TaxSavvy

TaxSavvy for freelancer, clients abroad

Paid in dollars? Zero GST on exports and simple, legal tax.

Developers, designers, consultants paid from abroad

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  • Freelancer return with foreign clients, Sec 44ADA
  • LUT filing RFD-11 for exporters
  • Do I need GST registration? Threshold and compulsory registration check
  • Presumptive income tax return, ITR-4 (Sugam), Sec 58 (old 44AD, 44ADA, 44AE)

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  • Invoices
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Facts, Provisions and law, Analysis, Conclusion.

  • Freelancer with Foreign Clients: Tax, GST, and FEMA Complete
    Facts
    India-based freelancer earning from US/UK/UAE clients: three compliance layers. Income Tax: declare foreign income, pay at slab rate. GST: export of services = zero-rated, but registration needed. FEMA: receive payment in USD via AD bank, convert within stipulated time. Get all three wrong and you have an IT notice, a GST notice, and an RBI violation.
    Provisions and law
    Sec 58 (old 44ADA); GST, Zero Rated Export; FEMA, EEFC; Sec 393 (old 195), No TDS
    Analysis
    GST myth: Many freelancers think they must charge 18% GST to foreign clients. Wrong. Export of services = zero-rated. Charge 0% GST. File LUT (Letter of Undertaking) once per year on GST portal. No GST collected from foreign client. No refund to claim. FEMA receipt deadline: Invoice raised March 1: payment must reach India by November 30 (9 months). If client delays: apply to RBI for extension. Funds beyond 9 months without RBI approval = FEMA violation. Currency conversion timing: Income recognized when received (not invoiced). Use RBI rate on date of receipt. If received in EEFC account: recognized when converted to INR. Keep EEFC account if you have USD expenses (cheaper than converting both ways). The new regime advantage for freelancers: Foreign income ₹30L → Sec 58, Income-tax Act 2025 (old Sec 44ADA): ₹15L taxable → new regime tax ≈ ₹2.1L. Old regime with Sec 123 (old Sec 80C): ₹13.5L taxable → tax ≈ ₹2.5L.
    Conclusion
    • Determine if profession is in Sec 58 (old Sec 44ADA) specified list (IT, consultant, designer, generally yes)
    • Open EEFC account at your bank for direct foreign currency receipt
    • File LUT (Letter of Undertaking) on GST portal before raising first foreign invoice
    • Raise invoice in USD to foreign client, zero GST charged
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  • LUT filing: how to export services with 0% GST
    Facts
    When you provide services to a foreign client and receive payment in foreign currency, it's an export of service. Zero GST applies, but only if you've filed a Letter of Undertaking (LUT) with the GST department.
    Provisions and law
    CGST Act, Sec 16(3)(a) | Rule 96A | LUT Form RFD-11
    Analysis
    Without LUT: You collect 18% GST on the invoice, deposit it, then claim a refund. Refunds take 30-90 days. Cash flow nightmare. With LUT: Issue invoice at 0% GST. Receive USD from client. Convert to INR. No GST to deposit, no refund to claim. Clean. Filing LUT: Annual. File on GST portal → Services → User Services → Furnish LUT. No fee. No stamp. Takes 5 minutes. Valid for the entire financial year. Conditions for export of service: Place of supply = outside India. Payment received in convertible foreign exchange. Customer is outside India.
    Conclusion
    • Login to GST portal → Services → User Services → Furnish LUT
    • Select FY for which LUT is being filed
    • Fill in details, submit with DSC or EVC
    • Download the LUT acknowledgement, keep for 7 years
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  • Invoicing foreign clients: Upwork, Fiverr, direct: FIRC and proof of export
    Facts
    When you receive money from a foreign client, you need proof that it was for export of service, not just a random foreign transfer (which could attract Sec 102, Income-tax Act 2025 (old Sec 68) scrutiny).
    Provisions and law
    FEMA 1999 | RBI ECB Guidelines | GST, export documentation
    Analysis
    FIRC (Foreign Inward Remittance Certificate): Your Indian bank issues this when foreign currency is credited. Contains: sender's name/country, amount, currency, purpose code. Get FIRC for every payment. Bank usually offers e-FIRC on request. Upwork/Fiverr: These platforms pay from their international entities. Get the payment breakdown showing client name, project, and amount. Platform 1099/earnings reports are useful. FIRC from your bank when money hits account. Documentation stack for every foreign payment: Invoice to client → platform earnings report → FIRC from bank → bank statement showing credit.
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  • Seeding a HUF: how to get money into it legally
    Facts
    The #1 question: how do you get money into the HUF? You cannot just transfer from your personal account, that income will be clubbed back to you under Sec 99, Income-tax Act 2025 (old Sec 64) and taxed in your hands anyway.
    Provisions and law
    Income Tax Act, Sec 92(2)(m) (old 56(2)(x)) | Clubbing provisions Sec 99 (old 64)
    Analysis
    Legal ways to seed a HUF: (1) Ancestral property received by inheritance goes into HUF automatically. (2) Gift from relatives outside the HUF (parents, in-laws). (3) Sale of HUF ancestral property, proceeds stay in HUF. (4) Business income earned by HUF as a business entity.
    Conclusion
    • Ancestral property, inherited from grandfather or further ancestors
    • Gift deed from relatives, parents, father-in-law, mother-in-law can gift to HUF
    • Blended funds, if HUF gets property, all sale proceeds and reinvestment stays HUF
    • NOT VALID: Personal savings transferred to HUF account (clubs back to you)
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