etc. It also offers a transfer of over $1000 without a fee if sent through a bank account. The application is available for both Android and IOS with good customer service.

Cash pickups are also available throughout the country along with promotional packages to the new customers. Instant bank transfers however have higher rates.