Update on 9th January 2018- A new article about GST for Freelancers has been published to include all the new changes issued by the GST Committe and answer the most common questions asked by readers
This article has been updated on October 24, 2017, according to the new rules provided by the GST Committee.
Now you don’t need to register for GST, unless and until your turnover is more than 20 lacs in an year. If you have already registered, GST council will soon be making available a cancellation procedure
There has been a lot of confusion about GST for freelancers in India. I have personally received a lot of emails from freelance writers asking me about the same and I didn’t want to pen down an article about it without being 100% sure of all the facts.
That is why this article is rather delayed, but all the information has been cross-verified by a number of CAs around the country so you can be sure of it. I have tried my best to put it in as simple terms as possible.
What is GST?
Goods and Services Taxes which is a composite tax and has replaced all the other types of taxes for greater clarity. Yes, it is applicable for the services industry as well.
How much GST would a freelancer charge?
Since it is replacing the service tax for a freelancer, the GST charges will be 18% of the total bill amount. Every invoice that you create will need to have 18% GST marked on it.
Is GST registration necessary for a freelancer?
Whether you are a freelance writer or a freelancer providing some other services. GST registration depends on the following factors:
- Do you only an annual revenue of less than 20 lacs?
Registration not required.
- Do you have an annual revenue of more than 20 lacs, despite of where your clients are located in India?
Registration required.
- Do you have clients in a number of states across India and annual revenue less than 20 lacs?
Registration not required
- Do you only have clients from overseas and you get payment through a foreign bank account, PayPal, or Western Union?
Registration not required, despite your income threshold.
As you can see, most freelancers have clients all over the country, that’s the whole idea behind freelancing. But that means, despite what you earn for freelancing, you will have to register for GST if your client is in a different state than you.
So, if a freelancer pays taxes in the state of Maharashtra but is working with a client registered in Tamil Nadu, then he will have to register for GST despite his annual income.
Should I charge GST from foreign clients as well?
No, you don’t need to charge GST on foreign client invoices. If the payment to your bank account is coming through a foreign bank account, then there is no need for any extra 18% GST charges. (Same applies to PayPal)
Who will pay for GST charges?
Your clients will and then you will pay the same to the government. You clients can claim it as tax credit when they file for taxes so that’s a win-win for everyone. Please do not pay for the GST charges yourself, even if your clients ask for a concession, because you will have to pay them back and your clients will still get tax credit for it.
How many returns would I have to file in an year?
37 in total. One annual return, and 3 returns per month.
So, that makes it 3×12 + 1 = 37 in total. Don’t worry, you don’t have to manually file these returns. You just have to ensure all your paperwork is in the right place and you have all your invoices with you, rest your CA can handle.
Will there be a change in invoicing?
Not really. You just have to ensure every invoice has a unique invoice number (I recommend using an invoicing software for that) and you have mentioned the GST charges along with your GST number in the invoice.
What if I don’t want to file for GST?
All this can be a lot for a freelancer who is still trying to find his ground and I get it. If I was asked to do so much work when I was starting out as a freelancer, I would have lost my mind. But if your long-term vision is to become a successful full-time freelancer, then you cannot run away from the government taxes.
Not to mention, if your client has filed for GST, deducting your TDS, and sending regular payments your way, then the government already knows you should have filed for GST and you haven’t. That is because your client lists you down as a freelancer or contractor when they file their TDS papers. Now if their bank account and yours is in a different state and your bank account is linked to your PAN card, then there is really no running from it.
At the end, either you would have to pay those 18% GST charges from your pocket or your client will forced to pay those even without you charging for it.
What should I do if my client doesn’t want to pay for GST charges?
First of all, you have to explain it to your client that they can get a tax credit for it when they file for taxes. So, the only clients who wouldn’t want to pay for GST charges are the ones who aren’t paying taxes or aren’t interested in paying you.
Will it affect my overall income?
Not at all. The extra GST charges are paid by your clients and you will still be getting paid exactly what you are charging as a freelancer.
The next step
Contact a CA
Contact an experienced CA who has been working with freelancers or solo entrepreneurs so that he exactly knows your requirements and doesn’t confuse you more.
File for GST
GST registration are still going on and will continue until the next 3 months. So, you can register for them any time. Once you do register, you will get an ARN number and after a week or two you will get the main GSTN. Once you receive the ARN number, you can start charging 18% GST and mention that ARN in the invoice. Though, you will have to regenerate all those invoices with your GSTN when you receive it.
Use an invoicing tool
If you think you can do all this manually in Microsoft Word or Excel, then you are greatly mistaken. Opt for an invoicing tool which supports adding taxes as well and generates unique invoice numbers so that you can easily edit or download the invoices for your own records.
Have any questions about GST for freelancers in India? Anything I forgot to mention? Feel free to comment below.
131 thoughts on “The Simplest Guide to GST for Freelancers in India”
Excellent Ritika…I think you are first to give this useful info for freelancers.
Thanks Manoj!
Thanks for your information.
Thanks Tejas!
This is very well written. Thanks for this.
Couple of clarifications.
1) If you have a combination of income from foreign and Indian clients, you need to only calculate revenue from Indian clients for the threshold of Rs. 20L?
2) I may have clients from only one state for now, but tomorrow I might get from another. Do I register for GST then or should I do that now itself? If I can register afterwards, then do I register before raising the invoice and hence irrespective of whether I actually get paid or not?
3) Similarly, what if I am registered for GST in some states, and get a new client in new state? Then can I register after I get the payment from the client of new state? (I hear that you have to register for GST separately for each state that you have clients in)
4) This rule of having to register for GST even if you are below the threshold of 20L if you have clients in multiple states is very weird. What’s government’s justification to it? This is not helpful to a small guy at all. Cost of keeping a CA itself will wipe out the income.
Hi Mukesh
1- Yes, only Indian clients are taxable.
2- If you plan to get more clients in different states, its best to register now. You will have to provide your GSTN number when you charge 18% GST, so you would need registration before raising the invoice. Also, GST registration is a 1-2 week process. You can’t register now and get your GSTN the next day
3- You don’t have to separately register for GSTN in all the states. Just once.
You just file for returns in different states, that’s something your CA will manage. So you won’t have to worry about all that
4- Yes, you are absolutely right. I mentioned the same in the article as well. This is going to create a big problem for new freelancers
I work on upwork and upwork converts and sends money to my account in INR (all my clients are abroad) does GST apply to me? I have receipts from that xx $$ converted to YY INR and send to zz account. Like paypal odesk sends in INR.
No,since your clients are abroad, you won’t be liable for GST. Though, do keep the dollar to INR conversion receipts with you for reference
Dear Ritika
My views are slight different on GST on export to other countries.Registration is required when you are exporting to other countries irrespective of any monetary ceiling of Rs.20 Lac. This is applicable in GST though this was not required under service Tax earlier.Process is a little bit complected in earlier stages though if not done it will be very troublesome in coming future.Below are some highlights.
1. Freelancer exporter needs to be registered under GST.
2. Freelancer exporter having turnover more than 1 crore last year can export without charging GST by submitting letter or undertaking to custom.
3. Freelancers having income less than 1 crore can export without GST by submitting bond of 15% of value of GST involved.
4. They can export by charging GST and pay the GST from own pocket and 90% of IGST will automatically come to their account after filling the returns rest 10% will be released on production of documents.
5. How the exporter will be certified: STPi is the authroized agency to certify export. You have to submit annexure, copy of invoice and number generated from rbi website to STPI. They will certify the same.
6. You will get advice from bank for remittance received from country of export.
7. Submit the advice and softex/invoice to bank and they will issue you the realization certificate of export and documents are complete now. Once you file your gst returns you will get the refund of IGST paid.
You must be thinking that cost of compliance will be high, yes I agree but you will be eligible to take credit of GST paid on various services like Telephone,lease line, office rent,computer and other asset purchased etc which were not there earlier and cost of compliance can be easliy met from there.
This can be elaborated further at good length and in good words,give me a pardon for this.
Hi Pardeep
This is valid for the export industry but freelancers come under the service industry
In case the freelancer is EXCLUSIVELY dealing with export of services and has no income from the domestic market, it is not mandatory for them to get registered at all.
In support of my argument, I quote the following link coming directly from the Central Board of Excise and Customs website FAQ: http://www.cbec.gov.in/resources//htdocs-cbec/gst/tweet-faq.pdf;jsessionid=03DB5C1D276516C077E7D2314A897E84
Specifically, read the Answer to Q17 which reads: “There is no liability of registration if the person is dealing with 100% exempt supplies”.
Everyone, please share your thoughts/inputs and please do correct if I am wrong, thanks.
Yes, that is exactly correct 🙂
Sometime, it is mix of export and domestic like on platform like freelancer.in, there are some Indian clients and others are foreign. Additionally, money coming into my account is via freelancer who converts all currencies into INR and then transfer into my bank account.
So will I have to pay GST for Indian clients in this case
Your article answers most of the queries. I am working as freelancer with one of Software Company Client and work on Contract. Our Bank accounts are in same city.
My Query:
1) My overall income for year does not exceed 12 Lacs, I am eligible to pay GST?
2) Client used to cut 10% TDS on every invoice that I make
3) Now with GST, Client says to cut 10% TDS and 18% GST? Is it correct?
My Understanding is, Client can deduct 10% TDS and pay the invoice and as I am under 15 Lac, I must not bear GST. I can pay my income tax dues.
If its in the same state, then you don’t have to file for GST unless you exceed 20 lacs. There will only be 10% TDS which will be deducted from the client side and you can file for its refund in your income tax return
Hi, the information is nice!
Is it still the same in 2020? All my clients pay me via Upwork and all of them are outside India.
Hello Ritika,
Thank you for the most simplified guideline for the freelancers in India. But I have a couple of questions.
1) If I do business only with the foreign clients and my yearly turnover is below 20 lakhs, do I need to register for the GST?
2) If I am still doing business with foreign clients and my turnover crosses 20 lakhs, do I then need to register under GST?
I will be waiting for your reply and thank you in advance.
As far as I know, the income you receive from foreign clients is non-taxable. The government does this to allow foreign currency to enter the Indian market and make it easier for foreign investors to put their money in India. Though, I am not 100% sure about the above 20 lacs thing, I would suggest confirming it with a CA
Thank you, Ritika.
Glad I could help!
Hi Ritika, Are you saying the money I receive via PayPal which is converted to INR and transferred to my bank account is non-taxable? Income transfered to my bank account is liable for income tax, right?
Hi Vidya
I am saying you don’t have to charge GST over it. For full-time freelancers and solo entrepreneurs, the income tax slab automatically gets halved because of the provisions made by the government. So, if your annual income is 10 lacs, your slab is actually considered 5 lacs. The 50% deducted includes income from foreign payments, health insurance, SIP investments, your business expenses, and everything else. (I strongly suggest consulting a CA as he/she would be able to give you more in-depth information regarding this )
And now, as per the latest, it looks like PayPal is joining the GST bandwagon 🙂
Yes, I heard :/
Hello Ritika,
Thanks for the information. But I guess, Freelance Journalists are exempted from GST.
Source: http://www.cbec.gov.in/resources//htdocs-cbec/gst/services-booklet-03July2017.pdf (Serial number 51 of ‘Nil’ section).
Can you please provide more info on this? Also though an ‘Independent Journalist’ does not have to pay GST, but do he/she still require a GSTN?
Any update on this can be very useful for the freelance journalist community.
Hi Sandipan
I am really sorry but I have no clue about GST rules for journalists as I am only focused on freelancer writers :/
Hi, Thanks for clearing my doubt through this beautiful article. I have some questions. >> Do the freelancers need to file income tax return? If yes, then on what basis and when.
>> If the freelancers get money through Paypal from foreign sources, then if the IT return is applicable to them? If yes, when?
Please help me for my queries.
You need to understand that GST is completely different from IT return. Whether you are charging GST or not, you will still be filing for IT returns. No matter what or where you are earning from, you have to pay taxes to the government. Even though GST is not valid for income being received from foreign clients
Need clarification.I am a retired engineer of 67 years of age and have been re-hired by an ESO operating from a SEZ at Bangalore. My annual earnings from technical advisor would be much less than 20 lakhs even when they keep renewing the contract. in this scenario there is a confusion about GST registration by ESO. As per my understanding I need not register for GST, however the finance team is asking me to register and then only raise invoice. Could some one clarify this.
Hi Kushal
If your and your employer’s registered place of work is in the same state then you don’t need to file for GST. They are probably forcing you to do that so that they can get GST credit
Hi Ritika,
Thank you for this post. Most of the articles related to GST are confusing, while yours is precise.
As a transcription service provider I get payment though PayPal from US and UK clients (12 lakhs per annum). As per your article,I don’t have to charge or pay GST.
Which ITR form do I need to fill for my income tax returns in 2018?
Hi
As I stated above, ITR is different from GST. So whether or not you are registering for GST will not depend on the type of ITR you fill
So if one earns 200ors from one state and 1000 from another and 200 from another. and like wise in total a person from state of Haryana works with 6 other states. so he/she has to register in all the states and then file 18 returns a month. That’s Killing the creativity of the person and drowning that person in paper work with is never an easy task in India. Plus Does a person below 20L and doing all outside india work need GST? I don’t see Govt having a clarity anywhere . Nor Ca.s have clarity and I don’t have the number of Hunuman to tell me what is what.
Unfortunately, there is nothing much you and me can do to change the tax policies. You don’t have to file 18 returns a month, that information is wrong. There is no extra paperwork as long as you were already keeping all your invoices in place (I recommend using an invoicing software)
Hi Ritika,
I am a freelance writer working from home in Ghaziabad, UP, for a company in Delhi. The company is asking me to pay the GST amount, as they cannot afford to pay GST to 40 vendors. They saying, lets bear the cost 50-50. What should I do? I am already in the process of GST registration, but still finding under which category and how to apply.
Should I register for GST (as they in different state). My annual income is 3.6 lakh.
Hi Deepti
Yes you should register for GST, but do not go into the 50-50 agreement.
As I mentioned above, when I client pays GST on the total bill, they get GST credit for it.
While they may be paying GST to you, they are also charging GST from their own clients. So the GST that they actually submit to the government is the (GST charged – GST they have already paid to vendors like you).
You will be doing the same thing.
So if you have charged INR 200 GST. The client will get that amount as GST credit and you will have to submit that amount to the government.
If you do 50-50, your client will get INR 200 GST credit, even though they only paid INR 100. And you will essentially be paying INR 300 for charges.
All in all, you will be the one getting paid less at the end of the day. And that’s exactly what your client is trying to do — getting you to decrease your rates.
Please let them know this isn’t allowed and its borderline illegal. It is mandatory for everyone to pay GST,those are the taxes laid out by the government. You don’t go to a restaurant and say “I will only pay 50% of the tax”
Hii, i provide web services to usa clients and my turnover is more than 40 lacs. Do i need to apply for registration? Even though my services are zero rated.
Yes, because your yearly turnover is more than 20 lacs per annum
Hello,
Freelancer providing their 100% services (tech/semi tech) out side India through online to students and other customers world wide from Delhi or any other part of India. No bill invoices are done to these customers and business volume remain very titular under 50$ or so for a job/service. And the amount is credited to banks in India through Pay Pal by deducting commission by the concerned brokers. in advise in such case to freelancers as what
– GST registration required. if so
– how the returns could be filed without bill invoices
– tax is being paid under section 44ADA as per amount credited to to bank A/c (Business less than 50 Lac pa clause apply)
– in case of business volume less than 20 Lac pa
– In case of business volume more than 20 Lac pa
Please advise on applicability of GST and other consequences.
If 100% of your income comes from outside India and you use paypal to receive payments, then you don’t need to file for GST, unless your yearly income is more than 20 lacs pa
Hey Ritika, great article, thanks!
Could you clarify on above statement again as PayPal will also start charging GST on each transaction and will need FICRs etc also
Hi Pravin, I am hoping to get the clarification on this soon. I will update the blog post when I do 🙂
Hi Ritika, I was having a NRI status in last financial year, I moved to India now and worked as a freelancer for a period 25 April 2017 to 15 Jul 2017 only and earned 11lakh. I am not sure about my annual income and NRI status in current financial year. Could you please suggest me the answer of the following questions in the present senrio. 1) Under which category should I register myself for GST
2) Do I have to pay GST on this amount, I reside in Gurgaon but I worked for a Mumbai based company. 3) can I pay the GST amount at the end of Financial year?
Hi Ashok
I don’t have much idea about NRIs to be honest. If you are filing taxes in India as a resident, then you are liable for GST. You could file it at the end of the year but you will be charged with a late fee, you need to be filing three returns every month
Hi, I usually do freelance writing for US/UK clients which is where most of my income comes from.
Now as per this article, it says as long as you don’t provide services to people in multiple states in India and your revenue is less than 20 lacs, you do not need to register for GST. I don’t foresee myself making more than 15 lacs per year at least in the next 2-3 years or writing for Indian clients.
However, on this link (https://np.reddit.com/r/india/comments/6rwc17/gst_freelancers_for_who_work_for_foreign_clients/), it says even for foreign clients, I would have to not only register for GST but file 40 GST returns a year and pay 18% GST on every payment I receive and then claim a refund.
Could you clarify this for me please?
Thanks.
The link you have shared is for export industry, not for the service industry
Working under a freelancer comes under the service industry. So no you don’t have to file for GST if you are just working with foreign clients. The Govt has intentionally made this rule to increase the inflow of foreign currency in the Indian market.
Also, there are no 40 returns, there are total 37. You don’t have to do anything really, these returns are automatic which can be taken care off by your CA
Thank you Ritika. I am in a similar situation where I am a consultant to a HK entity. Since it’s a contract that calls for fixed monthly payment, no invoice is generated and the foreign client has not paid any GST. Do I now have to pay GST on the amount received or am I liable only to pay only the advance tax on my income?
Hi Savita
No, you don’t need to pay or register for GST. Income tax is a whole different subject though
How is commission received from foreign clients – to be treated for GST.
Is the criteria , that commission received is in Foreign Currency and client is overseas enough or do other things matter ?
Like where does you client use these services – for doing business in India or ……
How can we tax a foreign entity or do we end up paying from our pocket ?
The golden rule all over the world is – you cannot export taxes !!
Hi Ritika, Thank you for the detailed article. I provide freelance service to a client in another state so I will charge applicable GST for my service. Now the client finally delivers that product/project to a foreign client. My question is that would my client be able to get input tax credit back, or does he/she have to bear the tax burden?
For you, the transaction stays between you and your client only. What the client does with the work delivered by you is out of your spectrum. You will charge GST on the total amount and if the client is registered for GST as well, then they can get an input tax credit over it.
Hi ritika. I am a freelance content writer for only a single client. My income is below 2 lacs per annum. My client wants me to get a gst number but considering that my work is not very extensive, I am confused whether it is really mandatory to get into the gst registration process. Please advice what I should do.
Dimpy, your client is probably forcing you to register so he can get tax credit. If you don’t think you need to register right now then you shouldn’t — Its your decision at the end of the day
Hi Ritika
Your article is enlightening. But I want to ask a few things. I work as a freelance content writer under a freelancing website. I have registered myself for GST.
The payment I receive comes with a deducted 18% GST charges and the commission from that freelancing website. I earn around 2.5- 3 lakhs per annum. Do I need to file for GST every month?
If you are already getting GST deducted then by registering for GST you can get that tax credit back and the GST paid also becomes non-taxable. I highly recommend registering for GST as it will only save you money
Thank you so much for the information.
just have one question. I am a freelancer and produce animation on service marketplace where I receive money in my paypal from marketplace. And there is no invoice generates on my name, The marketplace gives invoice to the client on its name. I just receive my price after deduction of some percentage by Marketplace.
Now my income crossed 20L . Want to register for GST. ( If Yes. I have to )
Without any invoices from my name , How this will be filed. Because GST needs every invoice. Please help in answering this.
Depends on where your marketplace is registered. If its not registered in India,then you don’t need to register whether your income has crossed 20 lac or not. You cannot tax foreign clients
Hi Ritika,
I am a Digital Marketing Freelancer and I wanted to enroll for GST registration. I got to know that deadline for enrollment was 20th Aug, 2017. Though my income is less than 20 lacs per annum(way less as I have recently started freelancing), my question is how do I bill my clients in my state or city if I am myself not registered under GST?
You ca bill your clients but you cannot add GST charges in your invoice if you aren’t registered for GST. The registration date has passed but you can still register. Its just, there might be some late free
What if the services are provided to foreign client only and the client pays through a foreign bank? Is GST registration mandatory? What if the payment was decided before July 1 but initiated after?
GST is only mandatory when payments are made from an Indian bank account. You cannot tax foreign clients..It doesn’t matter when the payment was decided
Hi Ritika,
Thanks for your article and responses.
This is in reference to your last comment where you said “GST is only mandatory when payments are made from an Indian bank account”
I provide software testing services to a US company and receive fixed monthly wire to my bank in US dollars from their US bank account. Am I require to mandatory register under GST?
Since export of services are Zero rated supplies but do they come under “taxable supplies”? Since if they are taxable supply, one has to register as per section 24(i) of GST that includes “inter-state taxable supplies”.
Please share your thoughts!
Hi Sachin, you aren’t required to register for GST. I have also updated the article to be more clear 🙂
HI Ritika!
Today i got an email from Paypal. this is the link. https://www.paypal.com/in/webapps/mpp/ua/upcoming-policies-full
i am a data entry freelancer, one of my regular clients give me a regular income per month and i am filing ITR from last 4 years. my latest ITR was less than 9 lac. my all income is from this business.
please read the message from link, i am confused. do i need to opt for GST and provide same to the Paypal.
Thanks in Advance Ritika.
I tried talking the PayPal customer service, turns out they are confused as well. We will have to wait and see about this :/
I do freelancing for clients located outside India and get paid in dollars via PayPal, which gets converted into INR and paid into my savings account. My annual turnover is less than 10 lacs. I read export of services is exempt. Should I register for GST? I have today received a policy update from PayPal stating they will charge 18% GST to be compliant with Indian laws. This is all too confusing for me. Can you please give me some clarity? Thanks.
PayPal charging for GST does not mean that you should be registering for GST. Just because you buy a laptop with GST charges for your business, doesn’t mean you need to register for GST.
If you only receive income from foreign clients, you don’t need to worry about registration
“If you only receive income from foreign clients, you don’t need to worry about registration” – is this applicable even when we have paypal desposits crossing 20-30 lacs annually?
Yes
Hi, I have a question. If I earn income through Amazon US (affiliate marketing) and they send me payments, do I need to register for GST? Most of the traffic on my website is from the US. But I’m not directly offering services like freelance writing, it’s more like blogging, with ads.
Hi Jatin
This I am not sure about because Amazon is registered in India as well and they might be sending you money directly from their Indian holding, in which case, you will have to register for GST. I think its best to contact the Amazon customer care regarding this
If it’s from the US holding then I wouldn’t have to register? Some people tell me I do, regardless
No you don’t need to register if payment is coming from a foreign bank account
Hi,
As an affiliate marketer, would I have to register for GST? I have a website with traffic outside India, and I get payed in US dollars from the Amazon US company.
Hi Ritika, I am a freelancer who provide services in Presentation Designing in India and to overseas clients as well. I have not registered for GST till now as I was not aware about the clause which says if I am providing freelancing services to inter state clients I need to have GST number. Now, my question is that my turnover is below 12 lacs and it is not gonna increase in coming 1-2 years. So now,if I apply for GST..will it become liability for me and on each and every Invoice I need to charge GST??? or should I charge GST only to inter state client and not to my state client???. Kindly suggest. Thanks, Monika
If you are providing services in different states (other than your home state), then you have to register for GST. When you register for GST, you will have to charge GST to both clients in your state and other states.
For clients in your state, GST charges will be added as — 9% CGST + 9% SGST
For clients in different state, GST charges will be added as – 18% GST
But, you will be charging the same GST for all clients
hi. i receive money from my foreign clients to my paypal. few days ago paypal announced GST, will they deduct 18% in money i receive from foreign client when i move the fund from paypal acc to bank?
Hi Ritika,
Are you sure that GST is not applicable if the payments are solely coming from overseas clients via PayPal? Some people commented on the change.org petition that overseas payments will be considered as inter-state. I think that’s absurd and your assessment seems to make more sense to me. I know there is a lot of confusion around this topic and I was wondering if you have any new updates on this. Thanks.
No GST registration is not applicable on PayPal payments.
PayPal may be charging GST over their fees. Though nothing is confirmed yet. I am waiting to hear from them
Export of services to international clients has been termed under interstate services, which means its mandatory to register for GST, even though export is zero rated. How would an individual freelancer operating under a brand name be able to register for GST? What documents would be required?
You only have to register for GST if you are receiving payments from an Indian bank account.
I think you just need your Aadhar card and PAN card for registration