Freelancer Receiving Payments via Crypto - Tax Classification Help

Tax queries 110 views 1 replies
User Avatar

Software developer
19 Points Joined November 2024

I'm a software developer receiving monthly payments from foreign clients in USDT, then converting to INR.

Payment Flow: Foreign Client → USDT → CopperX (https://copperx.io/) (offramp) → skydo -> Indian Bank Account 

Main Questions

1. Tax Classification

Will this be taxed as:

  • Business Income (my tax slab rate) - since I provided development services?
  • Crypto Income (30% flat rate) - since payment was in USDT?

2. FIRC Issue

  • FIRC shows CopperX as sender, not the actual client company
  • Is this acceptable for IT/FEMA compliance?
  • What documents needed to prove genuine work relationship? 

Background

  • Have proper contracts with foreign clients
  • Skydo provides FIRC for all transactions
  • Not doing any crypto trading - just receiving payments
  • Can prove services rendered through invoices/emails

Need expert CA opinion on correct tax treatment and compliance requirements.

Thanks in advance! 🙏

0 Reply Share Follow
On 10 June 2025 at 14:15 Report
Replies (1)
User Avatar

Master in Accounts & high court Advocate
9101 Points Joined December 2011

Tax Classification Your income from foreign clients in USDT will likely be taxed as *Business Income*, subject to your tax slab rate. Although you're receiving payments in cryptocurrency (USDT), the fact that you provided development services and have proper contracts with foreign clients suggests that this income is related to your business activities.

The Indian tax laws tax income from virtual digital assets (VDAs) like cryptocurrency at a flat rate of 30% if it's considered a capital gain or business income from trading VDAs. 

However, in your case, the payment in USDT is for services rendered, not trading or investing in cryptocurrencies. Therefore, your tax liability would be calculated based on your business income tax slab rate.

FIRC Issue Regarding the FIRC (Foreign Inward Remittance Certificate) issue, it's crucial to ensure that the documents reflect the actual transaction details. 

Since the FIRC shows CopperX as the sender, not the actual client company, you may need to provide additional documentation to prove the genuine work relationship.

To comply with IT/FEMA regulations, you should maintain the following documents: - 

*Contracts with foreign clients*: Ensure that your contracts clearly outline the scope of work, payment terms, and other essential details. - 

*Invoices and emails*: Keep records of invoices and emails that prove services were rendered, as you mentioned. - 

*Payment trail documentation*: Maintain documentation that shows the payment flow from the foreign client to CopperX and then to your Indian bank account. - 

*Additional documentation*: You may need to provide documentation that links CopperX transactions to your foreign clients, such as agreements or communication that specify CopperX as a payment gateway.

Compliance Requirements To ensure compliance with tax regulations, consider the following: - 

*File your tax return*: Report your business income from foreign clients, including the USDT payments. -

 *Claim deductions*: You can claim deductions for business expenses related to your development services. -

 Key Considerations -

 *TDS compliance*: Since you're receiving payments in USDT, there might be TDS implications.

However, TDS under Section 194S is applicable when purchasing VDAs from an Indian tax resident. In your case, the payment is for services, and the applicability of TDS would depend on the specific transaction details. - 

*Crypto tax implications*: If you were trading or investing in cryptocurrencies, you'd be subject to crypto tax regulations. However, since you're using USDT as a payment medium for services, the tax implications are different.

1 Reply
On 12 June 2025 at 13:57


CCI Pro

Leave a Reply

Post Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Threads

More recent discussions | Post

Related Threads
Loading