India taxes individuals based on a system of income slabs. Different tax rates are assigned to different ranges of income.&nbsp;

Understanding tax slabs is crucial for several reasons.

As a person earns more, the tax liability also increases, creating a fair and progressive tax system in the country. To achieve this, the government regularly updates and announces changes to tax slabs in the Union Budget.

The income tax slabs differ between the old and new tax regimes. Let's explore the specific slab rates applicable to Individuals for FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25).

Income Tax Slab Rates For FY 2023-24 (AY 2024-25)&nbsp;

Rates of the old tax regime slabs are categorized into three groups:

The new tax regime applies uniform tax rates to all individuals, eliminating the age-based distinctions in the old system. The new tax regime slabs 2023-24 are outlined below.

Applicability of Surcharge for FY 2023-24 (AY 2024-25)

The income tax <a href="https://incometaxindia.gov.in/charts%20%20tables/tax%20rates.htm">surcharge</a> is an extra fee imposed on top of the <a href="https://www.skydo.com/blog/how-to-file-taxes-under-44ada?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">regular income tax</a>. An additional tax is applied to individuals with higher income earnings in a specific financial year. Let’s look at the applicable surcharge rate under the Old and New tax regime.

However, 25% or 37% surcharge rates will not apply to income under the following sections.

Consequently, the highest surcharge rate on the tax payable for such incomes will be 15%.

Starting from the Assessment Year 2023-24, the maximum surcharge rate on tax payable for dividend income or capital gain specified in Section 112 will be capped at 15%.&nbsp;

A 4% Health and Education cess will be applied to all cases’ total income tax liability and surcharges.

Comparison of tax rates under the New tax regime and the Old tax regime for FY 2022-23 (AY 2023-24)

How do you calculate the income tax from the income tax slabs?

Let’s understand the calculation with an example.

Sanjana, aged 35, has a total taxable income of Rs. 8,50,000. She has opted for the old tax regime. Her income includes income from salary, interest and rental income. Deductions under section 80 have been reduced. Now, Sanjana wants to know her <a href="https://www.skydo.com/blog/gst-requirements-international-service-sales?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">tax liability</a> for FY 2022-23 (AY 2023-24).

*Sanjana, an individual taxpayer under the age of 60, enjoys an income exemption limit of up to Rs 2,50,000. Other taxpayers, i.e., senior and super senior citizens, have higher income tax exemption thresholds of Rs 3,00,000 and Rs 5,00,000, respectively.

Please be aware that the tax rates in the New Tax Regime are uniform for all categories of individuals, including regular individuals, senior citizens, and super senior citizens.&nbsp;

Individuals with a net taxable income of up to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability in both the New and Old tax regimes. It's important to note that in Budget 2023, the rebate under the new regime has been extended, making income up to Rs 7 lakh tax-free from the FY 2023-24 onward.

Let's delve into effective strategies to maximize your investments while minimizing the associated tax burdens.

ELSS mutual funds provide a dual benefit of potential capital appreciation and tax savings under Section 80C of the Income Tax Act. Investing in ELSS reduces taxable income and offers a path for long-term wealth growth.

2. Explore tax-efficient investment avenues

Health insurance qualifies for tax benefits under Section 80D. You can claim tax benefits on premiums paid - up to Rs 20,000 for senior citizens and Rs 15,000 for others. For example, if you pay Rs 15,000 for your policy and Rs 20,000 for your senior citizen parent, you can claim a total tax benefit of Rs 35,000.&nbsp;

Maturity value is tax-free for sums received under critical illness insurance policies.

This strategy entails selling loss-making assets to realize the capital loss and using it to offset the gains earned by profit-making assets.

For instance, if you have a loss of Rs. 20,000 in Stock A and a gain of Rs. 30,000 from Stock B, you can sell Stock A during a market downturn to offset the gains. This way, you can reduce your taxable income. The saved amount can be reinvested for portfolio growth.

Ensure that tax loss harvesting aligns with your overall financial goals and plan by considering a discussion with a financial professional or tax advisor.

<a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Consult financial professionals or tax advisors</a> for effective tax planning and strategic advice. Their expertise can provide tailored insights aligned with your financial goals and ensure a well-informed approach to optimize your tax situation.

If you need help deciding what is right for you, we will connect you with our panel of Indian and US-based CA / CPAs. Feel free to reach out to us.

Q1. How is a taxpayer's income categorized?

Ans: A taxpayer's income falls into five categories outlined in Section 14 of the Income Tax Act. These include Income from salary, Profits from a business or profession, Income from House Property, Capital Gains, and Income from Other Sources.

Q2. Is it possible to avail of 80C deductions while choosing the new tax slabs 2023-24?

Ans: No, under the new tax regime, several deductions and exemptions, including those under section 80C, are not permitted. Opting for the new tax regime means foregoing the ability to claim deductions under section 80C.

Q3. What do "Previous Year" and "Assessment Year" mean?

Ans: We have two important terms in income tax provisions: (i) Previous Year and (ii) Assessment Year. Previous Year is when you earn income, typically from April 1st to March 31st. The year right after the Previous Year, from April 1st to March 31st, is called the 'Assessment Year.'

For example, the Previous Year is from April 1, 2023, to March 31, 2024 (FY 2023-24). The corresponding Assessment Year is from April 1, 2024, to March 31, 2025 (AY 2024-25).

Q4. What is the tax exemption limit for calculating income tax rebate under section 87A?

Ans: For FY 2023-24 (AY 2024-25), the rebate limit has been increased to Rs. 7,00,000 under the new tax regime. This means a resident individual with taxable income up to Rs 7,00,000 will receive Rs 25,000 or the amount of tax payable (whichever is lower) as tax relief. However, the old tax regime's threshold limit will remain the same, i.e., Rs 12,500 if taxable income is up to Rs 5,00,000.

Q5. How much is the standard deduction for FY 2023-24?

Ans: You can claim a standard deduction of ₹50,000 to the income taxable under the head ‘Salaries.’ The standard deduction is a tax benefit that can be claimed irrespective of the amount spent on Transport or Medical Allowance. It applies to individuals earning a salary or pension income.

Prepare for the upcoming year's tax season by understanding the tax slabs for 2023-24 and optimizing your tax savings. 

Tax Slabs in 2023-24: Plan Ahead for Next Year Tax Savings

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Rohit Khuranna

Planning any international travel or making an international purchase? You might be in for a surprise when it comes to taxes. Since the 2023 Union Budget, Tax Collection at Source (TCS) has become a crucial part of foreign remittances, impacting your tax obligations. If you’re sending money abroad or making outward money transfers, you could be facing a 20% tax under the <a href="https://www.skydo.com/blog/what-is-lrs?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Liberalised Remittance Scheme (LRS)</a>.

So next time you make a big foreign payment, expect to pay extra for TCS which is collected by the receiving bank or business. This blog will give a thorough understanding of TCS to help you navigate the complexities of cross-border payments.&nbsp;

What is TCS or tax on foreign remittance?

TCS (Tax Collected at Source) is a tax system in India where the seller collects a tax from the buyer on specific goods or services. This collected tax is then remitted to the Income Tax Department. One example is its application to transactions like sending money abroad under the Liberalised Remittance Scheme (LRS), which we'll be discussing in this blog. The primary purpose of TCS is to track large transactions and prevent tax evasion. The tax rate varies depending on the type of transaction and is added to the sale price.

Difference between TCS and TDS on foreign remittance

Given the lack of discussion on TCS, it's easy to mix it up with TDS. Let's clear the air and distinguish between the two.

TDS is the tax deducted by the payer while making certain payments from various sources. The most common instance is the TDS deducted by companies while paying salaries. TCS on the other hand, is the tax collected by the seller on the sale of certain goods. For example, when you buy alcoholic liquor, the price includes 1% TCS. In a nutshell, TDS is deducted by the payer while TCS is collected by the seller.&nbsp;

Let's dive deeper to understand everything about TCS on foreign remittance so that you can minimise your tax burden.

When is Tax Collected at Source (TCS) on Foreign Remittance applicable?

Tax collected at source (TCS) applies when you send over INR 7 lakhs abroad in a financial year. For instance, if you are buying foreign company stocks worth INR 9 lakhs, you need to pay 20% TCS on 2 lakh (9 lakhs - 7 lakhs).

Prior to 2023, TCS on foreign remittances under the LRS was 5%. However, in the 2023 budget, the new TCS rate was increased from<a href="https://pib.gov.in/PressReleasePage.aspx?PRID=1936105" target="_blank"> </a><a href="https://pib.gov.in/PressReleasePage.aspx?PRID=1936105" target="_blank">5% to 20% to boost</a> tax revenue and promote domestic spending.&nbsp;

The TCS on foreign remittance for medical and educational expenses stands at 5% if the amount remitted exceeds INR 7 lakh. However, if medical and educational expenses are funded by a financial institution, 0.5% TCS will be applicable.

The new TCS rates became applicable from October 1, 2023.

Here are the activities on which TCS will be applicable:&nbsp;

4. Medical and Educational Expenses&nbsp;

Here is the breakdown for new and old TCS rates on different types of foreign remittances. Note that the new TCS rates will be applicable from 1st September 2023:

Note that the new TCS rates will be applicable from 1st September 2023.&nbsp;

TCS rate on Foreign Remittance Post Budget 2023

Let's try to understand the applicability of TCS via certain examples.&nbsp; 

Consider buying stocks worth INR. 10 lakh in a US company. Now, since the amount remitted is greater than INR 7 lakhs, 20% TCS will be applicable.&nbsp;

As mentioned, TCS will be collected on the amount exceeding INR 7 lakhs, which in this case is INR 10 Lakhs - INR. 7 lakhs, which comes to INR 3 Lakhs. As mandated, 20% TCS will be collected from INR 3 Lakhs which equals to INR Rs. 60,000

So if you are investing INR 10 lakhs in US stocks, you are effectively investing only INR 9,40,000 as the rest INR 60,000 will be collected as TCS.&nbsp;

Now consider that you are sending the same INR 10 lakh to your sister studying in the US to pay her fee. Since this amount is being remitted for educational purposes, instead of 20%, 5% TCS will be applicable on the amount exceeding Rs. 7 lakh.&nbsp;

Therefore, the total taxable amount will stay at INR 3 lakhs (Rs. 10 Lakhs - Rs. 7 lakhs)

However this time, instead of 20%, 5% TCS will be collected bringing the total amount to INR 15,000 (5% of INR 3 lakhs).&nbsp;

However, note that if you are unable to prove that the money sent abroad is for educational or medical purposes, 20% will be applicable.

Let's say the total remittance for the year adds up to INR 8 lakh, and this amount is financed through an education loan taken from a bank approved by the Reserve Bank of India (RBI).&nbsp;

In this scenario, a TCS of 0.5% would be applicable only on the amount exceeding the threshold of INR 7 lakh.&nbsp;

So, in this case, TCS would be charged on INR 1 lakh (INR 8 lakh - INR 7 lakh) at a rate of 0.5%, which translates to INR 500 (0.5% of INR 1 lakh)

While Tax Collected at Source (TCS) is not completely avoidable, here are some strategies you can use to minimise its impact:

#1: Adjust the TCS Against Your Final Tax Liability

If you have no or low tax liability, you can get the TCS on foreign remittance as refund while filing your ITR. Make sure to keep the following documents handy:

For example, let's say you purchase an overseas tour program package worth Rs. 9 lakh. With the new regulations, a 20% Tax Collected at Source (TCS) applies to the amount exceeding Rs. 7 lakhs, totaling Rs. 40,000. If your total income tax liability for the year is INR 1 lakh, you can offset the Rs. 40,000 collected as TCS against your liability, reducing the total tax payable to Rs. 60,000.&nbsp;

Submitting an erroneous TCS return can lead to penalties as per Section 271H. The penalty for such errors can range from a minimum penalty of Rs. 10,000 to a maximum penalty of Rs. 1,00,000. It is important for tax collectors to ensure the accuracy of their TCS returns to avoid facing these penalties and maintain compliance with tax regulations.

Here’s a quick read to understand<a href="https://www.skydo.com/blog/how-to-file-itr-for-freelancer?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link" target="_blank"> </a><a href="https://www.skydo.com/blog/how-to-file-itr-for-freelancer?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link" target="_blank">how to file your income tax return</a>.

#2: Make Foreign Investments Through LLPs

If you're making foreign investments, consider doing so through a Limited Liability Partnership (LLP), as these entities are <a href="https://www.google.com/amp/s/www.livemint.com/money/personal-finance/loophole-in-indian-investment-rules-how-llps-can-help-ordinary-indians-invest-abroad-and-avoid-taxes/amp-11690477164919.html">exempt from TCS</a>. LLPs are permitted to invest abroad via two modes: overseas direct investments (ODI) and overseas portfolio investments (OPI). In case of overseas portfolio investments, the 20% TCS rate doesn’t apply.&nbsp;

TCS is not applicable to payments made through international credit cards while overseas. Therefore, you can make international credit card payments while travelling abroad to reduce TCS liability.

Visa and Mastercard are the two major payment networks that offer international credit cards through various Indian banks. Many banks like SBI Cards, HDFC Bank, ICICI Bank, and Axis Bank provide credit cards powered by Visa or Mastercard that can be used internationally.

Additionally, American Express (Amex) is another network offering international credit cards in India. You can find Amex cards through banks like IndusInd Bank and YES Bank.

Remember, if your total foreign remittances (excluding travel packages) are less than Rs 7 lakh in a year, TCS doesn't apply. Each family member can use their own Rs 7 lakh limit, so plan your foreign remittances accordingly.&nbsp;

Also, as we have mentioned, educational and medical expenses abroad are exempt from the 20% TCS rule. Keep the relevant documents handy to claim this benefit.

The introduction of TCS on foreign remittance addresses two crucial concerns: tax revenue and domestic spending. It's imperative to clarify that TCS isn't an additional tax but rather a mechanism ensuring financial transparency and compliance, particularly in cross-border payments.

Here at Skydo, we're committed to streamlining international payments while adhering to compliance and transparency standards. With Skydo, receive international payments swiftly, free from forex or conversion fees, in a secure and compliant manner.

Have further questions about TCS on foreign remittance? Join our global community, where our panel of experts assist you in navigating the ever-evolving regulatory landscape.

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The Reserve Bank of India (RBI) serves as the supreme authority overseeing and regulating India's money market. RBI imposes penalties on banks and Non-Banking Financial Companies (NBFCs) for failing to comply with prescribed frameworks and guidelines, implementing necessary restrictions when required.

A significant recent operational restriction imposed by RBI was on Paytm Payments Bank. This blog aims to provide insights into the <a href="https://www.rbi.org.in/commonperson/English/scripts/FAQs.aspx?Id=3573#:~:text=After%20March%2015%2C%202024%2C%20you,Bank%20after%20March%2015%2C%202024">Paytm Payments Bank RBI ban</a> and explore strategies for ensuring better compliance moving forward. Join us to understand this important development and its implications.

It was all smooth sailing for Paytm and its subsidiary, Paytm Payments Banks, until January 31st when the RBI announced that it had placed major restrictions on the NBFC. The RBI was exercising its right under Section 35A of the Banking Regulation Act of 1949, to issue directives to banks and NBFCs to protect their customers’ financial interests.&nbsp;

On January 31, RBI imposed the following restrictions on Paytm Payments Bank, which it extended till March 15th.

Why Did RBI Put Restrictions on Paytm?&nbsp;

Here are the main reasons that led to RBI putting restrictions on Paytm and Paytm Payments Bank.

Under RBI’s guidelines for payment banks, they can not undertake lending activities. However, RBI identified that although Paytm Payments Bank does not lend to customers directly, it indirectly provides third-party <a href="https://www.niti.gov.in/sites/default/files/2023-02/DigitalBanking07202022_compressed.pdf">credit-dispensing products</a>.&nbsp;

One example is when you apply for loans from Paytm’s platform, they do not provide the loan directly but offer credit-dispensing products from top NBFCs.&nbsp;&nbsp;

Paytm owns 49% of Paytm Payments Bank, and the remaining 51% is owned by its founder and CEO, Vijay Shekhar Sharma. Although founders and parent entities can own a business, RBI requires the operations to be run independently by the company management to ensure they are aligned with customer interests.&nbsp;

RBI noted that although Paytm has maintained that the bank is run independently without any external influence, the governance has been highly influenced by Paytm and its CEO.&nbsp;

Thousands of bank accounts were identified to have been linked with a single PAN. RBI noted that if multiple fake accounts are created without the PAN holder's knowledge, the intention must be to use them for laundering money because it is difficult to identify the beneficial owner in such cases.&nbsp;

Furthermore, it drastically eroded the trust of users and seriously jeopardised the operational and security protocols needed for regulatory compliance.&nbsp;

Paytm and its founder and CEO Vijay Shekhar Sharma have announced that they are in frequent touch with RBI and holding talks to determine the next course of action to ensure the lifting of Paytm bank RBI ban. In an official response, Paytm announced that the ban would hurt its annual earnings by a staggering <a href="https://www.ndtv.com/india-news/paytm-paytm-news-explained-why-rbi-has-put-restrictions-on-paytm-payments-bank-4970845">₹300 crore to ₹500 crore</a>. Meanwhile, Paytm Payments Bank has paused its primary services, such as credit and deposit transactions, FASTag services, and onboarding of new customers.&nbsp;

Best Compliance Practices For Fintechs in India

The fintech segment in India has to comply with extensive regulatory and supervisory compliance requirements from various authorities such as the RBI and SEBI. Similar to Paytm, there are over <a href="https://www.cashfree.com/blog/fintech-companies-in-india/#:~:text=According%20to%20the%20reports3,amalgamation%20of%20finance%20and%20technology.">3,000 fintech firms in India.&nbsp;</a>

However, to ensure that they don’t experience the same restrictions as Paytm, here are some of the best compliance practices to consider.

Since the Paytm Payments bank, customers and merchants have been forced to look at alternatives. However, the platform or institution they choose must have ideal policies and frameworks to ensure seamless RBI compliance.&nbsp;

Similarly, with international payments, you need a platform that complies with RBI guidelines to ensure you receive payouts smoothly. Skydo is one such platform that facilitates international payments while staying true to all RBI regulations. Here’s how it works.

How Skydo Ensures Seamless RBI Compliance? 

Skydo ensures effective compliance through the following features and policies.

Skydo ensures effective compliance with industry regulations as it follows guidelines set by the Reserve Bank of India (RBI) under the OPGSP framework. RBI has set <a href="https://www.skydo.com/blog/pacb-circular-and-opgsp-update">guidelines</a> related to Online Payment Gateway Service Providers (OPGSPs) and their arrangements with Authorised Dealer (Category I) Banks.&nbsp;

Skydo constantly monitors the RBI framework to regulate its operations and ensure it follows the RBI’s OPGSP guidelines.&nbsp;

A <a href="https://www.skydo.com/blog/importance-of-fira-for-freelancers?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Foreign Inward Remittance Advice (FIRA)</a> is a document issued by Indian banks to Indian beneficiaries who receive foreign remittances into their bank accounts. Skydo offers Automated Digital FIRA, where the document is automatically generated immediately when you receive foreign funds in your virtual Skydo account. This saves time and ensures you are GST-compliant with every completed transaction.&nbsp;

Furthermore, when you execute an international transaction on Skydo, your <a href="https://www.skydo.com/blog/what-is-purpose-code-and-why-is-it-required?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">purpose codes</a> are automatically saved and seamlessly integrated into your invoices. This allows effective regulatory compliance, risk management, and transaction transparency.&nbsp;

For financial platforms and institutions, adequate KYC (Know Your Customers) and KYB (Know Your Business) processes are vital as penalties for flouting such processes by RBI are the most common.&nbsp;

<a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=demo_click">Skydo</a> has created detailed yet quick KYC and KYB processes to prevent money laundering, terrorist financing, and other illicit activities.

Skydo monitors every transaction you execute through your virtual currency account and ensures there are no unusual activities, to maintain a safe and trustworthy environment.&nbsp;

Creating an account and executing transactions leave a data trail about the sender and the receiver. Skydo ensures the safety of your money, data, and client/business information through top-grade encryption.&nbsp;

<a href="https://www.skydo.com/blog/why-skydo-is-your-trusted-international-payment-partner?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Skydo</a> keeps your data in a virtual safe, with an extra layer of security access. Furthermore, <a href="https://www.skydo.com/">Skydo</a> follows processes aligned with the new Data Protection Act to ensure your data is handled with the utmost care and in compliance with evolving regulations.

Financial Intelligence Unit - India (FIU-IND) is a national agency that receives, processes, analyses, and disseminates information relating to suspicious financial transactions. Skydo has registered with FIU-IND to report suspicious activity.

RBI has set guidelines and frameworks to protect customer data and money, and it should be the foremost priority of platforms and institutes to ensure their operations and processes comply with RBI guidelines.&nbsp;

For businesses, compliance helps in identifying and mitigating risks related to financial, operational, and reputational matters, safeguarding against potential losses and liabilities. It is crucial for fintechs or any other financial entities to adopt the best compliance practices to avoid regulatory scrutiny.&nbsp;

Hence, Skydo has prioritised developing policies and processes to ensure individuals and businesses onboard Skydo do not have to worry about any lapses in compliance for cross-border transactions.&nbsp;

When you sign up with Skydo, it handles your personal information carefully, strictly following its extensive Privacy Policy. Access to your data is limited to authorised personnel, ensuring its security. If you want a smoother and more compliant payment platform, visit <a href="https://www.skydo.com/">Skydo</a> today.&nbsp;

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What is the Interest Equalisation Scheme in India?

In international trade, access to affordable finance is a crucial factor that impacts the&nbsp; profitability of exporters. Recognising this, governments often institute schemes to support exporters in accessing finance at competitive rates.&nbsp;

Interest Equalisation Scheme (IES) is one such scheme that provides pre and post-shipment credit to exporters at subsidised interest rates. It allows exporters easy access to credit and reduces their cost of borrowing.

Key Features of the Interest Equalisation Scheme

The Government of India launched The Interest Equalisation Scheme (IES) on 1st April 2015. Initially, the scheme was valid for five years until March 31, 2020. However, it has undergone several extensions in response to evolving circumstances, including the challenges posed by the COVID-19 pandemic.

According to a recent notification from the Reserve Bank of India, the government has extended the scheme until June 30, 2024. This extension offers specific benefits to various categories of exporters. Manufacturers and merchant exporters dealing with specified 410 <a href="https://mpeda.gov.in/exporters/?page_id=1840">HS lines</a> will be entitled to a 2% interest equalisation rate. Additionally, MSME manufacturers exporting under any HS line will receive a higher rate of 3%.

Eligible Exporters and Industries by HS code

Exporters can identify eligibility based on industry classification using Harmonised System (HS) codes. These codes categorise export products into specific industries, determining their eligibility for the scheme. The scheme extends to specific export products meeting predefined criteria, ensuring that it targets industries with significant export potential. 	

Official channels, such as the Indian trade portal, provide a comprehensive list of eligible exporters and industries and the corresponding interest equalisation rates. Below are some covered sectors:

Criteria for Export Products under the Scheme&nbsp;

Exports under the scheme must originate from India. The Rules of Origin in the Foreign Trade Policy 2015-20 outlines the minimum processing criteria to qualify as ‘originating from India.’ These include:

New applicants can successfully register for the scheme by following these steps:&nbsp;

One significant advantage of the Interest Equalization Scheme is its ability to lower borrowing costs for eligible exporters.&nbsp;

For example, XYZ Exporters, a medium-sized enterprise specialising in the export of textiles, is seeking export credit. If it takes credit from banks, it will have to pay the base interest + 3%-5% above the base rate. However, if it’s eligible for the Interest Equilisation Scheme, it can get export credit at a subsidized 3% interest rate.&nbsp;

The concessional interest rate enables them to lower their overall financing expenses and improve their profitability.&nbsp;

Furthermore, XYZ Exporters could offer more competitive pricing in the international market, attracting more customers and expanding their market share. They could redirect saved funds toward business expansion initiatives, product diversification, or enhancing operational efficiency.

Interest Equalisation Scheme in India provides exporters access to affordable finance. By subsidising interest rates on bank loans, the scheme effectively reduces borrowing costs, empowering exporters to optimise their financial resources and expand their business operations.&nbsp;

For eligible exporters, the time is now to explore the IES's benefits and take proactive steps toward gaining them. By initiating the registration process, engaging with relevant authorities, and adhering to the scheme's guidelines, exporters can unlock opportunities to lower financial burdens, improve competitiveness, and drive sustainable growth.



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So you're a freelancer now. Great; the timing couldn't have been more right. According to a report by Nasscom Aon, the gig workforce will be <a href="https://timesofindia.indiatimes.com/city/bengaluru/tech-gig-economy-grows-india-to-have-23-5-million-workers-by-2030/articleshow/111048791.cms">23.5 million strong by 2030</a>. It was 7 million in 2021, that will be like 3x growth.

But the freelance boom highlights a big question: Do you have the right banking set up to support your business?&nbsp; Because you need a banking solution with international payment transfers, business expense tracking, professional invoicing systems, and freelancer-specific tax compliance requirements. Start by taking the first step, choosing between a savings vs current account.

Key Differences Between Current Account and Savings Account

One of the best ways to know the differences between a current account vs savings account is to compare their fundamental points. The following table just does that. 

Current Account vs Savings Account: Quick Takeaways

Before we move to the next section, let’s quickly summarize what we learned from the above comparison table.

Why Growing Freelancers Would Need a Current Account?

In addition to the above differences, here are five reasons why freelancers must consider opting for a current account for business needs

When you sign more clients, the transaction volume also increases. However, the transaction limits on savings accounts become increasingly problematic. Most savings accounts restrict you to certain free withdrawals monthly, with penalties for exceeding this limit.&nbsp;

Imagine working with different clients, each requiring multiple payment processing transactions, you'd quickly exceed these limits. A current account doesn’t impose such restrictions or penalties. This ensures you can manage your business finance and sign new clients without limitations.

If you work with overseas clients through platforms like Upwork, Fiverr, Amazon, or Stripe, a current account is a better choice. A current account provides an FIRA, which is an essential document for tax compliance. A savings account may not provide this document because it is relevant to business transactions only.

There is also a lack of integration between savings accounts and GST-compliant invoicing systems. This creates additional administrative burdens, meaning you have to sit down and perform manual reconciliation between banking and tax records. That’s a lot of unnecessary work with the risk of a compliance error. Current accounts typically offer dedicated GST modules that automate much of this tracking.&nbsp;

Separating Personal and Business Finances

When you start using your savings account for freelance income and personal expenses, you risk losing track, especially at the time of tax filing. You don’t know which expenses can be shown as deductions and which earning is business income. During a tax assessment, you might struggle to justify which portion of your internet bill, device purchases, or software subscriptions were for business versus personal use. This leads to an increased risk of penalties from the tax authorities. If you use a current account for business income, it’s easy to keep a trail of the money coming and leaving your account, thereby leaving no room for confusion.

After your monthly business earning exceeds ₹2–3 lakh, a savings account is no longer suitable. Banks may impose restrictions or flag your account for high transaction volumes. Current accounts support higher transaction limits and offer business-friendly features like overdrafts, helping you manage cash flow efficiently.&nbsp;

What Kind of Current Account Should a Freelancer Choose?

So, if the current account is the right choice for your freelancing business, should you open one right away? Yes, but we suggest you give priority to the following points

Zero Balance or Low MAB (Minimum Average Balance) Options

When you’re starting as a freelancer, the cash flow will be irregular. Choosing a current account with zero or low minimum average balance requirements helps you avoid unnecessary penalties and keeps your finances flexible.

Digital-first banks offer seamless online onboarding, instant account access, and easy integration with payment platforms. This makes your day-to-day banking faster and more convenient. Traditional banks, on the other hand, provide a wider branch network but often involve more paperwork and a slower process.

Since you’ll likely receive payments from clients abroad, pick a current account that supports smooth international transactions with competitive forex rates and minimal fees. This will save you money and time.

Ask: Does It Give FIRA, Support Stripe, Payoneer, and Amazon?

Before finalizing your account, confirm whether the bank provides FIRA. Also, check if the account seamlessly supports payments from popular freelancing and e-commerce platforms like Stripe, Payoneer, and Amazon to avoid any disruptions in receiving your income.

Receive Seamless International Payments with Skydo

Throughout the blog post, you’ve seen why a current account is a better fit for freelancers. It helps you manage growing business payments, maintain compliance, and keep your finances organized as you scale.&nbsp;

We also discussed how you must choose the right current account. But even with the best current account, traditional banking methods often come with hidden forex markups, unpredictable fees, and slow processing times, all of which can diminish your hard-earned income. For example, a wire transfer from the US to India will cost you <a href="https://www.skydo.com/blog/wire-transfer-from-usa-to-india">$15-$50</a> (Rs. 1,200 to Rs. 4,200)&nbsp; in SWIFT fees, which does not include the intermediary bank fees.&nbsp; In addition, the forex markup fee is applied on the live exchange rate, which ranges from <a href="https://skydo.com/blog/forex-markup-fee-explained">1% to 3.5%</a>. If the live exchange rate is Rs. 85, the bank may offer you as low as Rs. 82.45 (at 3% markup).

That’s where Skydo steps in as a smarter alternative for freelancers.

With Skydo, you can create virtual international accounts in countries like US, UK, Australia, and Singapore that allow your clients to pay you locally no SWIFT charges and no forex markup.

Skydo’s flat, upfront fee structure means you know exactly what you’ll pay, with no surprises. Here’s how Skydo’s pricing works:

While Skydo is a great platform for receiving international payments, it also helps you get paid on time. With the built-in invoicing feature, you can easily create, customize, and send professional invoices in multiple currencies, set due dates, and even automate payment reminders. Real-time payment tracking keeps you updated on invoice status, outstanding amounts, and settlement timelines. Once your payment arrives, Skydo instantly generates a <a href="https://www.skydo.com/blog/all-you-need-to-know-about-firc-a-complete-guide">FIRA for every transaction</a>, ensuring effortless compliance

In just a few clicks, you can set up your account and start receiving seamless international payments.<a href="https://www.skydo.com/"> Sign up now.</a>

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For exporters, eBRC (Electronic Bank Realization Certificate) is a key compliance document that serves as proof of payment received from abroad for exported goods or services. It is especially important for goods and software exporters covered under SOFTEX.

In this blog, we’ll break down what eBRC is, why it matters, how to obtain it, and everything else you need to know.

An eBRC (Electronic Bank Realization Certificate) is digital proof that your bank issues once you receive payment for an export. Simply put, it confirms that you’ve been paid for your goods or services.

This certificate is important because it helps you report your earnings, file taxes easily, and even access government benefits meant for exporters including low-cost loans, subsidies, duty exemptions and more.&nbsp;Since eBRC includes all the transaction details, it also makes compliance with authorities like the Income Tax Department smooth and hassle-free.