I am a newbie to AndhraFriends. I had a question regarding taxes and payment procedures for an indian citizen working for a US company from India.

I am currently in USA, working for a US company here. I am moving permanently to India (yeah!! ) and my company wants to retain me by making me an independent contractor who works from India on a full-time basis on a fixed salary per annum in dollars.

I did some basic research and understand that this is possible.

But my questions are,
1. How will I get paid if I am just an individual in India and I do not have any business entity to pay the amount to? My company gave me few options:

a. They will pay me via paypal, which I think is illegal since paypal has stringent rules on that - Am I right?
b. They will transfer money to my indian bank account, which I will get in converted currency - Is this legal for either of us?
c. They can transfer money to my US bank account and it will be a direct deposit like I currently have - Will I need to pay US taxes on this?

2. If either of the above options are selected and right, how will the India government know how much I am earning and how will I pay my taxes?

3. If I am paid as an independent contractor do I need to create a company on my name or can they transfer money just to an individual's account like me?

4. What is the best legal way to enable this?

I would really appreciate if you could take some time and help me out over here since I am breaking my head not knowing whom to contact and what to do. My company is only a start-up and so they do not have much information on how to enable this process.