TDS on Freelance Income — 194J, 194C & Foreign Clients

From 1 April 2025 (FY 2025-26) the Section 194J threshold is ₹50,000 in a financial year, up from ₹30,000. A client need not deduct TDS on professional or technical fees until aggregate payments to you in the year cross ₹50,000; once they do, TDS at 10% (or 2% for technical services) applies. The ₹50,000 limit is applied per category — professional fees, technical fees and royalty are counted separately.

It depends on the nature of the work. Professional or technical services — consulting, design, writing, IT, legal, medical, engineering — fall under Section 194J at 10% (2% for pure technical services). A fixed-scope work contract can fall under Section 194C at 1%/2%. Most freelancers are treated as professionals under 194J, and clients often default to 194J to be safe. The label on your invoice does not decide it — the substance of the engagement does.

If you do not furnish a valid PAN, the client must deduct TDS at 20% under Section 206AA — far higher than the normal 10% or 1%/2%. Always share your PAN. The old Section 206AB, which imposed an even higher rate on non-filers of returns, was omitted with effect from 1 April 2025, so a missing PAN is now the only reason a higher 20% rate would apply.

Companies, LLPs and firms must deduct TDS on your eligible fees regardless of their turnover, once you cross the threshold. An individual or HUF client must deduct only if they were subject to tax audit under Section 44AB in the immediately preceding year (business turnover above the audit limit, or professional receipts above ₹50 lakh). A small individual hiring you for a one-off project generally does not deduct. Foreign clients never deduct Indian TDS.

It can be. An individual or HUF is required to deduct TDS under Sections 194J/194C only if their books were subject to tax audit under Section 44AB in the preceding year. A small individual — say a person hiring a freelance designer for a one-off job — is not required to deduct. But an individual running a business large enough to be audited must deduct on your professional fees. Either way, you remain fully liable to pay tax on the income, whether or not TDS was cut.

No. Section 206AB, which required deductors to check whether a payee had filed income-tax returns and apply a higher rate to non-filers, was omitted with effect from 1 April 2025. For FY 2025-26 your client only needs your valid PAN; a missing PAN triggers the 20% rate under Section 206AA, but your filing history no longer affects the deduction rate.

No Indian TDS is deducted on payments from foreign platforms like Upwork, Fiverr, Toptal, Payoneer or PayPal, or from any foreign client, because the payer is outside India and has no obligation to deduct Indian TDS. You receive the full amount. The income is still fully taxable in India as business/professional income — report it in your ITR and pay advance tax yourself, since no TDS covers it.

It depends on the payer. Indian brands paying influencers for promotion deduct TDS under Section 194J at 10% (professional service) or Section 194C at 1%/2% (contract), once payments cross the threshold. YouTube AdSense from Google (a foreign entity) carries no Indian TDS, though Google may withhold US tax if Form W-8BEN is not submitted. All of it — brand deals plus AdSense — must be reported in the ITR, with advance tax paid on the untaxed portions.

Report foreign freelance receipts as business/professional income in ITR-3, or in ITR-4 if you opt for presumptive taxation under Section 44ADA. Under 44ADA a professional with gross receipts up to ₹75 lakh (where cash receipts are within 5%) can declare 50% of receipts as income and skip detailed books. Because foreign clients deduct no TDS, pay advance tax quarterly to avoid interest under Sections 234B and 234C. Foreign tax withheld abroad is claimed under the relevant DTAA, not as Indian TDS.

File your income-tax return and claim the TDS as credit against your tax. Steps: (1) confirm the TDS appears in your Form 26AS and AIS on the e-filing portal; (2) collect Form 16A from the client; (3) report your gross receipts in ITR-3 or ITR-4 and enter the TDS in Schedule TDS2; (4) the TDS is set off against your computed tax. If TDS exceeds your liability you get a refund; if it is short, pay the balance as self-assessment tax before filing.

Yes. If your total income is below the taxable threshold (or covered by the new-regime rebate), the entire TDS is refundable. File your ITR, enter the TDS from your Form 26AS in the TDS schedule, and your computation will show the TDS as exceeding your nil/low liability — the department refunds it to your PAN-linked bank account. To stop the deduction in the first place, give the client Form 15G (below 60) or Form 15H (senior citizen) at the start of the year, if your estimated tax for the year is nil.

Always report the gross fee. Declare the full invoice value as income and separately claim the TDS deducted as credit. If you report only the net amount received after TDS, your return will not match the gross figures in your AIS and Form 26AS, which can trigger a notice. The TDS shown in your 26AS is tax already paid in your name — you recover it through the ITR, so it is not a cost you should net off.

Yes, if your estimated total income for the year is below the basic exemption limit and your tax liability for the year is nil, you can give Form 15G (for individuals below 60) or Form 15H (for senior citizens) to your client, asking them not to deduct TDS. You must be an individual or HUF and your actual tax for the year must genuinely be nil. Submitting Form 15G falsely, knowing your income exceeds the limit, is a punishable offence under Section 277.

Yes — they are separate. TDS is income tax collected in advance and adjusted in your ITR. GST is a separate indirect tax: once your freelance turnover crosses ₹20 lakh a year (₹10 lakh in special-category states) you must register and charge 18% GST to Indian clients. For foreign clients, your service is an export — zero-rated — so you do not charge GST, and you can file a Letter of Undertaking (LUT) to bill without paying IGST.