TDS on freelance income is deducted by your Indian business client — 10% under Section 194J if you provide professional or technical services (design, consulting, writing, IT, legal, medical), or 1% (individual/HUF) / 2% (others) under Section 194C for a pure work contract. From FY 2025-26 the 194J threshold is ₹50,000 a year (up from ₹30,000). Foreign clients (Upwork, Fiverr, Google AdSense) deduct no Indian TDS — you get the full amount and pay advance tax yourself. TDS is only an advance — you claim it back in your ITR.
TDS Sections for Freelancers — Rates & Thresholds
Which section applies to your freelance income, the rate and the FY 2025-26 threshold. Most freelancers (consultants, designers, developers, writers) fall under Section 194J. See the full TDS rate chart 2025-26.
| Income type | Section | Rate | Threshold (FY) |
|---|---|---|---|
| Professional fees — consultant, designer, writer, CA, doctor, lawyer | 194J | 10% | ₹50,000 |
| Technical services — IT, engineering, software support | 194J | 2% | ₹50,000 |
| Royalty / IP licensing — authors, musicians, developers | 194J | 10% | ₹50,000 |
| Contract work — individual / HUF freelancer | 194C | 1% | ₹30,000 / ₹1,00,000 |
| Contract work — firm / company freelancer | 194C | 2% | ₹30,000 / ₹1,00,000 |
| Freelancer without PAN (s.206AA) | any | 20% | — |
| Foreign client (Upwork / Fiverr / AdSense) | — | Nil | No Indian TDS |
194J FY threshold was raised from ₹30,000 to ₹50,000 w.e.f. 1 April 2025 (Budget 2025). 194C thresholds — ₹30,000 single / ₹1,00,000 aggregate a year — are unchanged. No surcharge or cess on TDS for resident freelancers.
The 10% (or 1%/2%) a client deducts is only advance tax collected in your name. Your real liability follows your slab after Section 44ADA/expenses. If TDS is more than your tax, the excess is refunded when you file your ITR; if a foreign client deducted nothing, you must pay advance tax yourself to avoid interest under Sections 234B/234C.
Section 194J vs 194C for Freelancers
Most freelance work is a professional or technical service under Section 194J at 10%. A pure work contract — e.g. a fixed-scope production job — can fall under Section 194C at 1%/2%. The classification depends on the nature of the engagement, not the label on the invoice; clients often default to 194J for safety.
Section 194C — work contract
- Fixed-scope "work": production, editing, event, fabrication
- 1% if you are an individual / HUF, 2% for firm / company
- Threshold ₹30,000 single or ₹1,00,000 aggregate in the FY
- Lower rate, but only when it is genuinely a contract, not a profession
Section 194J — professional / technical
- Consulting, design, writing, legal, medical, IT, engineering
- 10% professional fees · 2% pure technical services
- Threshold ₹50,000 in the FY (from FY 2025-26)
- Covers most freelancers, consultants and content creators
194J Designer — ₹1,00,000 invoice
194C Individual — ₹1,00,000 contract
If you do not give the client a valid PAN, TDS jumps to 20% under Section 206AA regardless of section — ₹20,000 held back on a ₹1,00,000 bill. Always share your PAN. The old higher-rate rule for non-filers (Section 206AB) was omitted with effect from 1 April 2025, so a missing PAN is now the only trigger for the 20% rate.
Unsure whether a client should deduct under 194J or 194C? Get your position reviewed.
Talk to a TDS Expert →Which Clients Must Deduct TDS on Your Fees?
Not every client deducts. Whether TDS is cut on your invoice depends on who the payer is — a company always deducts, a small individual usually does not.
| Client type | Deduct TDS? | When |
|---|---|---|
| Company / LLP / firm | Yes | Always, once you cross the threshold — no turnover test |
| Individual / HUF in business | Yes* | Only if they were under tax audit (s.44AB) in the preceding year |
| Small individual / personal payer | No | No audit last year, or paying for personal use |
| Foreign client / platform | No | Outside Indian TDS — you self-pay advance tax |
* Tax-audit trigger: business turnover above the s.44AB limit or professional receipts above ₹50 lakh in the immediately preceding year.
A client failing to deduct does not reduce your tax — you still owe tax on the full income. The disallowance under Section 40(a)(ia) is the client's problem, not yours. So even where no TDS is cut, report every rupee and pay advance tax; the department matches your ITR against the client's 26Q and your AIS.
Client cutting TDS but you're in the nil-tax bracket? File Form 15G to stop it.
Form 15G Guide →Foreign Clients — No Indian TDS, but Still Taxable
Payments from Upwork, Fiverr, Toptal, PayPal, Payoneer, a US startup or a UK agency carry no Indian TDS — the payer is outside India and has no deduction obligation. You receive the full amount in foreign currency. But the income is fully taxable in India as business/professional income, so:
- Report it in your ITR under Income from Business or Profession — and in your foreign-income schedule where applicable.
- Pay advance tax in four instalments if your yearly tax exceeds ₹10,000 (no client TDS to cover it).
- Consider presumptive taxation under Section 44ADA — declare 50% of gross receipts as income if professional receipts are up to ₹75 lakh.
- Google/foreign payers may withhold US/foreign tax; claim relief under the relevant DTAA, not as Indian TDS.
- GST applies once your turnover crosses ₹20 lakh; exports of service are zero-rated (file an LUT to bill without IGST).
How to Claim Your Freelance TDS in the ITR
- Give the client a valid PAN
- Check TDS shows in Form 26AS & AIS
- Collect Form 16A from the client
- Report gross receipts (not net) in ITR-3 / ITR-4
- Enter TDS in Schedule TDS2
- Consider 44ADA presumptive income
- File Form 15G if your tax is nil
- Pay advance tax on foreign-client income
A frequent freelancer error is declaring only the amount received after TDS. You must report the gross fee as income and separately claim the TDS as credit — otherwise the AIS mismatch flags your return. The TDS in your 26AS is your money back, not a cost.
Freelance TDS across many clients and a foreign platform? Let us file it right.
File Your ITR →TDS on Freelance Income — Frequently Asked Questions
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