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GST and income tax compliance for India contractors.

Two tax systems touch every contractor payment: income tax through TDS on professional fees, and GST on the services themselves. We deduct at 10% under Section 194J, deposit against the contractor's PAN, issue Form 16A quarterly, and keep billing domestic so GST stays simple. All inside the $19 Contractor of Record fee.

TDS at 10% under Section 194J, deposited and certified with Form 16A. Domestic billing that keeps contractor GST straightforward. Included in the $19 COR fee.

Speak to sales EOR vs entity, in detail

G2 4.8 / 5 on G2, from companies employing teams in India through us.

Teams building in India. First hire to full team.

Tax handled ad hoc versus tax handled structurally.

Foreign companies paying Indian contractors directly usually get the tax mechanics wrong in one of two directions: no TDS at all, or GST complexity nobody signed up for.

Direct foreign payment

Versatile COR structure

TDS on fees
Often skipped entirely on foreign remittances
10% under Section 194J on every payout, deposited on time
Certificates
No Form 16A, contractor reconciles blind
Form 16A issued quarterly against deposits
GST posture
Export-of-services questions, LUT filings, refund chases
Domestic INR billing, standard GST treatment
Registration threshold
Contractor tracks the ₹20 lakh services threshold alone
Flagged as fees approach it, before it becomes a problem
Records
Challans and invoices scattered
Reconciled quarterly, archived per contractor
Who answers notices
The contractor, and eventually your inbox
Structured so notices are rare and answerable

Direct foreign payment
TDS on fees Often skipped entirely on foreign remittances
Certificates No Form 16A, contractor reconciles blind
GST posture Export-of-services questions, LUT filings, refund chases
Registration threshold Contractor tracks the ₹20 lakh services threshold alone
Records Challans and invoices scattered
Who answers notices The contractor, and eventually your inbox

Versatile COR structure
TDS on fees 10% under Section 194J on every payout, deposited on time
Certificates Form 16A issued quarterly against deposits
GST posture Domestic INR billing, standard GST treatment
Registration threshold Flagged as fees approach it, before it becomes a problem
Records Reconciled quarterly, archived per contractor
Who answers notices Structured so notices are rare and answerable
Payout day
10% TDS deducted from the fee under Section 194J
By the 7th
Deducted tax deposited against the contractor's PAN
Quarterly
TDS return filed, Form 16A generated and issued
Quarterly
Credits, challans and certificates reconciled
Ongoing
Fee levels tracked against the GST registration threshold
Year end
Contractor's 26AS matches our deposits, filing is easy

Interest and late fees compound quietly.

Late TDS deposit attracts interest per month of delay, and late TDS returns attract daily fees. Individually small, these accumulate across contractors and quarters into a number with an auditor's comment attached.

The structural fix is boring: deduct on payout day, deposit by the 7th, file quarterly, reconcile. Boring, repeated on time, is the entire product.

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Illustrative accumulation of TDS interest and fees Five contractors, deposits slipping one quarter
₹8,400 Month 1
₹31,000 Month 3
₹74,000 Month 6
₹1,6 lakh Month 12
Illustration of interest and late fees on delayed deposits for a small contractor group. Actual amounts depend on sums deducted and the delay.
Who the tax office writes to
Payments with TDS never deducted The payer, plus interest
COR deducting and depositing on schedule Versatile executes, records prove it

None of this is exotic. It is ordinary Indian tax mechanics, done every month, which is precisely why skipping it looks so bad in hindsight. Full-time contractor with rising fees and threshold questions? Employment may already be simpler. Price it with the EOR versus entity calculator and compare the whole picture.

The tax mechanics we run, in the open.

Nothing here is secret sauce. It is deduction, deposit, certification and reconciliation, executed on schedule with proof at each step.

You run

  • Approving fees and engagement changes
  • Your own books on the USD side
  • Nothing on the Indian tax side

We handle

  • Section 194J deduction each payout
  • Deposit by the 7th against each PAN
  • Quarterly returns and Form 16A
  • Threshold tracking and reconciliation

You run
  • Approve the fees
  • Book one USD invoice
  • Ask for any record
  • Skip the tax mechanics

We handle
  • Deduct 10% on payout
  • Deposit by the 7th
  • File quarterly returns
  • Issue Form 16A
  • Watch the GST threshold
  • Reconcile every quarter

When something happens in India, it is ours.
TDS deduction, deposit and returns Versatile
Contractor's own income tax filing The contractor, made easy by clean 26AS
GST registration if threshold crossed Contractor acts, we flag it early

A named compliance manager owns your account. Not a queue, not a chatbot, one person who already knows your headcount and your last filing.

Account managerMedian first reply 4 to 6 hours
Recruitment coordinatorBrief to shortlist 9 days
Finance associateFilings on time 8 / 8

The 26AS test

A contractor's Form 26AS should show every deposit we made against their PAN, matching Form 16A to the rupee. That one-line check is how contractors verify us, and we invite it from the first quarter.

Domestic by design

Because contractors bill our Indian entity in INR, the export-of-services maze, LUT filings and refund cycles never enter their lives. Simplicity here is a structural choice, not a service level.

Thresholds watched, not discovered

The ₹20 lakh services registration threshold is easy to cross mid-year and awkward to discover late. We track cumulative fees and raise the flag while options are still open.

One archive for everything

Challans, returns, certificates and reconciliations live beside the agreements and payout advices. When anyone asks a tax question about any contractor, the answer is a folder, not an investigation.

The 26AS test

A contractor's Form 26AS should show every deposit we made against their PAN, matching Form 16A to the rupee. That one-line check is how contractors verify us, and we invite it from the first quarter.

Trust that can be looked up.

Domestic by design

Because contractors bill our Indian entity in INR, the export-of-services maze, LUT filings and refund cycles never enter their lives. Simplicity here is a structural choice, not a service level.

The best GST problem is the one avoided.

Thresholds watched, not discovered

The ₹20 lakh services registration threshold is easy to cross mid-year and awkward to discover late. We track cumulative fees and raise the flag while options are still open.

Foresight is cheap, backdating is not.

Moving someone across

Tax continuity through conversion.

When a contractor becomes an employee, Section 194J deduction gives way to salary TDS, Form 16A to Form 16, and PF and ESI begin. The person's tax history stays clean across the seam.

Tax record integrity Kept
PAN history Kept
Compliance coverage Continuous
Untaxed gap 0 days

The final Form 16A and the first Form 16 reconcile side by side.

Supporting evidence

Audit us with the government's own records.

TDS deposits are made by Foo Falcon Technologies Pvt Ltd, registered in Bengaluru in 2022. Our deposits appear in your contractors' 26AS, which neither we nor anyone else can fake.

  • Incorporation
  • GST
  • EPFO code
  • ESIC
  • Shops and Establishments
  • PAN and TAN
  • Udyam MSME
What we verify
  • Incorporation Ministry of Corporate Affairs
  • GST Goods and Services Tax
  • EPFO code Employees Provident Fund Organisation
  • ESIC Ministry of Labour and Employment
  • Shops and Establishments Government of Karnataka
  • PAN and TAN Income Tax Department
  • Udyam MSME Government of India

Challan references accompany every deduction we report to you.

200

people whose statutory transitions we ran in one cycle

33

clients whose India tax mechanics run on our calendar

5 days

to bring a new contractor into the compliance cycle

G2 4.8 / 5 on G2, from companies employing teams in India through us.

G2 4.8 / 5 on G2, from companies employing through us.

Contractors' CAs stopped calling.

The quiet sign the tax mechanics work: filing season passes without a single reconciliation email.

Video
Bharath Rasoi KS Rajeshwari Founder, Bharath Rasoi
Video
Open Theatre Anand Raj Founder, Open Theatre
Abid Hassan Verified client
Sensibull
“They moved fast and took the whole compliance side off my plate. For a founder making an early India hire, that is exactly what you want.”
Abid Hassan Founder and CEO, Sensibull
Via G2
Moonshot
“Every option was either 'set up your own entity' or a platform that quotes a great price then hits you with add-ons. Versatile was the one that actually made it simple. First payroll ran on time. No scramble.”
Angad S. Co-Founder, Moonshot
Via G2
Digital Marketing Agency
“Contracts, PF, ESI, TDS and payroll all in one place. Invoicing in USD meant zero exchange rate surprises. The compliance rigour is genuinely reassuring.”
Vedant T. Founder, Digital Marketing Agency
Via G2
Design Studio
“Setting up in a new country can get messy fast, but their India EOR made onboarding feel easy. The team is responsive, clear, and great to work with.”
Setu C. Studio Owner, Design Studio
Via G2
US Startup
“We used Versatile to hire our first employee in India after months of putting it off because the compliance side seemed like a mess. They walked us through it and now we don't think about it.”
Verified US Founder First-time Founder, US Startup
Via G2
Mid-Market Tech Co.
“Versatile consistently delivered work that was both strategically sharp and execution-ready. Their turnaround times are impressive, and they think about problems the way an in-house team would.”
Shivani K. Senior Manager, Tech TA
Via G2
Growth-stage Startup
“Their team was highly responsive, professional, and easy to work with. They made a complex process feel simple.”
Mukul S. Core Team, Growth-stage Startup

Case studies.

Largest food delivery app in India, decacorn View case study The world's largest professional network, part of Microsoft View case study Legacy US software company, publishing platforms View case study

Compliance is the fee, not a surcharge.

TDS, Form 16A, threshold tracking and reconciliation are all inside $19 per contractor per month. Employment-grade compliance lives inside the $149 EOR fee.

Contractor of Record

Contractor tax done right
$19 /contractor/mo

Deduction, deposit, quarterly returns, Form 16A and reconciliation included. Contractor fees pass through at cost.

Fix the mechanics
  • Section 194J deduction
  • Deposit by the 7th
  • Quarterly TDS returns
  • Form 16A every quarter
  • GST threshold tracking
  • Quarterly reconciliation
  • Challan-level records
  • Notice support if ever needed
  • Section 194J deduction
  • Deposit by the 7th
  • Quarterly TDS returns
  • Form 16A every quarter
Plus four more inclusions
  • GST threshold tracking
  • Quarterly reconciliation
  • Challan-level records
  • Notice support if ever needed

Backfiling review available where past payments skipped TDS.

Employer of Record

Full statutory employment
$149 /employee/mo

$129 past twenty heads. PF at 12% both sides, ESI where applicable, gratuity accrual, salary TDS and Form 16.

Go full compliance
  • Salary TDS and Form 16
  • PF 12% employer and employee
  • ESI 3.25% and 0.75% where due
  • Gratuity at 4.81% accrued
  • Deposits on time: TDS 7th, PF/ESIC 15th
  • Payslips with eight statutory items
  • 5-day onboarding
  • Named payroll lead
  • Salary TDS and Form 16
  • PF 12% employer and employee
  • ESI 3.25% and 0.75% where due
  • Gratuity at 4.81% accrued
Plus four more inclusions
  • Deposits on time: TDS 7th, PF/ESIC 15th
  • Payslips with eight statutory items
  • 5-day onboarding
  • Named payroll lead

For relationships that have outgrown contractor tax treatment.

Past twenty employees

$149 $129 /employee/mo

Employment pricing drops beyond twenty heads. Contractor compliance holds at $19 flat.

Inside the compliance service

  • Per-payout TDS deduction
  • PAN-mapped deposits
  • Quarterly return filing
  • Form 16A issuance
  • 26AS reconciliation support
  • Threshold monitoring
  • Challan archive
  • Notice response support

Volume pricing

$149 $129 /employee/mo

$129 EOR past twenty heads. $19 COR at any count.

Inside the compliance service

  • Per-payout TDS deduction
  • PAN-mapped deposits
  • Quarterly return filing
  • Form 16A issuance
  • 26AS reconciliation support
  • Threshold monitoring
  • Challan archive
  • Notice response support

When contractor tax treatment stops fitting the relationship, the honest move is employment. The EOR versus entity calculator prices that move with your real numbers.

Contractor tax, without the jargon.

The questions that come up in every first call about contractor compliance.

What is TDS under Section 194J and why 10%?

Indian law requires payers to deduct tax at source on professional and technical service fees, generally at 10%, and deposit it against the service provider's PAN. The contractor then claims that credit when filing. It is withholding, not an extra tax; skipping it is what creates the problem.

What is Form 16A and why do contractors care?

It is the quarterly certificate proving tax was deducted and deposited against the contractor's PAN. With it, the contractor's return matches the department's records automatically. Without it, they are reconciling blind, and their CA starts asking pointed questions about who they are working with.

Do contractors need GST registration to work with you?

Not below the threshold. GST registration for services generally becomes mandatory as turnover approaches ₹20 lakh in a financial year. Registered contractors charge GST on invoices to our entity and we handle it as ordinary input; unregistered ones bill without it. We track fee levels so the threshold never arrives as a surprise.

Why is domestic billing simpler for GST?

A contractor invoicing a foreign company directly enters export-of-services territory: zero-rating conditions, LUT filings, foreign remittance documentation and refund timelines. Invoicing our Indian entity in INR keeps everything domestic and standard. Most contractors feel the difference at their first filing.

We have paid contractors for months with no TDS. How bad is it?

Fixable, and better fixed proactively. Exposure includes interest on the undeducted amounts and potential expense disallowance, growing with time. We review the history, quantify it, and structure go-forward payments correctly; your own tax advisors handle the remediation filings with our records supporting them.

Does the 10% deduction reduce what the contractor earns?

No. The gross fee is agreed, 10% is deposited as the contractor's own tax credit, and the balance is paid out. At filing, the credit offsets their liability. Contractors used to informal arrangements sometimes need this walked through once, and we do that directly.

Who handles a tax notice about a contractor payment?

If it concerns deduction or deposit we executed, we answer it with our records, and the archive means answers are attachments rather than reconstructions. Notices about the contractor's own filing position remain theirs, though clean Form 16A trails make those rare and short.

Longer reading: Contractor of Record overview · Compliant contractor contracts · Paying teams in India correctly · India payroll glossary · Related tool: misclassification risk quiz · Related tool: contractor conversion planner

Tell us where you are on the decision.

A role you want to hire, a team you want moved, or just the two routes to compare. A named person replies in 4 to 6 hours.

A named person replies in 4 to 6 hours, not an autoresponder.

We use these details to respond to your enquiry.

A named person replies in 4 to 6 hours, not an autoresponder. We use these details to respond to your enquiry.

What the first call covers

30 minutes

A cost comparison for your headcount, on your numbers, both routes.

  • A written cost breakdown
  • Entity documents before the call
  • PF, ESI, TDS, termination law
  • No follow-up sequence
Book a call →

You pick the time, we send a Meet link. Any timezone.

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