US Freelance Income? 5 Tax Rules You Must Know

Indian freelancers earning in dollars from US clients must follow special rules for GST, TDS, ITR filing, and foreign income reporting. Get these wrong and you could face tax notices, penalties, or lose valid deductions worth lakhs.

Here's what happened: Indian freelancers earning from US IT companies must report dollar income converted to rupees using SBI TT buying rates on the date of receipt, not the bank transfer rate.. Services exported to foreign clients attract 0% GST (zero-rated export), but freelancers must collect a Foreign Inward Remittance Certificate (FIRC) as proof to claim this benefit.. The India-US Double Taxation Avoidance Agreement (DTAA) prevents being taxed twice, but Form 67 must be filed on the Income Tax portal before the ITR submission deadline to claim the credit..

What you should do: Check your ITR form — if you filed ITR-1 with any foreign income, file a revised return using ITR-2 or ITR-3 and fill Schedule FSI before the deadline to avoid a defective return notice.. Collect a FIRC or bank certificate for every dollar payment received, and confirm with your CA that your invoices are marked as 'export of services' to legally charge 0% GST.. File Form 67 on the Income Tax e-filing portal before submitting your ITR to claim credit for any tax already deducted abroad — missing this step permanently forfeits the DTAA benefit..

Under Section 44ADA, freelancers with gross receipts up to ₹75 lakh can declare 50% as profit without maintaining detailed books — ideal if your actual expenses are less than 50% of income.