New FEMA rules for foreign payments: what freelancers need to know

Summary

The reporting mechanism could help authorities identify suspicious transactions, including instances where services are falsely declared to move money across borders.

Freelancers, consultants and small businesses receiving payments from overseas clients have to follow a new reporting compliance procedure under the Reserve Bank of India's (RBI) foreign exchange rules. These rules, effective 1 October, apply to all professionals exporting services, such as content writers, digital marketers, designers, and any freelancers taking on gigs on global freelance marketplaces like Fiverr, Upwork, etc.

The Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 require service exporters to submit an export declaration form (EDF) to their authorised dealer bank. The form records details of services exported and payments due from overseas clients.

Earlier, such declarations largely applied to goods and software exports; they now also apply to services. The objective is to track export transactions and ensure that foreign exchange earnings are brought into India.

Vijaykumar Puri, partner at VPRP & Co LLP, chartered accountants, said the reporting mechanism could also help authorities identify suspicious transactions, including instances where services are falsely declared to move money across borders.

How and when is EDF filed?

Under the regulations, service exporters can submit one consolidated EDF covering invoices raised during a calendar month, within 30 days after that month ends. For example, invoices raised in October can be reported together by 30 November.

For services other than software, the regulations also permit EDF submission on or before the date payment is received, said Harshal Bhuta, partner at P.R. Bhuta & Co., Chartered Accountants. “Filing before receiving payment can make reconciliation easier. Otherwise, the bank may initially treat the receipt as an advance until it is matched with the relevant invoice later.”

The form should be submitted through the authorized dealer bank. Exporters can obtain the prescribed format from the regulations or ask their bank for its submission procedure.

Chartered accountants (CAs) said that since the requirement started just this month, most of the banks are currently accepting physical forms to be submitted in bank branches. "We expect banks to move to a digital process soon. For instance, Axis Bank has just today integrated EDP reporting in their digital platform," said Bhuta.