How is freelance income from a US IT company reported?
How should US dollar income be converted into INR?
How is tax calculated?
- Calculate total gross receipts in INR.
- Compute taxable income under the presumptive scheme or normal provisions and add other income, if any.
- Check whether the old or new tax regime is more beneficial.
- Add 4% cess and applicable surcharge.
- Pay advance tax in instalments, wherever applicable.
Is TDS deducted in India or the US?
How do India-US DTAA and foreign tax credit apply?
Which ITR should freelancers file?
Which documents are required?
- Signed service agreement with the US company
- Invoices raised
- Bank statements showing credits
- FIRC for each remittance
- Form W-8BEN
- Form 1042-S
- Proof of business expenses claimed
What expenses can freelancers claim?
- Internet and mobile costs
- Software subscriptions
- Depreciation on laptop
- Professional/CA fees
- Bank charges and forex remittance charges
Does the nature of the US company affect taxation?
Is GST registration required?
Does it matter where the freelancer receives the money?
- Foreign bank accounts or platform balances held abroad must be disclosed in Schedule FA, even for small amounts and irrespective of the 44ADA option.
- Receipts through platforms such as Payoneer, Wise and PayPal may not automatically generate an FIRC-equivalent bank realisation certificate for EDPMS closure, so it may need to be actively requested.
Disclaimer: This is only for informational and educational purposes. Please consult a qualified expert for the latest laws and regulations.