Drawbacks of Billing in USD

While the benefits are lucrative, charging in USD can have some drawbacks, too. 

1. Exchange rate volatility

The USD-INR rate fluctuates often. You may quote $1,000 expecting ₹85,000 but receive less if the rupee gains value. Moreover, changes in trade policies or geopolitical tensions can impact exchange rates and result in unpredictable earnings.

2. Forex conversion charges & GST

Charging in USD also means you’ll have to pay 2%-4% currency conversion charges to banks or international payment platforms, depending on the payment method you choose. GST also applies to currency conversion services, which further increases the costs. 

3. Compliance complexity

Another challenge is adhering to RBI and FEMA compliances for foreign remittances. This involves maintaining FIRC, taking LUTs in GST, filing FST returns, etc. 

Billing in INR: What It Means

Billing international clients in INR means quoting and invoicing your service charges in Indian Rupees rather than USD. This means that you’ll get a fixed amount, irrespective of fluctuations in USD to INR conversion rates. 

Here’s how you can bill in INR:

• Decide how much amount you want in INR for a particular project and quote the same to the client.

• Send an invoice to the client in INR

• You quote your prices in INR and send an invoice with the amount clearly stated in Indian Rupees.

• The client converts the INR value to USD at the time of transfer and processes the payment. 

• You receive the international payment in INR in your Indian bank account through wire transfer or an international payment platform.

• In many cases, the client bears the exchange rate cost. But not always, which can lead to confusion.

Benefits of Billing in INR

Let’s understand how charging in INR benefits your business.

1. Predictable earnings

Since you quote a fixed rate in INR, you don’t have to worry about daily fluctuations in the USD-INR rate. Even if the FX rate goes down, you’ll still get the fixed amount in INR. This makes budgeting and financial planning easier in the long run. 

2. Simpler invoicing and GST filing

One major benefit of INR billing is that your documents are aligned with the Indian accounting system. You can easily match invoices to payments for GST returns, especially if you're not claiming export-related refunds.

3. Client pays the Forex conversion fee

In some setups, especially when using certain platforms, the client covers currency conversion at their end. This removes conversion charges from your side, though you’ll still need to confirm this with the client before signing the agreement.

Drawbacks of Billing in INR

Even though INR billing means simplified compliance, it has certain limitations. 

1. Potential loss in earnings due to fixed pricing

Charging in INR means you will miss out on the benefit of the USD to INR currency conversion.

For example, if you charge INR 90,000, you’ll get the same amount even if the dollar strengthens.

2. Creates confusion for the client

US clients are more comfortable processing invoices in their local currency because they don’t have to worry about checking the live FX rates and converting the invoice INR to USD. Plus, if the client is unfamiliar with exchange rates, they might negotiate with you, resulting in delayed payments. 

USD vs INR Billing: Which One Should You Choose? 

Choosing the ideal billing currency depends on your requirements and preferences. Here are a few factors you should consider:

1. Income potential

USD: If you want a higher income and don’t mind the unpredictability of fluctuating exchange rates, charging in USD can be more beneficial.

INR: You earn fixed and predictable income, but miss out on currency conversion gains.

Charge clients in USD for higher income potential.

2. Client preference and experience

USD: International clients are familiar with USD billing. It often feels more professional and easier for them to process.

INR: Clients might be confused about INR rates or unwilling to pay conversion charges.

If you are working with a new US client, billing in USD would be more convenient.

3. Forex risk and conversion charges

USD: You’re exposed to exchange rate fluctuations, and you'll pay conversion fees (plus GST on those fees).

INR: Earnings are predictable, and clients may bear the forex risk, but you lose out on favourable conversions.

If you prefer financial predictability, INR billing may be easier. But for long-term gains, USD is worth considering with proper planning.

4. Compliance and Documentation

USD: You’ll need e-FIRCs or bank advice letters to prove receipt of foreign currency for GST and tax purposes.

INR: This means simpler documentation, but you’ll get limited tax benefits.

If you have the resources to handle compliance (or work with a CA), USD billing gives you more benefits in the long run.

When to bill in USD:

• Your client is based abroad and prefers working in their own currency.

• You’re comfortable managing forex risks or using pricing buffers.

• You want to take advantage of GST refunds or input tax credits.

• You work on large-ticket projects where forex gains offset fees and paperwork.

When to bill in INR:

• You’re working with Indian subsidiaries of foreign companies.

• You’re using freelancing platforms that only allow INR payouts (like certain Upwork or Fiverr configurations).

• Your client prefers to handle currency conversion on their end.

• You want to simplify GST filings without dealing with export-specific paperwork.

A quick overview of USD vs INR billing:

Best Practices for Freelancers

Irrespective of the USD vs INR debate, make sure that you clear the payment terms with your client and adhere to compliances. Here are a few best practices to receive payments as a freelancer:

1. Mention the currency in the agreement

Discuss the billing currency with your client and mention it clearly in your contract or proposal. This way, you can avoid confusion while sending the invoice or during payment transfer.

2. Use live currency rates and add a buffer

Exchange rates can fluctuate daily. Use a live currency converter when quoting, and consider adding a small buffer (3–5%) to account for rate drops or conversion fees.

3. Consult an expert for GST and forex documentation

If you're exporting services and want to claim GST refunds, it's best to work with a chartered accountant or a legal expert. They can help with drafting agreement terms, GST filings, classification of services, and documentation like e-FIRC.

4. Maintain all payment proofs and e-FIRCs

Keep digital and physical records of e-FIRCs or bank advice letters for every foreign remittance you receive. You need these documents for GST, income tax filings, and even during audits.

Payment platforms like Infinity automatically generate e-FIRCs for each payment so you can download and maintain them easily.

Convert International Payments from USD to INR With Infinity

If you’re charging your clients in USD, you risk paying high transaction fees, forex markup and currency conversion charges. This reduces your earnings.

However, Infinity helps you overcome these challenges by offering a flat fee and complete payment transparency. 

With Infinity, you get:

• A flat 0.5% transaction fee on all international transactions.

• Currency conversion at live FX rates with zero FX markup.

• Real-time payment tracking to ensure transparency.

• Payments into your domestic bank account within 24 hours. 

Receive International Payments at Low Costs With Infinity

No matter which currency you choose, whether USD or INR, what matters most is how much you actually receive after all the deductions. That’s where choosing the right payment platform makes a difference.

Infinity is a transparent payment platform built for Indian freelancers and exporters. With Infinity, you can receive international payments directly in your Indian bank account at live mid-market exchange rates and low transaction fees.

Sign up with Infinity to avoid hidden charges and unpredictable fees!