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Mint
2 days ago
- Business
- Mint
Freelancing with foreign clients? Know Schedule FA and FIS compliance rules
Income earned by freelancers from foreign clients—whether through contracts, content creation, or platforms like YouTube and X (formerly Twitter)—is fully taxable in India. But the bigger concern is proper reporting in your Income Tax Return (ITR). Such income must be disclosed in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income). Failing to do so may trigger scrutiny under the Black Money Act. As you prepare to file your tax return for FY25, know the taxation rules on your foreign income earned as a freelancer to ensure correct reporting. Also read: Earning global income as a freelancer? Key income tax provisions you must know How is foreign income taxed? Foreign payments received for services—whether from a US company or a global platform—are treated as export of services and taxed as business income under "Profits and Gains from Business or Profession", taxed as per your slab. This applies to even payouts received from social media platforms like X as the money is paid by the company headquarters in the US. Similarly, for Youtube payouts, tax rules will depend on whether its Indian or foreign entity pays it, as per Akhil Chandna, partner, Grant Thornton Bharat. 'Income generated from platforms such as X or Youtube may be classified as either domestic or foreign income, depending on the origin of the payment. If the payment is made directly by a foreign entity, it is treated as foreign-sourced income. Conversely, if the payment is through an Indian entity, the income is treated as Indian-sourced." Experts differ on whether earnings from social media should be treated as business income or classified under Income from Other Sources (IFOS). Chandna says when someone is fully dedicated to content creation as their primary occupation, the earnings are treated as business income. 'On the other hand, if the income is incidental and not significant compared to other sources, it is categorised as 'Income from Other Sources" and taxed accordingly," he added. The second condition could apply to salaried individuals who have premium subscription and may be getting small payouts sporadically. Ashish Karundia, founder of CA firm Ashish Karundia & Co, says even one stray transaction may qualify as business. 'You are inviting the taxman to your door by not declaring it as business income. The argument that it is IFOS as such transactions are far and few, and may not find favour in the courts, given the way 'business' is interpreted over the periods," he said. So, what should you do? Ajay Rotti, founder and CEO, Tax Compaas says for smaller amounts upto ₹1-2 lakh in a year, even if someone reports the income as IFOS, the chances of the tax department disputing it are abysmal. 'As long as you pay tax on the income, the department will not question small amounts. Bigger amounts get attention as that is clearly business income," he said. Filing such income as business income has a benefit though, Rotti added. 'You can claim the monthly subscription fee and other associated expenses like the mobile data bill as business related expenses," he explained. However, even when declared as IFOS, you must declare it in schedule FA and FIS. Also read: How ultra HNIs can future-proof overseas education for their children What and how to report in ITR Foreign income is to be reported in two Schedules in the ITR— FA and FSI. Schedule FA is filled as per calendar year, whereas reporting of incomes in Schedule FSI is as per financial year. So, for the current assessment year filing, you will report incomes earned from 1 January 2024 to 31 December 2024 in Schedule FA, while Schedule FSI will have incomes for FY25, i.e, from 1 April 2024 to 31 March 2025. In Schedule FSI, you must report the details of income that you earn or receive from any source outside India. Make sure you also include this income separately under the appropriate head–business or IFOS–in your total income computation. Additionally, mention the relevant head of income under which you have reported this foreign source income in the corresponding column. In Schedule FA, these disclosures must be made under Table G, said Karundia. Columns 7 to 9 should be filled carefully, including the amount and the relevant Schedule where it is reported. The reported amount must be converted into INR using the telegraphic transfer buying rate of the State Bank of India. Next, if tax was withheld on the income in the origin country, taxpayers can claim tax relief on it by filing Schedule TR (Tax Relief). To avoid paying double tax, one can get Input Tax Credit, for which Schedule TR must be filed. In Schedule TR, you need to give a summary of the detailed information already furnished in Schedule FSI. Also, to claim FTC you must also submit Form 67 along with the ITR, said Chandna. Payments via PayPal or Stripe? When you receive foreign income in your Indian bank account, you must get an FIRC or Foreign Inward Remittance Certificate from your bank to confirm receipt of money. While the certificate is not to be furnished in ITR or elsewhere, FIRC supports the source and nature of foreign income and hence is a useful proof in case of scrutiny or for GST refund purposes. However, many international companies pay via wallets like PayPal and Stripe, where the money is deposited into the bank account in INR, rather than the foreign currency. In this case, the bank may not issue an FIRC. You can get an MT103 message from the remitting bank and an inward remittance certificate from the recipient bank, said Karundia. Chandna said these platforms have streamlined the process, by providing system-generated Foreign Inward Remittance Advice (FIRA), which suffices in most cases. Alternatively, you can get an MT103 issued from the intermediary bank in India, said Karundia. 'In transfers through platforms like PayPal or Stripe, a bank in India, the intermediary bank, may have an arrangement with a bank in the remitter country. This remitting bank generally issues the MT103 certificate." Also read: The confirmation bias: Why investors see what they want to see, and often get it wrong GST compliance If your annual freelance income exceeds ₹20 lakh, GST registration is mandatory. Since services to foreign clients qualify as zero-rated exports, you don't charge GST but must comply by registering. Karundia explained that you have two options–file a Letter of Undertaking or LUT to raise an invoice without GST, or raise the invoice with tax and don't file LUT. 'In the second option, you pay the GST using your own input tax credit or cash and then claim a refund." The LUT route is easier as it doesn't involve claiming a refund. It should be noted that LUT should be filed at the start of the year before the services are exported to a foreign client and not retrospectively. 'It's an easy online process done on the GST portal," said Karundia.
News18
12-07-2025
- Business
- News18
'Pulp Fiction? Not Quite': How Indian Oranges Are Powering A French Medicine To Treat Varicose Veins
'We are proud that the oranges grown in Indian soil are now an integral part of a medicine used by millions across the world," Aurelien Breton, managing director, Servier India, told News18. 'We procure oranges from Maharashtra, Telangana, Andhra Pradesh, MP, and Rajasthan currently." According to IQVIA data, Daflon's 500mg and 1000mg stand at a value of Rs 61 crore as per moving annual turnover, May 2025, ranking 2nd in the varicose therapy market. The average number of patients treated in a month is 1.2 lakhs. The citrus supply chain The Indian-sourced oranges are first processed locally—cleaned, dried, and converted into powder form. This citrus powder is then exported to Servier's manufacturing headquarters in France, where it undergoes sophisticated processing to extract the active pharmaceutical ingredients (APIs). Interestingly, those APIs are then re-imported back to India, where the final formulation of Daflon is completed for domestic distribution. This circular, transcontinental journey of a single orange—from a farm in Nagpur to a lab in northern France and back to a pharmacy shelf in Delhi—highlights the globalisation of pharmaceutical supply chains and India's growing importance as a trusted sourcing and manufacturing hub. The move wasn't just about logistics or cost-efficiency. According to Breton, Indian oranges matched the quality standards required for flavonoid extraction. 'We achieved 100% reliance on local Indian oranges through our Indian supply chain with effect from the financial year 2021." Indian oranges matched the former Spanish and Mexican counterparts. '2000 metric tons of small oranges were procured in the financial year 2023-24. We work with aggregators and farmers in multiple states in India," said Breton. Company set to bring precision cancer medicine Servier Pharma is set to bring precision cancer treatments to India. 'Unlike traditional chemotherapy, these therapies act on specific genetic mutations that are responsible for causing the cancer," Breton said. Out of three novel drugs coming into the Indian market, the first drug, Ivosidenib, targets a mutated protein known as isocitrate dehydrogenase 1 (IDH1), which is found in a subset of patients with cholangiocarcinoma (a type of biliary tract cancer) and acute myeloid leukemia (a form of blood cancer). 'Epidemiological data show a high prevalence of biliary tract cancers along the Ganga River basin, supporting the need for this targeted option, which can significantly delay disease progression. In clinical trials, Ivosidenib has demonstrated more than a threefold improvement in survival for AML (blood cancer) patients." The drug was officially launched in India in June 2025.
Mint
23-06-2025
- Business
- Mint
How to track your days in India—and why it matters more than ever for your tax status
Renowned entrepreneur M. Mahadevan, popularly known as 'Hot Breads Mahadevan' for his international bakery and restaurant chain, has run into tax trouble back home. A recent Income Tax Appellate Tribunal (ITAT) ruling declared Mahadevan a tax resident of India for financial years 2012-13, 2013-14, and 2018-19, thereby making his global income taxable in India—despite his claim of being a non-resident. Mahadevan, who operates restaurants and bakeries both in India and abroad, declared himself a non-resident in his income tax filings for the aforementioned years. He based this status on his interpretation of passport stamps, asserting that he had stayed less than 182 days in India in each relevant year. As a non-resident, he only paid tax on Indian-sourced income, leaving his overseas earnings out of the tax net. Also read: NRI taxation: How to claim special tax concessions However, a detailed review by the tax department—using passport records, visa copies, and data from the Foreigner Regional Registration Office (FRRO)—suggested otherwise. The officer concluded that Mahadevan exceeded the 182-day threshold in FY13 and FY14, and also met the 60-day-plus-365-days condition for FY19, thereby qualifying him as a tax resident under India's Income-tax Act, 1961 (ITA). Importantly, Mahadevan's travel was under 'social' or 'visitor' visa categories, not business or employment—further undermining his claim of leaving India for professional reasons. Mahadevan challenged the tax officer's ruling at the first appellate level, where he found relief. The appellate authority ruled in his favour, interpreting his overseas trips as business-related despite the visa types. It accepted his stay in India to be under the threshold and upheld his non-resident status, exempting his foreign income from taxation. On further appeal, the ITAT clubbed the cases and overturned the appellate ruling. It agreed with the tax department, affirming that Mahadevan was a resident for those years and his foreign income was liable to Indian tax. Still, the Tribunal offered some relief: if Mahadevan could furnish proof of foreign taxes paid, foreign tax credit would be allowed. Why the tribunal ruled against Mahadevan FRRO data as credible proof: The Tribunal trusted FRRO records as reliable government data for determining days of stay. Visa purpose matters: Frequent travel abroad did not equate to business if the visa stated otherwise. Since Mahadevan's visas were for social visits, he could not claim the 182-day exception allowed for business departures. UAE Tax Residency Certificate (TRC): Mahadevan produced a UAE TRC issued in 2021 for earlier years. The Tribunal held that under the India-UAE tax treaty, treaty benefits cannot apply if a person qualifies as a tax resident of India under domestic law. Also read: Decoding dual taxation: What NRIs need to know for better tax efficiency Key lessons for global Indians Residential status is pivotal in determining tax liability and must be backed by appropriate records. Count days with care An individual's residential status determines their tax liability in India and is primarily based on days spent in the country. While passport stamps are usually relied on, it's advisable to cross-check stay records with FRRO data to avoid mismatches that may affect tax residency. Involuntary stays (e.g., passport seizures) are excluded. For land entries from Nepal or Bhutan, where passports/visas aren't required, documents like hotel receipts can help establish duration of stay. Who is a resident? A person is considered a resident in India if they: The 60-day threshold is relaxed to 120 or 182 days for: Visa type matters Residency status can also depend on the visa category used for travel. A person leaving India for work should not use tourist or social visas, as these may not support claims of business-related travel abroad under tax laws. Dual residency & tie-breaker If you're classified as a resident in both India and another country, tax treaties apply a tie-breaker test. This considers: This helps decide which country can tax your global income. Also read: Golden tax window for NRIs: What RNOR means and how to use itAshish Karundia, founder, Ashish Karundia & Co., Chartered Accountants
