Receiving Foreign Client Payments in India: A Checklist

If a client or employer abroad pays you for work you do in India, the money should reach your Indian bank account through normal banking channels, described honestly as payment for services, with a paper trail you keep for every payment. Whether you also need GST registration and a Letter of Undertaking depends on your turnover and whether you are registered, and the income is taxable in India if you are resident. This checklist walks through each step, with every rule labelled by country and the date we checked it.

Our guide to working remotely for foreign companies explains contractor and employee arrangements and the main ways money crosses the border. This one is narrower and more hands-on: what to set up with your bank, which documents to keep for each payment, and the GST and income questions you need to settle.

When does a foreign payment count as an export of services?

India's GST law treats your work as an export of services only when several conditions hold together. The definition in the Integrated Goods and Services Tax (IGST) Act starts with these: you, the supplier, are located in India; your client is located outside India; the place of supply is outside India; and you are paid in convertible foreign exchange. One more condition rules out supplies between establishments of the same person (India, IGST Act section 2(6), checked 2026-11-01).

The place of supply can be less obvious for some work, such as acting as an agent or middleman between two businesses; ask your chartered accountant about that. The payment condition is the one you control day to day: ask the client to pay in a foreign currency into your Indian bank account, never in rupees through an informal route or someone else's account.

Setting up your bank to receive payments from abroad

Foreign currency payments come to you through an Authorised Dealer Category-I bank, which the Reserve Bank of India (RBI) describes as a bank authorised to deal in foreign exchange. Many banks hold this status, but confirm it with your bank for the exact account you plan to use.

The RBI's Master Direction on Export of Goods and Services (updated as on 17 July 2026) puts the responsibility on you as the exporter to realise and bring the full value of your services into India. As checked on 1 November 2026, the period allowed is nine months from the date of export (India, RBI). The direction's own footnotes show this wording was changed by notifications in November 2025 and again in June 2026, so check the current text if a client is paying late.

Before the first payment arrives, ask your bank these questions and keep the answers in writing:

• Can this account receive foreign inward remittances, and in which currencies?
• What exact details should the client use: account name, account number, the bank's SWIFT/BIC code and any intermediary bank?
• What charges do you deduct on an inward payment, and how is the exchange rate set?
• How will you ask me to state the purpose of each payment?
• Where do I download the inward remittance advice or certificate, and how soon after the credit?

Stating the purpose of the payment

Your bank will usually ask you to state the purpose of each inward payment, often by choosing a purpose code. Pick the description that matches the service you actually delivered, such as software, consulting or design work, and use the same one each time for the same kind of work. Never accept a client's suggestion to describe payment for work as a gift or family support.

Which documents show the money was export income?

For each payment your bank can issue an inward remittance advice or certificate, often called a FIRC or e-FIRC (Foreign Inward Remittance Certificate). The RBI's export rules refer to it directly: banks report the electronic FIRC to the RBI's Export Data Processing and Monitoring System (EDPMS) wherever one is issued against an inward remittance. Where a bank issues an Electronic Bank Realisation Certificate (eBRC), it has to generate it only from EDPMS data (India, RBI Master Direction, checked 2026-11-01).

Download the certificate as soon as the payment is credited and check it against your invoice. Mistakes are easier to fix in the same week than at year end. Check each certificate for:

• your name and account exactly as the bank holds them;
• the client's name as the sender, matching the name on your invoice and contract;
• the foreign currency amount, the rupee amount credited and the exchange rate used;
• the purpose description you chose;
• the date of credit, which you need for your own records.

Should you keep earnings in foreign currency? EEFC accounts

An Exchange Earners' Foreign Currency (EEFC) account lets a resident hold foreign exchange earnings in that currency instead of converting every payment to rupees. The RBI's FAQ says individuals resident in India may open one, and lists professional earnings such as consultancy fees, received for services rendered in an individual capacity, among the permitted credits.

Points to know from the RBI's current Master Direction and FAQ (India, checked 2026-11-01):

• It can be held only as a current account, and no interest is paid on it.
• You can credit all of your foreign exchange earnings to it, but the total credited in a calendar month has to be converted into rupees by the last day of the following month, after adjusting for approved uses.
• The RBI describes the scheme as a way to save on conversion and transaction costs, not a way to hold assets in foreign currency.
• Withdrawals in rupees are allowed, but money withdrawn in rupees cannot be converted back and re-credited.

An EEFC account mainly helps if you regularly pay for things outside India in the same currency, for example overseas software subscriptions or a conference registration, because payments abroad for permitted current transactions can be made from it. If every payment ends up in rupees within days anyway, an ordinary account that accepts foreign inward remittances may be simpler. Ask your bank what it charges to maintain one before you open it.

Do you need GST registration and a Letter of Undertaking?

Start with registration, because a Letter of Undertaking (LUT) only matters if you are registered for GST. Under section 22 of the Central GST Act, a supplier has to register in the State from which it makes taxable supplies once its aggregate turnover in a financial year exceeds ₹20 lakh (₹2 million), or ₹10 lakh in the special category States (India, checked 2026-11-01). Aggregate turnover is defined to include exports of services, so your foreign invoices count towards that limit.

If your turnover is below the limit and every client is abroad, whether to register anyway is worth discussing with a chartered accountant, since registration brings regular returns to file.

Once you are registered, exports of services are zero-rated. The IGST Act gives a registered exporter two routes: supply under a bond or LUT without paying integrated tax and claim a refund of unused input tax credit, or pay integrated tax on the export and claim that tax back as a refund (India, IGST Act section 16, checked 2026-11-01).

Filing the LUT on the GST portal

• Who files: a registered person who chooses to export without paying integrated tax, before making those supplies. The portal's own example is providing services to a client outside India without paying IGST.
• Where: Form GST RFD-11, filed online on the GST portal after you log in.
• What you enter: the financial year it covers, and the name, address and occupation of two independent witnesses.
• Approval: the status becomes Deemed Approved if the tax official takes no action within 3 working days.
• Renewal: the LUT expires at the end of the financial year, so you file a fresh one for each year.

Is income from foreign clients taxable in India?

Yes, if you are resident. The Income Tax Department puts it plainly: a resident person is chargeable to tax on global income. Being paid in dollars, pounds or euros, or through an account abroad first, does not change that (India, checked 2026-11-01).

For an individual, section 6 of the Income-tax Act, 2025 sets the basic residence tests: being in India for 182 days or more in the tax year, or for 60 days or more in that year together with 365 days or more over the four preceding years. There are exceptions, for example for Indian citizens who leave India for employment abroad, so read the section or ask a professional if you travel a lot.

Advance tax instalments and the presumptive scheme for some professions are covered in our guide to working for foreign companies, and a chartered accountant can tell you which applies to your work.

A record-keeping routine for every payment

1. Before work starts, agree in writing the scope, rate, currency, invoice dates and who pays transfer charges.
2. Raise a numbered invoice in the agreed currency with your name, address and PAN, plus your GSTIN and LUT reference if you are registered.
3. When the money arrives, download the remittance certificate the same day and file it with the invoice and the contract.
4. Note the rupee amount actually credited and move a fixed share into a separate account for tax.
5. If you hold an EEFC account, check at each month end what still has to be converted by the end of the next month.
6. Once a year, renew your LUT if you are registered and share the full set of invoices and certificates with your chartered accountant.

Some payment requests are warning signs in themselves: a client who wants to pay you through a stranger's account or asks you to forward part of a payment to someone else, a payment far larger than your invoice followed by a request to send back the difference, and money offered for work you never did. Decline them, tell your bank, and use the national cybercrime portal; our scam guide covers the wider warning signs.

Before your first foreign invoice goes out

1. Confirm with your bank that your account can receive foreign currency payments, and get the exact details to send the client.
2. Decide whether an EEFC account suits you or whether an ordinary account is enough.
3. Work out your turnover for this financial year against the GST registration limit, and if you are registered, file or renew your LUT before you invoice.
4. Set up one folder per client for the contract, invoices and remittance certificates.
5. Book a meeting with a chartered accountant early in your first year as a contractor, not when your return is due.