US payers issue Form 1099-NEC to non-employee contractors. Indian tax law doesn't replicate this — Indian contractor reporting splits across multiple forms, none of which the foreign payer typically issues.
The closest match — Form 16A
Form 16A is the Indian TDS certificate for non-salary payments — issued by Indian payers (not foreign) to Indian contractors when TDS has been deducted under Section 194J, 194C, etc. The Indian payer files quarterly 26Q return; Form 16A is generated from those filings.
- Issued by: Indian payer (not foreign).
- Issued to: Indian recipient (contractor, vendor, landlord, etc.).
- Covers: any non-salary payment with TDS deducted.
- Frequency: quarterly (after each 26Q return).
- Format: PDF generated from TRACES portal.
From FY 2026-27 onwards under ITA 2025, Form 16A is replaced by the corresponding successor form under Section 393 — typically referred to as Form 16A or its renumbered equivalent in the new regime.
Implication for foreign payers
If you are a foreign company paying an Indian contractor, you typically issue NO Indian tax form. The contractor self-reports the income on their Indian tax return (ITR-3 or ITR-4). You provide:
- Invoice / receipt for each payment.
- W-8BEN / W-8BEN-E for US-side compliance.
- Optional: annual summary of payments made to the contractor (for their records — helps their CA).
What the contractor files themselves
- ITR-3 — for individuals / HUFs with business or professional income (most contractors).
- ITR-4 — for individuals opting for presumptive taxation under Section 44ADA (professionals with annual receipts under ₹50 lakhs).
- GSTR-1 monthly — outward supplies (their invoices to you).
- GSTR-3B monthly — summary return + payment.
- GSTR-9 annual.
- Advance tax quarterly if liability > ₹10,000.
Annual summary on request for your contractors
FastLegal can prepare an annual payment summary for your Indian contractors — useful for their tax filing. Bundled in our Contractor plan if you support contractor compliance as a benefit.
Section 44ADA — presumptive taxation for professionals
Indian contractors providing professional services with annual gross receipts under ₹50 lakhs can opt for presumptive taxation under Section 44ADA. The scheme:
- 50% of gross receipts is deemed to be income (no need to maintain books).
- Income tax computed on the deemed income at slab rates.
- No tax audit required.
- Simpler ITR-4 filing.
- Most software developers, designers, consultants, accountants under ₹50L can use this — many do, given the simplicity.
Year-end reconciliation
The contractor reconciles their Indian tax position at year-end using:
- Their invoices and FIRCs.
- Form 26AS / AIS — tax department's pre-populated statement showing TDS deducted under their PAN.
- Bank statements.
- Foreign payments may not show in 26AS / AIS (no Indian TDS = no entry) — contractor adds these manually to ITR.
Frequently asked questions
Do we need to issue any Indian tax form to our contractors?+
No — as a foreign payer with no Indian PE, you have no Indian TDS or form-issuance obligation. Provide invoices and a year-end summary as a convenience.
Should we collect the contractor's PAN?+
Useful for your records but not required for foreign payers. The contractor uses their PAN on their own tax return.
What about Form 26AS — should we report payments?+
Foreign payers don't report to Form 26AS. Only Indian payers with TDS deductions do.
Does the Section 44ADA presumptive scheme apply to all contractors?+
Available to specified professionals — legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, and notified professions. Software development is generally included.
Stop reading circulars. Start running clean payroll.
Every FastLegal plan ships with a dedicated payroll consultant — a real human who runs your PF, ESI, PT, TDS and Form 16 issuance, configured to your salary structure, your state, and your hiring plan. You sign off. We do the rest.