GST Registration for Freelancers in India: A Complete Guide

GST Registration for Freelancers in India: A Complete Guide 

Freelancing in India has gained immense popularity, providing professionals the flexibility to work independently while earning a stable income. However, freelancers must comply with taxation laws, including Goods and Services Tax (GST), if their annual earnings cross a certain threshold.

This guide covers everything freelancers need about GST registration, applicable tax rates, exemptions, and compliance requirements.

GST for Freelancers: Registration, GST Rates, Exemption & Rules

What is a Freelancer under GST in India?

A freelancer offers professional services independently without being employed by a company. Under GST law, freelancers in India must register for GST if their turnover exceeds Rs. 20 lakh (Rs. 10 lakh for special category states).

Freelancers offering services to overseas clients must also comply with GST on exporting services, even if they do not cross the turnover limit.

Does a Freelancer Need to Register for GST?

GST registration is mandatory for freelancers if:

• Annual turnover exceeds Rs. 20 lakh (Rs. 10 lakh for special category states).

• They provide services outside India (exports).

• They offer Online Information and Database Access Retrieval (OIDAR) services (e.g., digital marketing, content writing, software development).

However, freelancers with an annual turnover below Rs. 20 lakh can opt out of GST registration unless they deal with interstate transactions or OIDAR services.

Can a Freelancer Register as a Composite Dealer?

The Composition Scheme under GST allows businesses with turnover up to Rs. 1.5 crore to pay a fixed percentage as tax instead of standard GST rates. However, service providers, including freelancers, are not eligible for the composition scheme, except for specific cases under Section 10(2A) with turnover up to Rs. 50 lakh.

Documents Required for GST Registration

To register for GST as a freelancer, the following documents are required:
PAN card of the applicant

• Aadhaar card for authentication

• Address proof (Electricity bill, rent agreement, or property tax receipt)

• Bank account details (Cancelled cheque or bank statement)

• Business details (Nature of services, turnover)

• Passport-size photograph

How to Register for GST for Freelancers?

Freelancers can register for GST online through the GST portal by following these steps:

• Visit the GST portal and click on ‘New Registration’.

• Select ‘Taxpayer’ and fill in the details like PAN, state, and email.

• Verify the OTP sent to your registered email and mobile number.

• Provide business details, including services offered and annual turnover.

• Upload necessary documents.

• Submit the application and receive the Application Reference Number (ARN).

• Once verified, the GSTIN (GST Identification Number) is issued within 7-10 days.

Which GST Rates Are Applicable to Freelancers?

Freelancers must charge GST on their invoices based on the nature of services:

How to Calculate GST for Freelancers in India?

To calculate GST liability, use the formula:

GST Payable = (Total Invoice Amount × GST Rate) / 100

For example, if a freelancer charges ?50,000 for services at 18% GST, the calculation will be:
Rs. 50,000 × 18% = Rs. 9,000 GST
Total Invoice Amount = Rs. 50,000 + Rs. 9,000 = Rs. 59,000

Invoicing Rules for Freelancers

Freelancers registered under GST must issue tax invoices with the following details:

• Name, address, and GSTIN of the freelancer

• Invoice number & date

• Client’s details (Name, GSTIN if applicable)

• Description of services provided

• Applicable GST rate & amount

• Total invoice value

Is a Freelancer Eligible to Claim Input Tax Credit (ITC)?

Yes! Freelancers registered under GST can claim ITC on business-related expenses such as:

• Software subscriptions

• Laptops & office equipment

• Internet bills

• Professional services (CA, legal fees, etc.)

To claim ITC, freelancers must:

• Maintain GST invoices for purchases.

• File GST returns on time.

How Many GST Returns Does a Freelancer Have to File?

Freelancers must file the following GST returns:

Freelancers not exceeding Rs. 5 crore turnover can opt for QRMP (Quarterly Return Monthly Payment) scheme, allowing quarterly filings.

What Is the Penalty for Late Filing of Returns?

Failure to file GST returns on time attracts penalties:

• Late fee of Rs. 50 per day (?20 for NIL returns).

• Interest at 18% per annum on outstanding tax liability.

FAQs

1. How to Calculate Tax for Freelancers?

Freelancers must calculate GST (if applicable) and Income Tax separately.

• GST = (Invoice Amount × GST Rate)

• Income Tax = As per tax slab (after deductions)

2. Do Freelancers Need to Pay GST?

Yes, freelancers must register and pay GST if their annual income exceeds Rs. 20 lakh (Rs. 10 lakh for special category states) or if they provide interstate services.

3. Why Is GST for Freelancers Important?

GST compliance ensures freelancers avoid penalties, claim Input Tax Credit (ITC), and operate legally in India.

4. What Is the Tax Limit for Freelancers?

• GST Registration: Rs. 20 lakh turnover (Rs. 10 lakh in special category states)

• Income Tax: Applicable if total income exceeds Rs. 2.5 lakh per year

5. Can Freelancers Avoid Tax?

No. Freelancers must pay GST and Income Tax if they meet the eligibility criteria. However, they can reduce tax liability using:

• Business expenses (claim ITC)

• Deductions under Section 80C, 80D, 80E

• Investments in PPF, ELSS, NPS

6. Do Freelancers Need to Pay Both GST and Income Tax?

Yes, freelancers must:

• Pay GST (if applicable) on services.

• Pay Income Tax based on annual earnings.

Conclusion

GST registration is crucial for freelancers to comply with tax laws and claim Input Tax Credit (ITC). If your income crosses the Rs. 20 lakh threshold, or if you deal with international clients, it’s advisable to register for GST to ensure legal and financial compliance.

For assistance in GST registration and filing, consult with ADCA – Expert Chartered Accountants in Bangalore. 

Need Help with GST Registration?

Contact ADCA | Visit ADCA Website