Getting your first international order on Fiverr or Upwork is exciting. Then the questions start: Do I need GST? Do I pay tax on dollars? What is an LUT? Which purpose code should my bank use?
This guide explains the main rules for Indian freelancers in plain language. It is general information, not tax advice. Rules and thresholds change, so confirm your situation with a chartered accountant (CA) before filing.
Quick summary
| Topic | What it means for you |
|---|---|
| GST registration | Mandatory above ₹20 lakh aggregate turnover a year (₹10 lakh in special category states) |
| GST on foreign clients | Treated as export of services: zero-rated (0%) when conditions are met |
| LUT | File a Letter of Undertaking each year to export without paying IGST upfront |
| Proof of payment | Keep FIRC or e-FIRA for every foreign payment |
| Income tax | Taxed as business or profession income; Section 44ADA presumptive scheme may apply |
Do Indian freelancers need GST registration?
You must register for GST once your aggregate annual turnover exceeds ₹20 lakh (₹10 lakh in special category states). Aggregate turnover includes all your income from services, including domestic clients and export income.
Below the threshold, registration is optional. Some freelancers register voluntarily because certain clients or platforms ask for a GSTIN, or to claim input tax credit on business expenses.
Export of services: why foreign income can be 0% GST
When you serve a client located outside India and receive payment in convertible foreign exchange (or as permitted by RBI), the service generally qualifies as an export of services, which is zero-rated under GST. You charge 0% GST and can still claim input tax credit.
To export without paying tax first, registered freelancers file a Letter of Undertaking (LUT) on the GST portal using Form GST RFD-11, once per financial year. Without an LUT, you would have to pay IGST and then claim a refund.
FIRC, e-FIRA and purpose codes
Every foreign payment you receive is an inward remittance under FEMA. Keep proof:
- FIRC (Foreign Inward Remittance Certificate) from your bank, or
- e-FIRA, an electronic advice issued by RBI-authorised platforms.
Keep these records for at least five years. They prove your income is export income for GST and income tax.
Your bank or payment platform also tags each receipt with an RBI purpose code. Common ones for freelancers include:
- P0802: software, web and app development, IT services
- P0806: design, content writing and creative services
- P1006: business consulting and virtual assistance
- P1007: digital marketing, SEO and advertising
Using the correct code matters for compliance. Confirm with your bank if unsure.
Note: RBI updated export realisation and reporting rules for service exporters from October 2026. Ask your bank or CA how the new timelines and declaration requirements apply to you.
Income tax for freelancers
Freelance income is taxed as income from business or profession, not as income from other sources. You have two main options:
Option 1: Presumptive taxation under Section 44ADA
- Available to eligible professionals with gross receipts up to ₹50 lakh, or up to ₹75 lakh if at least 95% of receipts come through banking channels.
- 50% of gross receipts is treated as profit; you pay tax on that amount at slab rates.
- No need to maintain detailed books of accounts. You typically file ITR-4.
Whether your specific work, such as design, writing or development, qualifies as a specified profession under 44ADA is something to confirm with a CA.
Option 2: Regular books of accounts
Declare actual income minus genuine business expenses (laptop, internet, software subscriptions, co-working, platform fees) and file ITR-3. This can be better if your real expenses exceed 50% of receipts.
Advance tax
If your tax liability for the year exceeds ₹10,000, pay advance tax in instalments due on 15 June, 15 September, 15 December and 15 March. Missing them attracts interest under Sections 234B and 234C.
Platform fees and withdrawals
- Fiverr charges sellers a 20% commission, and earnings clear after a waiting period (14 days for most sellers, 7 days for top-rated levels).
- Upwork holds funds in escrow and releases them on its billing cycle, with service fees deducted.
- Withdrawal costs vary widely between direct bank transfer, wire and third-party wallets. Compare the exchange rate, not just the fee.
A simple compliance checklist
- Open a separate bank account for freelance income.
- Save every FIRC or e-FIRA and platform statement monthly.
- Track total turnover and register for GST before you cross the threshold.
- If registered, file your LUT at the start of each financial year.
- Estimate tax quarterly and pay advance tax on time.
- Meet a CA before filing your first return as a freelancer.
Frequently asked questions
Is Fiverr income taxable in India?
Yes. Indian residents are taxed on worldwide income, including earnings from Fiverr and Upwork.
Do I charge GST to foreign clients?
Usually no. Qualifying exports of services are zero-rated, and with an LUT you invoice at 0% GST.
I earn ₹5 lakh a year. Do I need GST?
Generally not, since you are below the ₹20 lakh threshold, unless another rule requires registration for your situation.
Sources
- Razorpay Blog, Upwork and Fiverr Payment Guide for Indian Freelancers (September 2026): GST threshold, LUT, FIRC/e-FIRA, purpose codes, 44ADA limits, advance tax dates and platform details.
- Goods and Services Tax Network, GST Portal: official registration and LUT filing.
- Income Tax Department, e-Filing Portal: official ITR forms and advance tax information.
Disclaimer: CyberExcuse is not a tax advisor. This article is for general information; consult a qualified chartered accountant for advice on your situation.
More freelancing guides in Freelancer Growth.