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GST for Freelancer in 2018 – Do You Need to Register?
By Ritika Tiwari / January 9, 2018 / Comments: 31

After I wrote an extensive post about GST for freelancers in August, I got an overwhelming response by freelancers all around the country. While many of them were finally clear about the GST rules, others had even more questions. The changing amendments by the GST committee also didn’t help.



While initially it was compulsory for every freelancer to register for GST, a new update in the GST rules relaxed that compulsion and now only freelancers that earn more than 20 lacs per annum are required to register for GST.

In the past 6 months, I have received a lot of common questions from freelancers about GST and in this post I’ll be trying to answer all those questions.

Note: Before we move forward, I’d like to clarify that these answers apply to freelancers who provide digital services online like content writing, website designing, digital marketing, and virtual assistance among others. These answers don’t apply to people offering export product or anything else. Also, I am providing these explanations according to the latest updates by the GST committee at the time of writing this article.

GST for Freelancer: All the queries and doubts that you still have about GST, foreign clients, PayPal, anything else are finally answered

Who needs to register?

People who earn more than 20 lacs per annum. There are no other limitations to this rule. It doesn’t matter where your clients are located. If your annual income is more than 20 lacs rupees, then you need to register for GST and charge 18% GST for your services.

I have a GSTN, but I don’t earn more than 20 lacs in a year. What should I do?

You can get your GSTN cancelled immediately and it won’t have any effect on your business. Until the date your GST is cancelled, you have to charge it in all your invoices and file for GST.

My client doesn’t have a GSTN. Can I charge him GST?

It doesn’t matter whether your client has a GST or not, if you have GST, then you have to charge it in your invoice. In case your client has a GSTN, then they will be liable for an input tax credit. You can enter your client’s GSTN when you file for your monthly GST. for it.

Do I need to charge GST to clients based out of India?

Your client’s location doesn’t matter, it’s their bank account’s location which matters. If your client is based abroad but they are paying you from a bank account in India, then you have to charge GST on their invoice.

In case the client’s bank account is based out of India, then you don’t need to charge GST.

This also applies to Upwork and PayPal clients.

I get part of my income from India, and part from abroad. Do I need to register?

If your total income is more than 20 lacs per annum, then you need to register for GST.

I get all of my income from abroad clients. Do I need to register?

If your annual income is more than 20 lacs per annum, then registration of GST is mandatory. If you only have foreign clients then you don’t need to charge GST to any of them and you can just file a zero GST return.

My clients are refusing to pay GST. What should I do?

GST is a tax that you pay to the government and you don’t keep any of it. If your clients don’t want to pay GST, then you will have to pay GST from the total amount paid to you by your clients.

For instance, if the bill is INR 1000, then GST over that will be INR 180. In case your client refuses to pay for it, then you will have to pay GST from that INR 1000 you receive. So essentially you will only get to keep INR 847 and you will have to pay INR 153 as GST to the government.

That is why, if your clients refuse to pay GST, then its best to not work with those clients since you’ll end up getting paid less than you deserve.

PayPal is charging GST now. Can I use PayPal if I don’t have a GSTN?

Yes, you can use PayPal without a GSTN. PayPal is now charging GST over their PayPal fees. This simply means that if you have a GSTN, then you can get an input tax credit by adding your GSTN to your PayPal account. If you don’t have a GSTN, you can still use PayPal without a glitch.

Can I file for GST myself?

The GST website provides you with login credentials through which you can easily file for GST. Though the website is still very cranky and the procedure is pretty confusing. If you can, I’d recommend just getting a CA to do it.

If I am charging GST, what about IT returns?

Your income tax is completely different from GST. Whether you register for GST or not, you still have to pay income tax over all the money that you are earning.

Are there any more questions that I missed out? Please leave a comment below and let me know

 

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31 Comments on "GST for Freelancer in 2018 – Do You Need to Register?"

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Kunjan
Guest
3 days 11 hours ago
Hi, Ritika Thanks for nice write up. I am using cleartax for invoicing and also ask some friends. They are telling about LUT / Bond if I don’t want to charge GST to foreign client. Here is a thing, I do have GST as I was consulting Indian client, now I am consulting foreign client. I am getting money using foreign wire transfer, in foreign currently. Even invoice is in foreign currency. Do I need to go for bond or LUT? Or simple invoice with 0% tax will do. There is a option for Export invoice in GST portal also… Read more »
Nupur
Guest
Nupur
3 days 12 hours ago

Hi Ritika,

Both your articles are very helpful. I had a small query. I am a freelance writer and work with multiple clients in India. But my annual income/revenue is well under 20 lacs (sadly!). However some of clients are large IT companies and they are insisting I get a GST number else they will have issues. Is that required considering they will in any case deduct tax?

Dinesh
Guest
Dinesh
4 days 8 hours ago
Hi Ritika, thanks for the informative article, I am the CEO of AR/VR company, we get our payments through paypal (70%) and upwork (30%) , although the questions is not in context of freelancer only. 1. I have my current account on name of company with two directors associated to it. 2. All the payments comes into that account only . 3. The annual income is less then 20 L 4. I got registered to GST in the first week of Nov-2017. 5. Didnt pay any GST tax till now Based on the above points I have few queries. 1.… Read more »
Pankaj Arora
Guest
5 days 6 hours ago

Hi Ritika,

Thanks for This Article. I have one question.. if i receive say 1.5 lac per month from my foreign Client , and Client pay me via Paypal every month.
should i need to deposit or pay any kind of GST or Tax to Govt?
also what if i received more than 20 lac in one year .. is there any liability on me to pay any GST or Tax on received amount?

Looking forward for your advice

apoorva
Guest
apoorva
16 days 19 hours ago

What is the cancellation process if your income in below 20 lacs? Also, is it advisable to cancel a registered GSTN – as in the future incomes can increase so probably I may have to re-register or the rules might change again… Also, a lot of clients insist on having a GSTN, how do you manage that if you cancel your registration?

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