If you are genuinely employed by a foreign company and receive a salary, you are not exporting services in the way the EDF contemplates, and on top of that RBI said on 7 October 2026 that individuals providing services abroad are not required to report. So a remote employee on a real employment contract does not file an EDF. The answer changes only if your "employment" is actually a contractor arrangement run through your own proprietorship, LLP or company, in which case that business should assume the EDF applies.
Key takeaways
- Salary from employment is not an export invoice. There is nothing to put in Part 2B.
- RBI's 7 October 2026 statement: individuals providing services abroad and personal-contract transactions are outside reporting. FAQs are awaited.
- Employed through an Indian employer of record? You are paid by an Indian entity in rupees. Purely domestic for you.
- Called an "employee" but sending invoices? You are a contractor. As an individual, RBI's statement applies; through a business entity, file the EDF.
- Tax obligations on foreign salary or contractor income continue regardless.
Four common set-ups
Remote work with foreign companies comes in several shapes, and the label your employer uses is less important than how you are actually paid.
| Set-up | How you are paid | EDF position |
|---|---|---|
| Employer of record (EOR) in India | Indian EOR company pays salary in INR, deducts TDS | No EDF for you; the EOR handles its own cross-border billing |
| Direct employment by a foreign company | Foreign company pays salary into your Indian account | Not an export of services; RBI's statement on individuals also applies |
| Individual contractor | You invoice the foreign company monthly | Individual; RBI said no reporting, check with bank until FAQs |
| Contractor through your own entity | Your proprietorship, LLP or company invoices | Assume covered; file monthly EDF |
If you are on an employer of record
Many foreign companies hire in India through an employer of record. Legally, the EOR is your employer. It issues your appointment letter, runs payroll in rupees, deducts TDS and files Indian returns. The EOR itself bills the foreign company for providing your services, and that is its export, not yours.
For you, the salary is no different from working for any Indian company. Nothing changes with the EDF regulations.
If a foreign company pays your salary directly
Some foreign companies pay Indian employees directly from abroad. The money arrives as an inward remittance with your bank asking what it is for. Employment income is not a service-export invoice, so there is no EDF to file, and RBI's statement about individuals reinforces that.
What you still need:
- A clear employment contract showing you are an employee, not a contractor.
- Payslips from the employer each month.
- FIRAs or bank advices for each credit, showing the purpose as salary or compensation. Ask your bank which purpose code it uses and request correction if it shows a services code by mistake.
If you are a contractor called an "employee"
Plenty of remote roles are contractor roles in practice. If you send a monthly invoice, receive no payslip, and the company deducts no payroll taxes, you are providing services, whatever the onboarding email says.
As an individual working under a personal contract, you fall within the group RBI described as outside reporting. The regulation text has not been amended yet, and RBI said it would issue FAQs, so check with your bank until those are published.
When your contracting runs through a business
Arjun contracts as a backend developer for a Berlin start-up. He invoices through Vellore Byte Works, a proprietorship he registered for GST, and payments land in its current account. Monthly invoice: EUR 6,500.
| Month | Invoice | Amount | EDF due |
|---|---|---|---|
| October 2026 | VBW/26/010 | EUR 6,500 | 30 November 2026 |
| November 2026 | VBW/26/011 | EUR 6,500 | 30 December 2026 |
| December 2026 | VBW/26/012 | EUR 6,500 | 30 January 2027 |
Because Arjun works through a proprietorship, he should assume he is covered and file one EDF each month, with "Software" as the type of export and "Internet" as the mode of delivery. Each invoice is around ₹6 lakh, under ₹10 lakh, so his bank may close EDPMS entries on his periodic realisation declaration. Our guide for freelance software developers covers this path in more detail.
Tax points that do not go away
The EDF is a FEMA declaration and has nothing to do with your income-tax position. Whatever your set-up:
- Foreign salary paid directly is taxable in India for residents. A foreign employer usually does not deduct Indian TDS, so you may need to pay advance tax yourself. Plan for it.
- Contractor income is business or professional income. Presumptive schemes may be relevant for eligible professionals; ask your CA.
- Tax deducted abroad may be creditable in India with the right documents and forms.
- GST applies to contractors who supply services and cross the registration threshold or register voluntarily; salaried employees are outside GST for that salary.
Our article on income tax on foreign income covers the basics. This is general information, not legal or tax advice.
Simple record-keeping either way
Keep a folder per financial year with:
- Your contract (employment or contractor agreement).
- Payslips, or invoices if you are a contractor. The export invoice generator creates clean contractor invoices.
- FIRAs or bank advices for every foreign credit.
- Any withholding tax certificates from abroad.
If RBI's FAQs later ask individuals to do anything, you will have everything in one place.
Frequently asked questions
Do I need to file the EDF if I work remotely for a US company?
If you are a genuine employee receiving a salary, no. Salary is not an export invoice, and RBI said on 7 October 2026 that individuals providing services abroad are not required to report. If you contract through a business entity, that business should assume it is covered.
I am paid through an employer of record. Does the EDF apply to me?
No. The employer of record is your Indian employer, paying you in rupees. Any cross-border billing to the foreign company is the EOR's own export and its own compliance, not yours.
My company calls me an employee but I send invoices. What am I?
For practical purposes, a contractor providing services. As an individual on a personal contract, RBI's statement says you need not report, pending FAQs. If you invoice through a proprietorship, LLP or company, file the EDF.
What purpose code should a foreign salary credit carry?
Salary should carry a code that reflects compensation rather than a services export. Ask your bank which code it uses for salary from abroad and request correction if the FIRA shows something else.
Do I pay tax on salary paid from abroad?
Generally yes, if you are an Indian tax resident. Foreign employers usually do not deduct Indian TDS, so you may need to pay advance tax. Speak to your CA about your residency status and obligations.
Bottom line
Real employees do not file EDFs; contractors working through their own business should. Look at how you are paid, not what you are called. If you invoice through a business, prepare your monthly declaration with the free EDF form generator.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.