Working from India for company in UK - is it possible?

[anandansd]

Hi, I'm based in Chennai, India. A UK based company has approached me to work for them. I do not have a working VISA for UK. Since they are unable to support a VISA for me now, we are exploring the possibilities of me working from India for their company.

Here are my questions:
1. Living in India, can I be a direct employee of the UK company? Is it legally allowed in India to draw salary from a UK company? Will I be paying income tax in India or in UK or in both the countries?

2. If the above option is not a valid one, should I be a self employed contractor? Should I start my own company for this? If yes, what type of company - proprietary or private limited?

Thanks.

[secret.simon]

The OP of the thread that you had initially posted to had not logged in since March 2014. I have spun your query off into a separate thread.