Indians earning foreign currency from remote work, international businesses, content creation, and so on often face additional regulations than those earning locally. These regulations can be tricky to navigate, especially for newbies. Many risk regulatory infringements, withheld payments, or paying the wrong tax. This article explores FIRC, taxes, and compliance for Indians earning in foreign currencies.
Also read: Safe ways to receive international payments in India
A Foreign Inward Remittance Certificate (FIRC) is an official document issued by Authorised Dealers (ADs), which may be banks or authorised payment providers, confirming that funds received in India originated abroad. It serves as a verifiable record of the transaction, including details like
Since 2016, most ADs issue electronic versions (e-FIRC) and not a physical document. The e-FIRC is digitally signed and sent to the RBI's Export Data Processing and Monitoring System (EDPMS).
Indians earning foreign currency require an FIRC because it proves their income is legitimate. It is also essential for audit, regulatory, and tax purposes. However, you might not need an FIRC for every single foreign payment you get. FIRCs are often requested during GST audits or by banks when clarifying the nature of inflows. Businesses claiming GST export benefits or LUT exemptions almost always need them.
If you are a remote worker receiving large or irregular foreign payments, banks may request an FIRC to correctly classify the payment under RBI guidelines. You might also need it when applying for loans, visas, or financial products as credible income proof.
Also read: A guide for Indians getting paid by clients abroad
Obtaining an FIRC is straightforward. It is usually issued by the payment platform you are using.
Paying taxes on foreign income in India mostly depends on your residency status. If you are earning globally in foreign currencies as an Indian resident, you are required to pay taxes. If you are a non-resident Indian (NRI), only the income you make in India is taxable. Entirely foreign-sourced income is usually exempt from taxation.
Foreign earnings must be converted into INR for tax filing. The conversion is done using the RBI reference rate or notified rates, and not the rate you converted at. It is important to make this distinction because your tax obligation may be slightly different from the INR you actually got. Don’t get confused, this is completely normal and legally accepted.
India has DTAAs with over 90 countries to prevent the same income from being taxed twice. So, if you are already paying taxes in any of those countries, you can apply to avoid paying taxes on the same income. To claim DTAA benefits, you must:
Also read: How freelancers in India are taxed on foreign payments
Earning foreign currency as an Indian professional is increasingly common. The real challenge lies in managing taxes and remaining compliant. Understanding FIRCs and handling taxes correctly ensures you can focus on your work rather than paperwork. With Grey’s multi-currency accounts, you can receive payments in USD, EUR, and GBP without being forced to convert to INR at unfair bank rates. Managing all your foreign earnings on one platform also ensures you can easily access your financial records, file your taxes, and remain compliant.
Sign up on Grey or download the app to get started today!
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