Key takeaways
- Foreign clients without an Indian presence generally have no Indian tax to withhold.
- Indian freelancers' services to foreign clients are zero-rated exports for GST with an LUT.
- Specified professionals can use presumptive tax under section 58 (50% of receipts).
If you’re the foreign client
- Generally no Indian tax to withhold when a foreign company with no Indian presence pays an Indian resident freelancer.
- Pay through banking channels so the freelancer receives a foreign-inward-remittance advice (e-FIRA) — their proof of export.
- Keep it a genuine contractor relationship. Full-time, directed “freelancers” can create employment and permanent-establishment risk.
- Collect your own country’s forms (e.g. W-8BEN in the US) as your home rules require.
If you’re the Indian freelancer
- GST: services to a foreign client paid in foreign currency are an export — zero-rated. Register once turnover crosses ₹20 lakh, file a Letter of Undertaking (LUT) each year and invoice without IGST. See GST on export of services.
- Income tax: specified professionals (engineering, technical consultancy, accountancy, legal, architecture, interior decoration and notified professions) can use the presumptive scheme under section 58 of the Income-tax Act, 2025 — 50% of receipts taxed, up to ₹75 lakh where cash receipts are 5% or less. Others are taxed on actual profit.
- Advance tax applies — see the advance tax guide.
Sources
Frequently asked questions
Does a foreign company have to deduct tax when paying an Indian freelancer?
Generally no, where the foreign company has no presence in India. It should pay through banking channels so the freelancer gets an e-FIRA as proof of the export.
Do Indian freelancers charge GST to foreign clients?
No GST is charged when the service qualifies as an export — foreign client, payment in foreign currency. Registered freelancers file an LUT and invoice at zero rate.
Can Indian freelancers use presumptive taxation?
Specified professionals can, under section 58 of the Income-tax Act, 2025: 50% of receipts is treated as income, up to ₹75 lakh of receipts where cash receipts are 5% or less.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.