Freelancer as taxable

Question

“I am a sole proprietor and I receive monthly remittances into my bank account. I currently pay my employees from my own account, and their taxes are deducted according to the local tax slabs. Now my funder wants to send payments directly to my employees’ bank accounts. In that case, will my employees be considered freelancers, and will they then have to pay taxes according to the local tax slabs themselves?”

Answer 1

1. No, your employees will not automatically become freelancers just because the funder pays them directly.

2. Their status depends on the employment relationship, not the payment route.

3. If they are still working under your control, hours, and terms, they remain employees.

4. Their income will still be taxed under salary slabs, not freelancer/contractor slabs.

5. Only if you formally change them to “contractors” would they file and pay taxes as freelancers. Which will save taxes for employees