South Korean companies, especially in electronics, automotive, gaming and shipbuilding, buy engineering, software and content services from India, often through long-term vendor relationships. To export services to South Korea from India, you will usually invoice in US dollars (sometimes Korean won), receive payment by international wire, declare each month's invoices on one EDF and realise each within 9 months of its date. The one area to prepare for is tax withholding on the Korean side, which clients may raise and which your CA should review.
Key takeaways
- USD is the most common invoice currency for Indian vendors; KRW is possible if your contract and bank support it.
- Payments typically arrive by SWIFT wire from Korean banks. Ask for OUR charges and an invoice reference.
- Some Korean payers may consider withholding tax on fees paid abroad. Whether it applies and at what rate depends on Korean law and the India-Korea DTAA; let your CA advise.
- Korean clients often ask for documents such as a tax residency certificate to apply treaty rates.
- Enter "South Korea" (or "Republic of Korea", consistently) in the EDF Part 2B country column.
How Korean engagements usually work
Korean companies often work with a small group of approved vendors, with formal onboarding and precise documentation. Expect a vendor registration pack, bank verification and sometimes a request for company certificates before the first payment.
| Engagement type | Typical services | Billing | Practical note |
|---|---|---|---|
| Captive vendor for a large group | Embedded software, testing, CAD | Monthly T&M or fixed monthly fee | Onboarding can take weeks; start early |
| Game studio outsourcing | Art, animation, QA, localisation | Per asset or milestone | Asset acceptance gates payment |
| Shipbuilding and heavy engineering | Detail design, drafting | Per drawing package | Package references matter on invoices |
| Startups and tech companies | Product development, data work | Retainer | Often faster, less formal |
| Korean subsidiary of a global group | Shared services | Monthly | May follow global group procurement |
Invoicing a Korean client
Korean finance teams appreciate consistency. Include:
- your legal name, address, GSTIN and IE code if you have one;
- the client's exact legal name in English as it appears in their vendor records, and address;
- PO number or contract reference and project code;
- invoice number, date, service description and period;
- currency, amount and international bank details;
- SAC code and, under LUT, "Supply meant for export under LUT without payment of IGST".
A mismatch between your company name on the invoice and the name in the client's vendor master is a common cause of delayed payment. Use exactly the same name everywhere. Our export invoice generator keeps your details consistent.
Payments from Korea
- Currency: most Indian vendors invoice and receive USD. If you invoice in KRW, confirm with your bank how it handles won credits before signing.
- Charges: ask for OUR on the invoice. Under SHA, intermediary banks may deduct fees in transit.
- Net payments: if the client withholds tax, the credit will be lower than the invoice. Ask the client for a withholding certificate or receipt each time.
- Evidence: request a FIRA or FIRC for each payment and check the purpose code; for software work it is usually P0802 or P0807, for engineering P1009. Confirm with your bank.
Withholding and the India-Korea DTAA, hedged
This is where Korea differs from many Western markets. Korean payers may apply withholding tax on certain payments to foreign companies, and the India-Korea tax treaty can affect whether and how much. The answer depends on what you supply (for example, whether a payment could be seen as a royalty or technical fee) and on documentation.
What to do:
- Ask the client early whether they plan to withhold and on what basis.
- Send your contract and service description to your CA before the first invoice.
- Provide treaty documents if advised, such as a tax residency certificate.
- Collect proof of any tax withheld, so you can claim credit in India using Form 67. Our guide on foreign tax credit and Form 67 explains how.
Withholding and your EDF
Withholding creates a gap between the invoice and the money received. On the EDF and in EDPMS, the invoice is still declared at its full value. When you send the bank matching instructions, explain that the shortfall is foreign tax withheld and attach the client's withholding certificate. If you know withholding will apply at filing time, ask your bank whether it wants the net realisable value (NRV) column to reflect it.
Worked example. Saransh Embedded Systems Pvt Ltd, a Bengaluru firm, develops firmware for a Korean electronics group. On 2 October 2026 it invoiced USD 40,000 for September's work. The client paid USD 38,800 on 30 October, withholding USD 1,200 under its reading of the treaty, and sent a withholding receipt.
Saransh declared the full USD 40,000 on its October EDF (Part 2B country: South Korea), due 30 November 2026. In its matching letter to the bank, it attached the FIRA for USD 38,800 and the withholding receipt for USD 1,200, asking the bank to treat the invoice as realised. It also gave the withholding receipt to its CA for a foreign tax credit claim.
Its second invoice that month, USD 6,500 for test automation dated 22 October, was paid in full in November with no withholding, because the client classified that work differently. Two invoices, two treatments: exactly why the CA review matters.
Realisation timing
Large Korean groups usually pay to agreed terms once onboarding is complete. Delays come from vendor setup, name mismatches and acceptance gates on game or engineering deliverables. Track each invoice's 9-month deadline (12 months if invoiced in rupees) in your register and request an extension from your AD bank before it lapses if needed.
This is general information, not legal or tax advice.
Frequently asked questions
What currency do Indian companies invoice Korean clients in?
USD is the most common choice. KRW invoicing is possible if your contract and bank support it; check how your bank handles won credits first.
Will my Korean client deduct tax from my invoice?
Possibly. It depends on Korean law, the type of service and the India-Korea DTAA. Ask the client early and have your CA review the contract and any documents the client requests.
How do I show withheld tax on the EDF?
Declare the full invoice value. When matching, explain the shortfall as foreign tax withheld and attach the client's withholding certificate. Ask your bank whether it wants the NRV column to reflect known withholding.
What country name goes on the EDF for a Korean client?
Use "South Korea" or "Republic of Korea" in the Part 2B country column, and use the same form consistently on every EDF.
Bottom line
Korean clients are loyal and methodical; get onboarding, naming and withholding sorted before the first invoice and the rest is routine. Declare full invoice values and document every deduction. Prepare your monthly form with our 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.