GST on Freelancing Services: What You Need to Know

Insights by CA Adda - Chartered Accountancy Firm in India

GST on Freelancing Services: What You Need to Know in 2024

The Goods and Services Tax (GST) can be a gray area for freelancers in India. Here's a breakdown of what you need to understand about GST on freelancing services in 2024:

Registration Threshold:

• You are not mandatory to register for GST if your annual turnover is less than Rs. 20 lakhs.
• This threshold reduces to Rs. 10 lakhs for special category states like Jammu & Kashmir and North Eastern states.
• Even if your turnover is below the limit, you can voluntarily register for GST.

GST Rates:

• The GST rate applicable to your freelance services depends on the specific service you offer.
• Rates can vary from 0%, 5%, 12%, 18%, or 28%. You can find the exact rate using the HSN/SAC code for your service on the government website.
• If a specific rate isn't mentioned for your service, a general rate of 18% GST applies.

Tax Collection at Source (TCS):

• If you provide services through online marketplaces like Upwork or Freelancer.in, these platforms might deduct TCS (Tax Collected at Source) at 1% of your service value.
• This applies only if you are GST-registered. Freelancers who are not registered for GST are exempt from TCS.

Filing GST Returns:

• Once you register for GST, you are obligated to file GST returns regularly.
• The frequency of filing depends on your turnover and can be monthly, quarterly, or annually.

Benefits of GST Registration (Optional):

• Input Tax Credit (ITC): You can claim credit for GST paid on purchases related to your business, reducing your overall tax liability.
• Credibility and Professionalism: Having a GST registration can enhance your professional image and attract clients who prefer working with GST-compliant providers.

Important Considerations:

• Maintain accurate records of your income and expenses for GST filing purposes.
• Issue proper invoices with the correct HSN/SAC code and GST rate.
• Stay updated on any changes or amendments to GST regulations.

Conclusion

Understanding GST is crucial for freelancers in India. By familiarizing yourself with the registration process, applicable rates, and filing requirements, you can ensure smooth compliance and navigate the GST system effectively. Remember, consulting a tax advisor can be helpful for personalized guidance based on your specific situation.