If you live in India and work for clients abroad, as a freelancer, a consultant or a remote contractor paid by invoice, your earnings are taxed in India as professional income. Nobody deducts tax for you the way an employer would, so four things become your job: working out the tax, paying it in advance, proving your income came from abroad, and staying within the RBI and GST rules for exports.
1. What gets taxed
Your taxable income is based on your gross receipts in rupees: the amount actually credited to your Indian account for each invoice, after conversion and any platform fees. That is why it helps to note the exact rupee amount every time a payment lands.
2. Presumptive taxation: the simple option
From Tax Year 2026-27 (April 2026 to March 2027), the new Income-tax Act 2025 applies. Its Section 58 replaces the old Section 44ADA for professionals, with the same basic idea:
- You declare 50% of your gross receipts as profit. The other half is treated as your expenses, whatever they actually were.
- You don't need to maintain books of account for this income.
- It is available if your receipts are up to ₹75 lakh a year and cash receipts are no more than 5% (bank transfers from abroad are not cash). Otherwise the limit is ₹50 lakh.
- Information technology is covered as a profession, so developers, designers and similar roles qualify.
- If you declare less than 50% as profit, you must keep books and get a tax audit.
If your real expenses are more than half your income, declaring actual profit can cost less, but it needs proper records. Our calculator shows both numbers side by side.
3. Tax rates for 2026-27 (new regime)
| Taxable income | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 to 8 lakh | 5% |
| ₹8 to 12 lakh | 10% |
| ₹12 to 16 lakh | 15% |
| ₹16 to 20 lakh | 20% |
| ₹20 to 24 lakh | 25% |
| Above ₹24 lakh | 30% |
A rebate of up to ₹60,000 means no tax at all up to ₹12 lakh of taxable income, with relief just above that. A 4% health and education cess is added to the tax. The ₹75,000 standard deduction only applies to salary, not to freelance income.
Two examples, using presumptive taxation
- ₹20 lakh received in the year: taxable income ₹10 lakh, tax ₹0 because of the rebate.
- ₹40 lakh received in the year: taxable income ₹20 lakh, tax ₹2,08,000 including cess.
4. Advance tax: pay during the year, not at the end
If your tax for the year, after any TDS, is ₹10,000 or more, you pay it in instalments:
| Pay by | Total paid by then |
|---|---|
| 15 June | 15% of the year's tax |
| 15 September | 45% |
| 15 December | 75% |
| 15 March | 100% |
If you use presumptive taxation, you can pay the whole year's advance tax in one go by 15 March. Paying late or too little attracts interest of 1% a month on the shortfall. Pay through the e-Pay Tax option on the Income Tax e-filing portal, choosing advance tax as the payment type.
5. Keep a FIRA for every payment
A Foreign Inward Remittance Certificate (FIRA), or its electronic version, is your bank's proof that money came from abroad. It supports your export of services for GST and helps explain your income if the tax department asks. Download it from your bank or payment app for every payment, and keep it with the invoice.
6. The RBI deadline for getting paid
Under foreign exchange rules, payment for exported services must reach India within a set time from the invoice date. The period has changed several times recently:
| Invoice dated | Must be paid within |
|---|---|
| 14 Nov 2025 to 4 Jun 2026 | 15 months |
| 5 Jun 2026 to 30 Sep 2026 | 9 months |
| From 1 Oct 2026 | 15 months |
If a client is running late, chase them well before the deadline, and talk to your bank if payment won't arrive in time.
7. GST: zero-rated, but not ignorable
- Registration becomes mandatory once your turnover in a year, including exports, crosses ₹20 lakh (₹10 lakh in Manipur, Mizoram, Nagaland and Tripura).
- Exports of services are zero-rated. File a Letter of Undertaking (LUT), Form GST RFD-11, on the GST portal every year, ideally before 1 April, so you can invoice without paying IGST upfront.
- Mention on each invoice that it is a supply for export under LUT without payment of IGST.
8. Money held abroad
If you keep a balance in a foreign bank or wallet account, it has to be declared in the foreign assets schedule of your return (Schedule FA). The penalties for leaving it out are heavy, so don't skip it.
9. Filing the return
The return for a tax year is due by 31 July of the following year when no audit is needed (31 October if it is). Check the figures against your Annual Information Statement (AIS) on the e-filing portal before submitting.
Checklist
- Record the rupee amount of every payment the day it lands.
- Download the FIRA for each payment.
- Estimate the year's tax and pay advance tax on time (by 15 March if presumptive).
- Watch the ₹20 lakh GST threshold, and renew your LUT every April once registered.
- Chase unpaid invoices before the RBI deadline.
- Declare foreign accounts and file by 31 July.