I'm a salaried employee with a side gig for a foreign client: what applies?
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Short answer
Your salary and your side income are treated separately. Salary is not a supply under GST, so only the freelance receipts count towards the ₹20 lakh registration threshold.12 The foreign client's payments are an export of services that need an Export Declaration Form and realisation within nine months, and for income tax the fees are business or professional income reported alongside your salary.345
Plenty of designers, developers and analysts in India hold a full-time job and take evening work from clients abroad: a Gurugram product manager reviewing pitch decks for a London startup, or a Chennai data engineer building dashboards for a US agency. The side work is a small export business sitting next to your salary.
Do I need GST registration for the side gig?
Only once the side income is large enough. Salary is outside GST: Schedule III of the CGST Act says services by an employee to the employer in the course of employment are neither a supply of goods nor a supply of services.1 So your aggregate turnover under section 2(6) is just your freelance receipts, including exports.1 Notification No. 10/2017-Integrated Tax exempts you from registration until that crosses ₹20 lakh in a financial year (₹10 lakh in special category States).2 See GST registration for freelancers who export.
What does the RBI require for the client's payments?
The same as for any exporter. From 1 October 2026, file an Export Declaration Form (EDF) with your bank within 30 days from the end of the invoice month, or for non-software services on or before the payment date.3 Payment must be realised within nine months of the invoice date.4 Use a bank or regulated payment provider that issues a Foreign Inward Remittance Advice (FIRA) for each receipt.
How are salary and side income taxed together?
A resident is taxed on income from all sources under section 5 of the Income-tax Act, 2025, so you add both.5 Salary falls under "Salaries" and the side fees under "Profits and gains of business or profession". The slab rates for tax year 2026-27 apply to the total.5
If the side work is a specified profession, such as information technology or technical consultancy, Table row 3 of section 58(2) can deem 50% of gross receipts as profit.67 Your employer's tax deduction covers salary only, so you may owe advance tax on the side income if your remaining liability is ₹10,000 or more.5 See advance tax for freelancers.
What else should I check?
Your employment contract may limit outside work or give your employer rights over work you create, and the RBI and tax rules do not override that. With two heads of income, the return form and computation are worth reviewing once with a chartered accountant.
How did we verify this?
We checked this page against the sources below on 28 October 2026. Read our methodology or report an error.
- [1]CBIC: CGST Act, 2017 (as amended up to 31 August 2021), section 2(6) and Schedule III, paragraph 1
- [2]Notification No. 10/2017-Integrated Tax (exemption from registration for inter-State suppliers of taxable services), GSTZen reproduction
- [3]RBI: Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification No. FEMA 23(R)/2026-RB, amended up to 22 September 2026 (regulations 3 and 5)
- [4]RBI: Notification No. FEMA 23(R)/(1)/2026-RB dated 22 September 2026 (amendment to regulation 5)
- [5]Income-tax Act, 2025 as amended by Finance Act, 2026: sections 5, 202 and 404 (Income Tax Department)
- [6]Income Tax Department: Income-tax Act, 2025, section 58 (presumptive taxation, Table row 3)
- [7]Income Tax Department: Income-tax Act, 2025, section 62 (specified profession, sub-section (4))
Frequently asked questions
Does my salary count towards the GST threshold?+
No. Services by an employee to the employer in the course of employment are neither a supply of goods nor of services under Schedule III of the CGST Act.1
Will TDS on my salary cover the tax on my side income?+
Not automatically. Your employer deducts tax on salary only. If your total tax after TDS is ₹10,000 or more, advance tax applies under section 404.5
Can I use the 50% presumptive scheme for side income?+
Yes, if the side work is a specified profession under section 62(4) and gross receipts are within ₹50 lakh, or ₹75 lakh with cash receipts within 5%. Salary is taxed separately.67
Do I need my employer's permission?+
Neither the tax law nor the RBI requires it, but your employment contract may restrict outside work or claim ownership of what you create. Read it before you start.
This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.
Keep reading
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How presumptive tax for professionals works for Indian freelancers paid in foreign currency: old 44ADA, new section 58, limits, 50% income, advance tax.
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