India taxes individuals based on a system of income slabs. Different tax rates are assigned to different ranges of income.&nbsp;

Understanding tax slabs is crucial for several reasons.

As a person earns more, the tax liability also increases, creating a fair and progressive tax system in the country. To achieve this, the government regularly updates and announces changes to tax slabs in the Union Budget.

The income tax slabs differ between the old and new tax regimes. Let's explore the specific slab rates applicable to Individuals for FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25).

Income Tax Slab Rates For FY 2023-24 (AY 2024-25)&nbsp;

Rates of the old tax regime slabs are categorized into three groups:

The new tax regime applies uniform tax rates to all individuals, eliminating the age-based distinctions in the old system. The new tax regime slabs 2023-24 are outlined below.

Applicability of Surcharge for FY 2023-24 (AY 2024-25)

The income tax <a href="https://incometaxindia.gov.in/charts%20%20tables/tax%20rates.htm">surcharge</a> is an extra fee imposed on top of the <a href="https://www.skydo.com/blog/how-to-file-taxes-under-44ada?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">regular income tax</a>. An additional tax is applied to individuals with higher income earnings in a specific financial year. Let’s look at the applicable surcharge rate under the Old and New tax regime.

However, 25% or 37% surcharge rates will not apply to income under the following sections.

Consequently, the highest surcharge rate on the tax payable for such incomes will be 15%.

Starting from the Assessment Year 2023-24, the maximum surcharge rate on tax payable for dividend income or capital gain specified in Section 112 will be capped at 15%.&nbsp;

A 4% Health and Education cess will be applied to all cases’ total income tax liability and surcharges.

Comparison of tax rates under the New tax regime and the Old tax regime for FY 2022-23 (AY 2023-24)

How do you calculate the income tax from the income tax slabs?

Let’s understand the calculation with an example.

Sanjana, aged 35, has a total taxable income of Rs. 8,50,000. She has opted for the old tax regime. Her income includes income from salary, interest and rental income. Deductions under section 80 have been reduced. Now, Sanjana wants to know her <a href="https://www.skydo.com/blog/gst-requirements-international-service-sales?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">tax liability</a> for FY 2022-23 (AY 2023-24).

*Sanjana, an individual taxpayer under the age of 60, enjoys an income exemption limit of up to Rs 2,50,000. Other taxpayers, i.e., senior and super senior citizens, have higher income tax exemption thresholds of Rs 3,00,000 and Rs 5,00,000, respectively.

Please be aware that the tax rates in the New Tax Regime are uniform for all categories of individuals, including regular individuals, senior citizens, and super senior citizens.&nbsp;

Individuals with a net taxable income of up to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability in both the New and Old tax regimes. It's important to note that in Budget 2023, the rebate under the new regime has been extended, making income up to Rs 7 lakh tax-free from the FY 2023-24 onward.

Let's delve into effective strategies to maximize your investments while minimizing the associated tax burdens.

ELSS mutual funds provide a dual benefit of potential capital appreciation and tax savings under Section 80C of the Income Tax Act. Investing in ELSS reduces taxable income and offers a path for long-term wealth growth.

2. Explore tax-efficient investment avenues

Health insurance qualifies for tax benefits under Section 80D. You can claim tax benefits on premiums paid - up to Rs 20,000 for senior citizens and Rs 15,000 for others. For example, if you pay Rs 15,000 for your policy and Rs 20,000 for your senior citizen parent, you can claim a total tax benefit of Rs 35,000.&nbsp;

Maturity value is tax-free for sums received under critical illness insurance policies.

This strategy entails selling loss-making assets to realize the capital loss and using it to offset the gains earned by profit-making assets.

For instance, if you have a loss of Rs. 20,000 in Stock A and a gain of Rs. 30,000 from Stock B, you can sell Stock A during a market downturn to offset the gains. This way, you can reduce your taxable income. The saved amount can be reinvested for portfolio growth.

Ensure that tax loss harvesting aligns with your overall financial goals and plan by considering a discussion with a financial professional or tax advisor.

<a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Consult financial professionals or tax advisors</a> for effective tax planning and strategic advice. Their expertise can provide tailored insights aligned with your financial goals and ensure a well-informed approach to optimize your tax situation.

If you need help deciding what is right for you, we will connect you with our panel of Indian and US-based CA / CPAs. Feel free to reach out to us.

Q1. How is a taxpayer's income categorized?

Ans: A taxpayer's income falls into five categories outlined in Section 14 of the Income Tax Act. These include Income from salary, Profits from a business or profession, Income from House Property, Capital Gains, and Income from Other Sources.

Q2. Is it possible to avail of 80C deductions while choosing the new tax slabs 2023-24?

Ans: No, under the new tax regime, several deductions and exemptions, including those under section 80C, are not permitted. Opting for the new tax regime means foregoing the ability to claim deductions under section 80C.

Q3. What do "Previous Year" and "Assessment Year" mean?

Ans: We have two important terms in income tax provisions: (i) Previous Year and (ii) Assessment Year. Previous Year is when you earn income, typically from April 1st to March 31st. The year right after the Previous Year, from April 1st to March 31st, is called the 'Assessment Year.'

For example, the Previous Year is from April 1, 2023, to March 31, 2024 (FY 2023-24). The corresponding Assessment Year is from April 1, 2024, to March 31, 2025 (AY 2024-25).

Q4. What is the tax exemption limit for calculating income tax rebate under section 87A?

Ans: For FY 2023-24 (AY 2024-25), the rebate limit has been increased to Rs. 7,00,000 under the new tax regime. This means a resident individual with taxable income up to Rs 7,00,000 will receive Rs 25,000 or the amount of tax payable (whichever is lower) as tax relief. However, the old tax regime's threshold limit will remain the same, i.e., Rs 12,500 if taxable income is up to Rs 5,00,000.

Q5. How much is the standard deduction for FY 2023-24?

Ans: You can claim a standard deduction of ₹50,000 to the income taxable under the head ‘Salaries.’ The standard deduction is a tax benefit that can be claimed irrespective of the amount spent on Transport or Medical Allowance. It applies to individuals earning a salary or pension income.

Prepare for the upcoming year's tax season by understanding the tax slabs for 2023-24 and optimizing your tax savings. 

Tax Slabs in 2023-24: Plan Ahead for Next Year Tax Savings

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Rohit Khuranna

Freelancers in India often wonder which bank account to use for their business income. Can you run your freelance gig on a regular savings account, or is a current (business) account better? T

His guide explains the key differences between savings and current accounts, and tells you when to use each. We’ll cover interest rates, transaction limits, overdraft facilities, and tax compliance issues (like FIRA and GST) to help Indian freelancers make the right choice.

Understanding Savings and Current Accounts

 Designed for individuals to save money. You can deposit funds and earn interest on your balance. In India, banks typically offer around 2–4% annual interest on savings accounts.&nbsp; 

Savings accounts usually have limits on free withdrawals and require a lower minimum balance (often ₹500–₹10,000). They are ideal for building an emergency fund or short-term goals, and come with basic facilities like ATM/debit cards and net banking.

Meant for business transactions. Current accounts do not earn interest on deposits, but they allow unlimited transactions and higher cash/deposit limits.&nbsp; They often require a higher minimum balance (₹10,000+). 

Current accounts provide business features like overdraft facilities (short-term credit) and multiple cheque books. They are tailored for professionals or businesses that handle frequent/large payments.

Key Differences at a Glance: Current Vs Savings Account

When to Use a Current Account (Why Freelancers Need One)

A current account is usually the safer, more flexible choice once your freelance business grows:

A savings account can be okay for very small-scale freelancers or those just starting:

However, remember, after your monthly business earnings exceed ₹2–3 lakh, a savings account is no longer suitable. Above that, the risk of account restrictions rises, and you lose out on business features.

Choosing the Right Account: Key Considerations

When picking an account, look beyond the basic category:

&nbsp;For most Indian freelancers, a current account is the better long-term choice once your earnings and transactions pick up. It handles high volume, provides professional tools (overdraft, cheques, FIRA/GST support), and separates business from personal funds. You might start with a savings account when your freelancing is very small-scale, but plan to switch or add a current account as soon as possible.

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India is seeing a massive surge in foreign remittances, from freelancers working with global clients to families receiving support from relatives abroad. But while sending money is easier than ever, receiving it efficiently, affordably, and compliantly still poses challenges for many.

In this guide, we break down everything you need to know to receive money from abroad in India, covering bank transfers, online platforms, virtual accounts, required documents, tax rules, and the smartest options for your needs.

What Are the Main Ways to Receive Money From Abroad in India?

Bank wire transfers via the <a href="https://www.skydo.com/blog/swift-money-transfer-ultimate-guide">SWIFT network</a> are one of the most common ways to receive international payments in India, especially for established businesses or high-value transactions.

A Bangalore-based IT services company receives $150,000 from a U.S. corporate client for a quarterly contract. The client uses SWIFT to transfer funds from Chase Bank to HDFC Bank.

<a href="https://www.skydo.com/blog/virtual-account-numbers">Virtual accounts</a> offer a modern, cost-effective way for Indian freelancers and businesses to receive international payments.&nbsp;Platforms like Skydo and Wise provide you with local receiving accounts in foreign countries, so clients can pay you like a local.

Steps to Receive via Virtual Account:

A freelancer in Pune provides design services to a client in New York. Instead of using SWIFT, the client pays via ACH using the freelancer’s virtual US bank account from Skydo. The money is converted and settled in INR within 24 hours, with no delays, no hidden forex fees.

<a href="https://www.skydo.com/blog/paypal-in-india-charges-review-alternatives">PayPal </a>and <a href="https://www.skydo.com/blog/stripe-india-charges-review-alternatives">Stripe</a> are two of the most popular global payment platforms for freelancers, agencies, and online businesses. They offer simple setups to receive payments from international clients, especially for small-ticket or card-based transactions.

These platforms act as intermediaries; your client pays using their preferred method (card, wallet, bank), and you withdraw the converted amount to your Indian savings account.

An Indian SaaS business uses Stripe to collect monthly subscriptions from global customers, offering seamless card payments and auto-billing. Meanwhile, a freelancer uses PayPal to invoice clients for one-off projects or small retainer work, offering a quick and familiar option for international clients to pay via card or wallet.

 Other Methods: Remittance Services &amp; UPI-Based Transfers

Apart from bank transfers, virtual accounts, and payment gateways, there are other ways Indian individuals receive money from abroad,&nbsp; such as cash remittance services (Western Union, MoneyGram) and UPI-linked international transfers.

These methods are typically more suited for personal remittances rather than business transactions.

Remittance Services (e.g., Western Union, MoneyGram)

&nbsp;UPI-Linked Transfers (via Tie-ups with NRIs or Global Apps)

A student receives ₹25,000 from their parents abroad via Western Union, or an NRI sends a small Diwali gift through a global app integrated with UPI. Quick, simple, but not appropriate for business invoices or export earnings.

When it comes to receiving international payments in India, the method you choose significantly impacts how much actually reaches your account. Below is a breakdown comparing traditional bank wire transfers, payment gateways (like PayPal, Stripe), and virtual accounts (like Skydo).

Typical Scenario: If you’re receiving $5,000, you might lose ₹5,000–₹10,000 in deductions before it hits your account.

Use Case: Good for small, frequent payments or client card payments, but costly for large transfers.

Best For: Exporters, agencies, and freelancers who want clarity, savings, and automated documentation.

 RBI Guidelines &amp; Tax: What You Need to Know

Whether you're a freelancer, a small business, or receiving money from friends or family abroad,&nbsp; it's important to stay <a href="https://www.skydo.com/blog/compliance-guideline-for-inward-remittance">compliant with RBI and Indian tax regulations</a>. Here's what you need to know:

All foreign inward remittances must comply with the Foreign Exchange Management Act (FEMA). The purpose of the transfer (gift, income, business payment, etc.) determines the applicable regulation and reporting requirement.

Virtual accounts (Skydo, Wise) offer ease, low fees, and instant FIRA.

Use virtual accounts for routine payments. For very large sums, occasional SWIFT transfers may still be necessary."

Payment gateways like PayPal or Stripe are convenient, but plan to avoid conversion markups by withdrawing via lower-cost alternatives or virtual accounts.

Tips to Avoid Overpaying While Receiving Money from Abroad

If you're tired of hidden bank charges, delayed settlements, and chasing compliance paperwork, Skydo offers a better way.
With RBI-approved virtual accounts, live forex rates (no markup), and instant, free FIRA for every transaction, Skydo makes receiving international payments faster, cheaper, and 100% compliant.

Whether you're a freelancer, an agency, or an exporter, Skydo helps you bring your payments home without the usual hassle.

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Receiving money from abroad in India

Do Indian freelancers and businesses need to pay GST on payments from abroad, or on converting USD to INR?
In most cases, export income is GST-free, but forex conversion charges and related services do attract 18% GST.

In this guide, we’ll break down how GST applies to international payments, currency exchange, and inward remittances, plus the documents you need, and how to stay compliant without overpaying.

GST on International Transactions: Overview

For Indian freelancers and businesses, payments from foreign clients are usually not subject to GST. That’s because most exports of services qualify as zero-rated supplies under GST. Zero-rated means you don’t charge GST to your overseas client, but you can still claim Input Tax Credit (ITC) on the GST paid for your business expenses, like software, equipment, or rent.

To qualify as an export of service, five conditions must be met:

Note that, this blog covers only cross-border service exports,&nbsp; not personal remittances or imports, which are treated differently under GST.

GST on Inward Remittances (Export Service Payments)

If you're an Indian freelancer or business receiving payments from foreign clients for services, you don’t charge GST on those invoices. These are considered zero-rated exports under GST as per <a href="https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/acts/2017_IGST_Act/active/chaptervii/section16_v1.00.html">Section 16 of IGST Act</a>,&nbsp; meaning no GST is applied, but you're still eligible to claim Input Tax Credit. For example, if you build websites and get paid $1,000 from a US client, you simply raise an invoice without GST.

To support this classification, you’ll need proof of foreign inward remittance, such as a <a href="https://www.skydo.com/blog/all-you-need-to-know-about-firc-a-complete-guide">FIRC (Foreign Inward Remittance Certificate)</a> or bank advice. These documents show that the payment was received in foreign currency and help validate your export status during audits.

If you're a registered business, it’s advisable to submit <a href="https://www.skydo.com/blog/all-you-need-to-know-about-lut-for-tech-service-export">a Letter of Undertaking (LUT)</a> to export without paying GST.
If you don’t furnish an LUT, you'll need to pay GST upfront on the export invoice and later claim a refund from the government.

Either way, keep proper documentation to support your zero-rated export claims and stay audit-ready.

GST on Foreign Currency Conversion (Forex Services)

Whenever you convert foreign currency to INR (or vice versa), banks and forex providers charge 18% GST,&nbsp;but only on the service fee charged by your bank or forex dealer. This fee is considered a “value of supply” and is taxed at 18% GST.

But here’s the part many people find confusing: the service value isn’t fixed; it’s calculated using a slab system set by the government.

So even though the GST rate is 18%, in most real-world cases, the effective tax comes out to a very small percentage of the converted amount. This helps ease the burden on exporters and freelancers converting foreign payments.

Also note: This GST only applies to retail customers. Inter-bank forex transactions (say, between banks or authorised dealers) are exempt.

How Much GST Does Skydo Charge on International Payments?

Skydo charges 18% GST on its flat service fee, not on the full amount of your international payment.

For example, if you receive $10,000, Skydo’s fee is $29. The applicable GST would be 18% of $29, which comes to around $5.22.

This makes the GST impact predictable and transparent; you’re only paying tax on the actual service, not on the full remittance amount.

GST on Compliance Services like FIRC &amp; BRC

When you receive foreign payments for services, your bank often issues two important documents:

Banks usually charge a small fee for issuing these certificates, and 18% GST is added to that fee, since it's treated as a domestic service.

In most cases, this GST is either built into the bank’s invoice or handled via the reverse charge mechanism, meaning the foreign payer (your client) is technically liable, but you don’t need to worry about collecting GST from them.

You just pay the fee to your bank, and the GST part is already taken care of.

✅ Bonus: Skydo provides FIRA instantly and for free with every payment, saving you both time and money on compliance.

Managing GST on Foreign Transactions: Best Practices

If you're receiving payments from abroad, a few GST best practices can help you stay compliant and avoid surprises:

For Indian freelancers and businesses, receiving payments from foreign clients is largely GST-free, thanks to zero-rated export rules. The only GST you usually pay is on forex conversion or compliance services like FIRC, and even then, it’s a small cost.

As long as you use authorised channels, maintain proper records, and stay updated on GST rules, you can manage your global payments confidently and compliantly.

Skydo helps simplify this even further, with live forex rates, clear service fees, and instant access to FIRA.

<a href="https://www.skydo.com/">Learn more</a> or sign up to streamline your international payments.

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Picture this: you're running a successful export business, orders are flowing in, and everything seems smooth until you realise your invoice management system is no longer compliant.&nbsp;

India's GST framework now mandates e-invoicing for businesses above certain turnover thresholds - and if your annual aggregate turnover exceeds ₹5 crore, you must generate e-invoices for all B2B transactions and exports. Not generating valid e-invoices can lead to non-compliance, penalties, and delayed input credits.&nbsp;

This guide explains how e-invoicing applies to exporters, outlines the necessary steps, and provides guidance on automating the entire process.&nbsp;

E-Invoicing involves uploading your invoice details to a government portal, which provides you with a unique ID number and a QR code to verify the authenticity of your invoice.

You create invoices the same way you always have, using your accounting software or billing system. The difference is that now you need to send the invoice data to the <a href="https://einvoice5.gst.gov.in/index">Invoice Registration Portal (IRP)</a> for verification.&nbsp;

Any GST-registered business with an annual turnover above ₹5 crore must generate e-invoices for B2B transactions. This includes all export transactions, whether you're selling goods or services to customers outside India.

All business-to-business invoices for both goods and services. If you're exporting anything from software to steel, from consulting services to consumer products, electronic invoicing applies.

The primary benefit is that your invoice information is automatically transmitted to the GST portal and e-way bill portal. This means that when you file your monthly GSTR-1 return, most details are filled in automatically, eliminating the need for manual data entry. It saves time once the process runs smoothly.

Does e-Invoicing Apply to Exporters? (2025 Thresholds)

The short answer is yes - most exporters doing decent business volume will need to comply with e-invoicing requirements.

You must generate e-invoices for exports if:

Remember that this threshold applies to your total business turnover, not just export sales. So even if your exports are small, if your domestic plus export sales together exceed ₹5 crore, e-invoicing becomes mandatory for all your B2B transactions, including exports.

What are the Consequences of Skipping e-Invoicing for Exporters?

Skipping e-invoicing creates real problems that can seriously impact your export business:

Getting your export e-invoice format right the first time saves you unnecessary amendment issues later. Here's what every export e-invoice needs to include:

💡Tip: Don't let missing shipping bill details delay your invoicing. You can generate the e-invoice first using the electronic invoice system and update shipping bill information later through the amendment process.&nbsp;

This keeps your cash flow moving while ensuring compliance. Just remember to update those details once you receive shipping documentation to maintain complete records.

Step-by-Step: How to Generate an e-Invoice for Exports

Getting your first export e-invoice up and running feels overwhelming, but it's actually a simple five-step process:

Step 1: Create the invoice in your billing software or ERP

Generate your export invoice as you normally would (make sure to add invoice number), ensuring that you mark the invoice type as "Export" and include all required details, such as foreign buyer information. Most modern accounting software has been updated to handle e-invoices and mandatory fields, but double-check that yours captures shipping bill numbers and export-specific data.

Step 2: Push it to the Invoice Registration Portal (IRP) via direct API integration or manually

Upload your invoice data to an authorized IRP. You can accomplish this through API integration, if your software supports it, or manually via the web portal. The system will validate your invoice details against the GST rate database and check for any errors in real-time.

Within seconds, the IRP sends back your unique Invoice Reference Number and QR code. Add these to your original invoice - this makes it a valid e-invoice under GST law.

Step 4: Share with the client and use for filing GSTR-1

Send the updated invoice with IRN and QR code to your customer. The invoice data automatically flows to your GSTR-1, so monthly filing becomes much easier with pre-populated export details.

Step 5: Use it while applying for export refunds or generating eBRC

When claiming GST refunds or obtaining your Electronic Bank Realization Certificate, please reference your IRN. Banks, tax experts, and authorities use this to verify legitimate export transactions quickly.

💡Pro tip: Ask your accountant or software vendor if your current system is IRP-compliant. Many businesses save time by using integrated e-invoicing platforms that automate steps 2 and 3.

Tools That Simplify e-Invoicing for Exporters

Managing e-invoicing manually gets difficult, especially when you're juggling multiple export orders. Here are a few bulk generation tools to help you out:&nbsp;

<a href="https://gstn.org.in/gsp-ecosystem">GST Suvidha Providers (GSPs)</a> with export invoicing modules

These government-approved providers offer specialized export features beyond basic e-invoicing. They understand export documentation requirements and often include features like automatic shipping bill integration and FEMA compliance checks.

Popular accounting software, such as Tally, Zoho, Busy, and Marg, has built-in e-invoicing capabilities. Once set up, they automatically push invoice data to IRP and retrieve the IRN and QR code without requiring any manual intervention. This works well if you're already using these systems for your accounting.

Custom-built tools for SaaS exporters and MSMEs

Many exporters, particularly in the services sector, require solutions that extend beyond traditional accounting software. These application service providers are specifically designed for digital businesses and address the unique challenges of service exports.

Platforms like Skydo that auto-generate compliant GST invoices

Some fintech platforms combine payment processing with invoicing compliance. Skydo, for instance, creates GST-compliant invoices automatically when you receive international payments, handles <a href="https://www.skydo.com/blog/automated-firc-simplifying-international-payments-compliance">FIRA</a> generation instantly, and provides real-time payment tracking. This approach works particularly well for freelancers and service exporters who want everything integrated - from invoicing to payment receipt to compliance documentation.

Export payments shouldn't be complicated. Skydo streamlines the entire process by automatically generating GST-rate-compliant e-invoices when you receive international payments. You get instant FIRA generation, zero FX margins, and real-time payment tracking - all in one platform.

Instead of juggling separate tools for invoicing, compliance, and payments, Skydo handles everything seamlessly. Perfect for service exporters, freelancers, and MSMEs who want to focus on growing their business rather than wrestling with paperwork. The platform integrates e-invoicing compliance with actual payment processing, allowing you to stay compliant while receiving payments faster and at a lower cost than traditional banking routes.

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TDS on foreign remittance keeps many Indian business owners awake at night.&nbsp; Questions like: Do I need to deduct TDS while paying a foreign vendor? Should I worry if my US client doesn’t deduct TDS while paying me? Keep circling in their head.&nbsp;

If that sounds relatable, this blog will be your single source of truth for all things TDS on foreign payments. We’ll provide detailed and jargon-free answers to tell you exactly when TDS applies, who needs to apply, and how to avoid costly mistakes.

TDS on Foreign Payments: What Does It Actually Mean?

TDS (Tax Deducted at Source) is a system used by the government to collect tax at the point where income is paid. Under Section 195 of the Indian Income Tax Act, if you’re an Indian resident or a non-resident making a payment to a foreign vendor or a Non-Resident, and if that income is taxable in India, you’re required to deduct the TDS before transferring the amount. There are a few exceptions to this rule, like the salary paid to a foreign individual.&nbsp;&nbsp;

But you have to deduct TDS when you pay an annual licensing fee to a software vendor based in the US. For example, your design team uses the Adobe Photoshop premium license to design various assets. Adobe Inc. is a USA-registered company, so TDS will apply to it. If the annual license costs $10,000, you must deduct 10%, i.e. $1,000 as TDS. The purpose of this system is to keep track of cross-border payments and prevent tax evasion.

But the real challenge for export-focused businesses and freelancers is knowing which payments actually require TDS. Do all outgoing payments attract TDS? The answer is no. It depends on multiple facets. Here’s a small table to show you when the TDS will be applicable:

If You’re Receiving Foreign Payments – Does TDS Apply?

TDS is not deducted on incoming payments. When you get paid by a foreign client, they may not deduct tax on the amount. Why?

1. Your income accrues in India:&nbsp;This means you are providing goods or services to foreign clients from India and earning money from it. Therefore, it will be treated as income earned and accrued in India

2. The Indian tax laws do not govern your foreign clients. They are not required to comply with Indian TDS provisions because they operate outside India’s tax jurisdiction.&nbsp;

3. As an Indian resident, you’re responsible for declaring your income and paying tax to the Indian government, not your client.

Keep your documents well-organised and thoroughly check them so that you receive the payment from your foreign client without hiccups. For example, always use the correct purpose code. You can always refer to a<a href="https://www.skydo.com/blog/rbi_purpose_code_for_inward_remittance"> Purpose Code finder</a> if you’re not sure which one applies to your business. Likewise, keep your invoices, GST details, and <a href="https://www.skydo.com/blog/automated-firc-simplifying-international-payments-compliance">Foreign Inward Remittance Advice (FIRA)</a> accessible.&nbsp;

We will cover these documents in more detail in the later part of the blog

TDS Rates on Foreign Payments (2025 Update)

The TDS rate depends on the nature of the payment and whether the Double Taxation Avoidance Agreement (DTAA) applies. We will get to the meaning of DTAA in a bit. 